Duties, Powers, Rights

Question 1

Duties of a T of discretionary trusts

Answer 1

Survey range of objects

No allocations outside potential class

Question 2

Exhaustive trust

Answer 2

T must allocate whole of funds or income

Non-exhaustive- can retain some

Question 3

Duties of all trustees

Answer 3

Familiarise
Preserve 
Exercise discretion, consider powers 
Duty of care 
Avoid conflict of interest 
No dealing on own account 
No remuneration 
Relevant / irrelevant consideration 
Professional advicei
Mustn’t compete with trust
Self dealing rule- fair dealing 
Evenhandedness 
Provide info and account to B 
Distribute in accordance with docs

Question 4

Does a T have to accept the role

Answer 4

No must have capacity and accept rule

Question 5

How do Ts hold property

Answer 5

Joint ownership

Survivorship

Question 6

Who can use public trustee

Answer 6

Anyone but not obliged to accept

Question 7

Meaning of duty to preserve trust

Answer 7

This means take care when dealing with it

Question 8

What is the standard of care for T

Answer 8

Skill and care reasonable in the circumstances having regard to any special knowledge or experience of T

Question 9

What does dealing on own account mean

Answer 9

Do not manage trust for benefit of T

Exception is fair dealing - full disclosure and fair price, T may buy beneficial interest from B

Question 10

When can T be remunerated

Answer 10

Professional T can be paid 
Trust doc allows it 
Court authorised it 
All Bs consent 
Expenses in course of duty

Question 11

When does T have to take professional advice

Answer 11

Consider advice about how to invest- not necessarily follow

Exception if T reasonably considers advice unnecessary

Question 12

What is the self dealing rule

Answer 12

Sale of trust property to T is voidable by B

Even if T retired unless significant time passes

Question 13

What does duty to act evenhanded include

Answer 13

Act impartially between Bs

When there is a life tenant and a remainderman T is under duty to invest the property to generate an income for life tenant

Question 14

What to do if there is a missing B

Answer 14

S27 TA- advertise and if no one comes forward can distribute
Benjamin order- court allows distribution
Insurance
Pay some money into court for distribution later

Question 15

Retirement, replacement and appointment of trustees

Answer 15

36 TA - T can replace / appoint T who dies, retires, disclaimed trust, refused to act, incapable, unfit or left U.K. for 12m

39 TA- at least 2 remaining Ts or trust corp and T will power to appoint Ts consents by deed

19 TOLATA - can appoint, replace or retire a T is all Bs are Sui juris and collectively absolutely entitled to property, acting together in writing. Only when no power in doc for someone else to appoint T. Not if already 3 Ts. To retire must take arrangements to protect Ts rights connected to trust, at least 2 Ts remaining or trust corp and replace T or others consent by deed and retiring T declares by deed.

20 TOLATA - B may direct T to appoint a substitute if T becomes mentally incapable of role

41 TA - court can appoint and replace T when it is impractical for others to act without court

Question 16

How to declaim trust

Answer 16

Deed

Question 17

What is retirement is uneffective

Answer 17

T is still liable

Question 18

Do Bs under a discretionary trust have a property right

Answer 18

Not until T decides how to distribute

Question 19

Do Bs have a property interest under a fixed trust

Answer 19

Yeah and can compel T to transfer the legal title to them using rule in Sanders v Vautier

Question 20

Do Bs under a discretionary trust have any right to distribution

Answer 20

No

But could replace T if no distribution made for too long

Question 21

Bs right to ensure trust is administered properly

Answer 21

Can inspect trust doc, tax returns, balance sheets and minutes of meetings where T decides to make distributions

Subject to terms in doc to prevent disclosure

Ts do not have to give reasons

T must keep accounts and make the available to B

Question 22

Trustee powers

Answer 22

Power to invest
Power of maintenance
Power of advancement
Misc. insurance, sell etc

Question 23

Trustees power to invest

Answer 23

Power and duty - must invest 
Consider diversification 
Disregard ethical considerations unless trust doc says otherwise 
Review from time to time 
Suitable investment

Question 24

Will T be judges for failure of individual investments

Answer 24

Not if T gives due consideration to diversification and suitability of investments

Question 25

Is T liable for errors of judgement

Answer 25

Not if T acts honestly and with ordinary prudence

Question 26

Can T delegate power to invest

Answer 26

Yes but still liable if not to an appropriate person

Not liable if appropriate person

Question 27

Can T delegate power to distribute

Answer 27

No

Question 28

Power to maintain.

Answer 28

Income for minor to maintain, education or benefit B
Even if no power in trust doc
Can exhaust entire income
Ts discretion
Not entitled if not entitled to immediate income (contingent or prior interest unless 18 then can have it even if conditional)

Question 29

Power of administration

Answer 29

Unless excluded in trust doc
Allows T to apply capital for Bs benefit before it vests absolutely
Must be reason beneficial to B
Can be any amount
Subtract from later distribution
Cannot detriment remainderman
Even if B is infant, or only have future or contingent interest