Investing The Trust Patrimony

Question 1

Why do trustees need to invest?

Answer 1

Income for beneficiaries

Public trusts need income stream

Question 2

What is portfolio theory?

Answer 2

Consider all of investments together, variety of low risk and Hugh risk

Question 3

Duties of trustees in investments?

Answer 3

Duty of care
Prohibition of self-dealing
Regard to suitability and diversability
Duty to seek advice

Question 4

What did 1961 achieve?

Answer 4

Widened range of investments, now wider range and narrower range but 50/50 seconds split arbitrary and annoying
Duty to seek advice good but cumbersome - not for every type
Diversability not always req’d
Greater powers than before

Question 5

Impact of new legislation

Answer 5

Unlikely that admin of trusts will be changed that much

Default law now apace with contemporary investment practice

Question 6

Delegation?

Answer 6

Can’t delegate all duties under trust eg Piper Alpha widow and children (Scott v Occidental)
s4C 1921 - can delegate where admin but not discretionary
Trustee Act 2000 in Eng and Wales lists powers which can’t be delegated

Question 7

New law

Answer 7

Charity and Trustee Investment (S) Act 2005
Any kind of investment including heritable property
Regard to suitability of investment and need for diversification of investment
Proper advice but only where they think reasonable
Nominees & delegation

Question 8

Tibbert v McColl

Answer 8

Kept money in account for 18 years without investing

Question 9

Do trustees have to invest?

Answer 9

Not if risk too high
Not if simple executory trust
Weigh up risks and gains
Melville v Noble’s Trs - left it for 19 years without investing