Investments Flashcards
In the absence of express provisions, what statutory requirements are there in terms of investment of trust money by a trustee?
A trustee must purchase investments
Investments must be anything they could make if they were absolutely entitled to it, save for land.
When may a trustee make an investment in land?
They may acquire a freehold or freehold as an investment for occupation by a beneficiary, but this must be within the UK (unless the instrument says otherwise).
What must trustees regard when making investments?
Their statutory duties and non-statutory duties.
What are trustee’s statutory duties when purchasing investments? (4)
They must consider if the investment is suitable for the trust
They should consider the need for diversification to spread risk.
They must exercise care and skill.
They should review investments from time to time and consider the need for advice.
What are trustee’s non-statutory duties in respect of investment? (2)
Trustees must act fairly between beneficiaries.
Trustees must secure the best financial return for beneficiaries.
When can trustees delegate to a qualified third party in respect of investments? (6)
It must be done collectively by all trustees.
Care must be taken when selecting the agent.
It must be done in writing.
They should provide a written policy statement to the agent on how they should operate.
Secure agent’s agreement to compliance of the policy statement, statutory duties and non-statutory duties.
The trustee must review the agent’s actions from time to time.
Can trustees be vicariously liable for the actions of an agent?
Not if the agent was properly selected and appointed, and the trustees kept a proper eye on what the agent was doing.
The investment agent would be liable in these circumstances.
