Powers of Trustees

Question 1

Performance is at the discretion of trustees - they cannot be forced to exercise their power

Answer 1

Re Brockbank

Question 2

Trustees’ powers are subject to common law standard of care:

Must act as an ordinary prudent man of business in the conduct of his own affairs would do in that situation

Answer 2

Speight v Gaunt

Question 3

General powers of advancement

Answer 3

s.32 TA 1925

Question 4

Advancement is any use of money which will improve the beneficiary’s material situation

Answer 4

Pilkington v IRC

Question 5

Trustees are now allowed to advance full amount of the beneficiary’s share (for trusts created after 2014)

Answer 5

s.9 Inheritance and Trustees’ Powers Act 2014

Question 6

Trustees have the power to advance in their absolute discretion, provided:

Answer 6

• it does not exceed half of beneficiary’s share (changed for trusts created after 2014)
• is brought in account as part of such share; and
• does not prejudice beneficiaries with prior interest

Question 7

When parents of young beneficiaries request an advancement to the beneficiary, trustees should be cautious, and, if they doubt intentions, they should apply money directly to the cause (eg school fees)

Answer 7

Re Pauling’s Settlement Trust

Question 8

General powers of maintenance

Answer 8

s.31 TA 1925

Question 9

Trustees may now pay or apply the whole or any part of the trust as they fit (for trusts created after 2014)

Answer 9

s.8 Inheritance and Trustees’ Powers Act 2014

amended s.31 TA 1925

Question 10

Trustees need not consider the age and requirements of the infant and other income available to him or her (for trusts created after 2014)

Answer 10

s.8 Inheritance and Trustees’ Powers Act 2014

amended s.31 TA 1925

Question 11

Courts may intervene if trustees’ discretion is ‘improper’

Answer 11

Tempest

Question 12

Courts may intervene if trustees merely do as settlor tells them, rather than exercising discretion

Answer 12

Turner v Turner

Question 13

Court may intervene if trustees act capriciously

Answer 13

Re Manisty’s Settlement

Question 14

Beneficiaries are entitled to see trust documents, subject to confidentiality.
Although, even if confidential, court has power to order them to be disclosed

Answer 14

Schmidt v Rosewood

Question 15

Beneficiaries are usually not entitled to see trustees’ deliberations/reasons for decisions made

Answer 15

Re Londonderry’s Settlement

Question 16

Beneficiaries are not entitled to see trustees’ deliberation/reasons for decisions made unless:

Answer 16

• beneficiary has a legitimate expectation that discretion would be exercised in his favour and it wasn’t
• It is for a pension fund

Question 17

If trustees do give reasons for their decisions, court may find this decision void if they deem it irrational

Answer 17

Klug v Klug

Question 18

Saunders v Vautier

Answer 18

Beneficiaries can end the trust if:

• 18+ and of sound mind (Sui juris);
• all of them agree; and
• all are in existence and ascertained, and absolutely entitled

Question 19

s. 1(1) Variation of Trusts Act 1958

Answer 19

On application, courts can consent for those who cannot consent themselves, provided variation will benefit them

Question 20

It is immaterial whether the variation (VTA) is contrary to settlor’s wishes

Answer 20

Goulding v James

Question 21

A benefit for VTA could be:

Answer 21

A tax saving scheme or raising the contingency age to. more responsible age (Re T)

Question 22

Variation of the trust (for the purposes of VTA) is permitted, but a complete resettlement of the trust will not be approved (ie changing beneficiaries)

Answer 22

Re Ball’s Settlement

Question 23

Court cannot consent for an adult ascertained beneficiary who is capable of consenting himself

Answer 23

Knocker v Youle