Powers of Trustees Flashcards
Performance is at the discretion of trustees - they cannot be forced to exercise their power
Re Brockbank
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
Speight v Gaunt
General powers of advancement
s.32 TA 1925
Advancement is any use of money which will improve the beneficiary’s material situation
Pilkington v IRC
Trustees are now allowed to advance full amount of the beneficiary’s share (for trusts created after 2014)
s.9 Inheritance and Trustees’ Powers Act 2014
Trustees have the power to advance in their absolute discretion, provided:
- 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
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)
Re Pauling’s Settlement Trust
General powers of maintenance
s.31 TA 1925
Trustees may now pay or apply the whole or any part of the trust as they fit (for trusts created after 2014)
s.8 Inheritance and Trustees’ Powers Act 2014
amended s.31 TA 1925
Trustees need not consider the age and requirements of the infant and other income available to him or her (for trusts created after 2014)
s.8 Inheritance and Trustees’ Powers Act 2014
amended s.31 TA 1925
Courts may intervene if trustees’ discretion is ‘improper’
Tempest
Courts may intervene if trustees merely do as settlor tells them, rather than exercising discretion
Turner v Turner
Court may intervene if trustees act capriciously
Re Manisty’s Settlement
Beneficiaries are entitled to see trust documents, subject to confidentiality.
Although, even if confidential, court has power to order them to be disclosed
Schmidt v Rosewood
Beneficiaries are usually not entitled to see trustees’ deliberations/reasons for decisions made
Re Londonderry’s Settlement
Beneficiaries are not entitled to see trustees’ deliberation/reasons for decisions made unless:
- beneficiary has a legitimate expectation that discretion would be exercised in his favour and it wasn’t
- It is for a pension fund
If trustees do give reasons for their decisions, court may find this decision void if they deem it irrational
Klug v Klug
Saunders v Vautier
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
s. 1(1) Variation of Trusts Act 1958
On application, courts can consent for those who cannot consent themselves, provided variation will benefit them
It is immaterial whether the variation (VTA) is contrary to settlor’s wishes
Goulding v James
A benefit for VTA could be:
A tax saving scheme or raising the contingency age to. more responsible age (Re T)
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)
Re Ball’s Settlement
Court cannot consent for an adult ascertained beneficiary who is capable of consenting himself
Knocker v Youle
