Role of Trustees

Question 1

What is the minimum duty that all trustees must uphold?

A. To act honestly and in good faith for the benefit of beneficiaries
B. To act in accordance with settlor’s personal instructions
C. To follow court directions in all situations
D. To distribute the trust assets equally

Answer 1

A. To act honestly and in good faith for the benefit of beneficiaries
Explanation: This is the core obligation of trustees under trust law. A trust would fail without this basic duty.

Question 2

Lucy is a lay trustee and there is no mention of trustee fees in the will. She spends 100 hours on the estate work. Can she charge for her time?

A. Yes, all trustees can claim time spent
B. No, lay trustees cannot be paid unless expressly authorised
C. Yes, because work was necessary
D. Yes, but only if co-trustees agree

Answer 2

B. No, lay trustees cannot be paid unless expressly authorised
Explanation: Under trust law, only professional trustees have statutory rights to payment — lay trustees need clear will authority or court approval.

Question 3

Who holds the legal title to the trust property?

A. The settlor
B. The beneficiaries
C. The trustees
D. The court

Answer 3

C. The trustees
Explanation: Trustees hold legal title and control over the property but must use it solely for the benefit of the beneficiaries (equitable owners).

Question 4

A trustee sells trust assets without consulting co-trustees. There is financial loss. What is the legal position?

A. Only that trustee is liable
B. The beneficiary is liable if they agreed
C. The loss is not actionable if done in good faith
D. All trustees are liable unless one shows they acted reasonably

Answer 4

D. All trustees are liable unless one shows they acted reasonably
Explanation: Trustees must act jointly. Silent trustees must supervise. Liability can be joint unless someone proves they acted prudently.

Question 5

Tim, a trustee, sells a trust property to his sister at market value without telling the other trustees. What is this an example of?

A. Breach of duty of care
B. Lawful delegation
C. Breach of no conflict rule
D. Prudent investment

Answer 5

C. Breach of no conflict rule
Explanation: Even if sold at fair value, this is self-dealing — a trustee must not act where there is a personal interest unless authorised.

Question 6

Which duty applies specifically to professional trustees under the Trustee Act 2000?

A. Duty to consult beneficiaries
B. Statutory duty of care (s1)
C. Duty to maximise profit
D. Duty to take out indemnity insurance

Answer 6

B. Statutory duty of care (s1)
Explanation: Professionals are held to a higher standard under s1 TA 2000, especially when investing or delegating responsibilities.

Question 7

A will names Liam and Jess as trustees. Liam disclaims the role before acting. What is the result?

A. Liam is treated as never having been appointed
B. Liam is still a trustee until court removes him
C. Liam must find a replacement
D. Jess cannot act alone

Answer 7

A. Liam is treated as never having been appointed
Explanation: A disclaimer before acting means the trustee never takes up the role and incurs no liability.

Question 8

A trustee made an error but acted honestly and reasonably. What protection may apply?

A. Automatic exoneration
B. No liability because there’s no loss
C. Protection under s61 Trustee Act 1925
D. Beneficiaries must waive claims

Answer 8

C. Protection under s61 Trustee Act 1925
Explanation: Courts may relieve trustees of personal liability under s61 if they acted honestly, reasonably, and it is fair to excuse them.