Running a Trust Flashcards
s.36 TA 1925
The person nominated in the trust instrument for appointing trustees, or if not, the remaining trustee(s)/the PR of the last surviving trustee can, by writing:
- Appoint a new trustee in substitution; or
- Appoint additional trustees
Reasons why may appoint a new trustee in substitution
If a trustee is:
- dead
- out of the UK for a year
- desiring to be discharged
- refusing to act
- unfit to act
- incapable of acting
- an infant
Property automatically vests in the trustee
s.40 TA 1925
Court will only appoint trustees where it is inexpedient, difficult or impracticable for the appointment to be made without the court
s.41 TA 1925
A trustee can retire without replacement if
s.39 TA 1925
- there are at least two trustees remaining;
- he declares his discharge by deed; and
- the other trustees consent by deed
Beneficiaries can remove and appoint trustees by writing if:
s.19 TLATA
- no one nominated for the purpose of appointing new trustees; and
- beneficiaries are of full age, capacity and taken together are absolutely entitled to the trust property
‘Investment’ is something expected to produce income and/or capital growth
Harries
An unsecured loan is NOT an investment
Khoo Tek Keong
General duties of investment for a trustee
- Act impartially between the beneficiaries
- Not to place self in position of conflict between personal and trust interests/obligations
- Act in best interest of beneficiaries.
The best interest of beneficiaries is the best financial interests
Cowan v Scargill
Reasons trustee need not act in best interests of beneficiaries
If:
- ethical investment yielded as good a return;
- beneficiaries are adults and have strong relevant ethical views;
- it is not appropriate (ie charitable trustees)
- settler has so provided in the trust instrument
Trustees can make any investment that they would make if they were absolutely entitled
s.3(1) TA 2000
Statutory duty of care
s.1 TA 2000
Purchase of land in UK can be for investment or other purposes
s.8 TA 2000
For day-to-day runnings of trusts, trustees have common law standard duty of care:
How an ordinary prudent man of business would conduct his own affairs
Speigh v Gaunt
Trustee can sued if:
Gain made by trust fund is less than gain made by reasonable man would be (Nestle)
Trustees’ investment decision was one which no reasonable trustee would take (Olswang)
Trustee cannot delegate unless they have authority to do so
Pilkington v IRC
Trustee can delegate delegable functions to agents
s.11 TA 2000
Trustees cannot delegate:
- ‘Dispositive’ powers or discretions which involve the distribution of trust capital/income amongst beneficiaries;
- Power to appoint new trustees
A beneficiary cannot be appointed as an agent, even if also a trustee
s.12 TA 2000
Agents appointed under s.11 are subject to the usual conditions attached to such power
s.13 TA 2000
Trustees must review the performance of agents
s.22 TA 2000
Trustees can pay agents reasonable remuneration out of the trust funds
s.32 TA 2000
Liability of agents
Trustees may be able to sue in negligence or breach of contract and hold the damages on trust for the beneficiaries
