Running a Trust

Question 1

Appropriate Standard of Care - Such care that is prudent of a man of business

Answer 1

SPEIGHT v GAUNT

LEAROYD v WHITELY (business investment)

Question 2

An investment is something expected to produce income and/or capital growth

Answer 2

HARRIES v CHURCH OF ENGLAND

Question 3

An unsecured loan is not an investment

Answer 3

KHOO TEK KEONG

Question 4

Beneficiaries can only recover compensation for loss if the gain made by the trust is less than the gain a reasonable man would have made

Answer 4

NESTLE v NATIONAL WESTMINSTER BANK

Question 5

A trustee is not liable for an investment decision unless it is one which no reasonable trustee (similar knowledge and skill) would make

Answer 5

WIGHT v OLSWANG

Question 6

Best Interest means Best Financial Interest

Answer 6

COWAN v SCARGILL

Question 7

Trustees cannot delegate unless they have authority to do so

Answer 7

PILKINGTON

Question 8

Performance is at the discretion of the trustees – Cannot be compelled by the Beneficiaries to exercise power

Answer 8

RE BROCKBANK

Question 9

Once Beneficiaries have received an advancement of one-half of their share, the trustees cannot give them further advancement even if the trust fund increases in value

Answer 9

RE MARQUESS OF ABERGAVENNY’S ESTATE

Question 10

Advancement = Any use of money which will improve the Beneficiary’s material situation

Answer 10

PILKINGTON

Question 11

If there is a reason to suppose that the beneficiaries are unlikely to use the money for the purpose for which it was advanced, the trustees should apply the money directly to the purpose

Answer 11

RE PAULING’S SETTLEMENT TRUST

Question 12

Discretion of Power - Court may intervene if ‘improper’

Answer 12

TEMPEST

Question 13

Discretion of Power - Court may intervene if trustees merely do as a settlor tells them, rather than exercising their own discretion

Answer 13

TURNER v TURNER

Question 14

Discretion of Power - Court may intervene if trustees act capriciously

Answer 14

RE MANISTY’S SETTLEMENT

Question 15

Beneficiaries entitled to see trust documents, subject ot confidentiality

Answer 15

SCHMIDT

Question 16

Reasons for Decision - Beneficiaries not entitled to see these

Answer 16

RE LONDONDERRY’S SETTLEMENT

Question 17

Reasons for Decision - If trustees do state the reasons, Court may find the decision void if they deem them to be irrational

Answer 17

KLUG v KLUG

Question 18

Reason for Decision - Where the Beneficiary had a legitimate expectation that discretion would be exercised in his favour and wasn’t (e.g.: income suddenly stopped)

Answer 18

SCOTT v NATIONAL TRUST

Question 19

Variation of Beneficial Interest - SAUNDERS v VAUTIER

Answer 19

Beneficiaries can end trust is;
18+ and of sound mind
All beneficiaries agree
Are all in existence and ascertained, and absolutely entitled

Question 20

Variation of Beneficial Interest - Immaterial whether variation is contrary to settlor’s wishes

Answer 20

GOULDING

Question 21

Restrictions to Variation of Beneficial Interest - Court cannot consent for an adult ascertained beneficiary who is capable of consenting himself

Answer 21

KNOCKER

Question 22

Trustees owe a duty to watch over and if necessary to correct the conduct of their co-trustees

Answer 22

STYLES v GUY