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Equity > Running the trust - Trustees duties and powers > Flashcards

Running the trust - Trustees duties and powers Flashcards

1
Q

Can beneficiaries force trustees to carry out their duties?

A

Yes if necessary by court action

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2
Q

Statutory duties - Investments - S. 3 and S. 8 - What investments are authorised?

A

Trustees can make any investment that they could make if they were absolutely entitled to the assets of the trust. Can purchase land as an investment.

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3
Q

Statutory duties - Investments - S. 4 - Standard investment criteria

A
  • Suitability
  • Diversification
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4
Q

Statutory duties - Investments - S. 5 - Advice

A

Trustees must obtain and consider proper advice about the way they should exercise their power of investment having regard to the standard investment criteria unless the trustees reasonably conclude that in the circumstances it is unnecessary or inappropriate to do so. Trustees must obtain the advice from a person whom they reasonably believe is qualified to give such advice. Trustees are not obliged to follow the advice they receive but they must give that advice proper consideration.

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5
Q

Statutory duties - Investments - S. 1 - Standard of care

A

Such care and skill as is reasonable in the circumstances. In relation to investments trustees must exercise the same standard of care as would a reasonable businessman.

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6
Q

Statutory duties - Delegation - Definition

A

Trustee’s duty not to delegate unless authorised

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7
Q

Statutory duties - Delegation - Collective delegation by all the trustees

A

Trustees can delegate most functions that relate to the administration of the trust but not dispositive powers which involve the distribution of trust capital or income among beneficiaries.

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8
Q

Statutory duties - Delegation - Collective delegation by all the trustees - Paying the agent

A

Where delegation is permitted trustees can pay the agent reasonable remuneration out of trust funds

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9
Q

Statutory duties - Delegation - Collective delegation by all the trustees - Review

A

Trustees must regularly review the performance of agents and nominees

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10
Q

Statutory duties - Delegation - Individual delegation

A

If a trustee is absent for up to 12 months.

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11
Q

Powers of trustees - When to use them

A

When a beneficiary may not be entitled to the capital of the trust until some future time. This power allows them to apply trust money for the benefit of the beneficiaries.

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12
Q

Powers of trustees - Power of advancement - When to use it

A

Allows trustees to apply part of a beneficiary’s share of trust capital before that beneficiary is strictly entitled to receive it.

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13
Q

Powers of trustees - Power of advancement - What it allows trustees to pay

A
  • Capital
  • To beneficiaries with an interest in capital
  • If the payment is for the beneficiary’s advancement or benefit
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14
Q

Powers of trustees - Power of advancement - Advancement or benefit

A

Means - any use of the money which will improve the material situation of the beneficiary. E.g House, furniture, apprenticeship, education

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15
Q

Powers of trustees - Power of advancement - Restrictions

A
  • The maximum that can be advanced is one-half of the beneficiary’s entitlement.
  • The beneficiary must bring any advancement into account on becoming absolutely entitled
  • Anyone with prior interest must be an adult and consent in writing to the advancement. This includes a person with a prior life interest
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16
Q

Powers of trustees - Power of maintenance - When to use it

A

Allows them to apply the income of the trust fund for minor beneficiaries

17
Q

Powers of trustees - Powers of maintenance - What it allows them to pay

A

Trustees have a discretion to apply trust income for the infant’s maintenance, education or benefit

18
Q

Powers of trustees - Powers of maintenance - Restrictions

A

While the life tenant is alive, the life tenant has the right to all the trust income and none can be applied for the benefit of the beneficiary. IF THERE IS AN EXPRESS PROVISION DEALING WITH THE INCOME THEN WE CANNOT GIVE INCOME

19
Q

Controlling the trustees - Can the beneficiaries compel trustees to carry out an act in the administration of the trust?

A

The beneficiaries can compel the trustees to perform their duties if necessary by court action. Trustees are under no duty to exercise a power and the beneficiaries cannot force them to do so. The only duty owed by the trustees is to consider whether to exercise the power.

20
Q

Controlling the trustees - Will the court interfere with the exercise of a discretion or power?

A

The court will intervene in the exercise of a power or discretion if it is improper.

21
Q

Controlling the trustees - Providing beneficiaries with reasons

A

Trustees are not obliged to provide the beneficiaries with reasons explaining why they exercised a power or discretion in the way that they did

22
Q

Controlling the trustees - Showing trust documents

A

Beneficiaries are allowed to see trust documents

23
Q

Joint control of all trustees

A

Trustees are under a duty to keep trust property under the joint control of all trustees

24
Q

Taking decisions unanimously

A

Trustees must generally take decisions unanimously

25
Q

Retirement

A

The beneficiaries can direct a trustee to retire if they are of full age and capacity and are together absolutely entitled to the trust fund. They must all be alive and in agreement

26
Q

If the statutory powers of maintenance and advancement have not been excluded

A

The trustees are obliged to pay an adult contingent beneficiary trust income

27
Q

If there is no charging clause

A

The solicitor must rely on the trustee act. As a professional trustee the act authorises the professional trustee to receive remuneration provided the other trustees consent

28
Q

Replacement of a trustee

A

The appointment must be in writing executed by the continuing trustees and the inclusion of the retiring trustee is optional

29
Q

Replacing the trustee when they’ve been outside the Uk

A

Two trustees could remove their co-trustee on the grounds that he has been outside the UK for more than 12 months. However they can only remove the co trustee on this ground if they appoint a replacement trustee in place

30
Q

What are beneficiaries allowed to see

A

Trust documents = trust deed, accounts and a list of the trusts investments

31
Q

Vicarious liability

A

Trustees are not vicariously liable for the investment choices made by an agent.

32
Q

How much money under the power of advancement can trustees give?

A

They can advance monies up to the presumptive share of the beneficiary concerned

33
Q

Exercising any function relating to land and consulting beneficiaries

A

Trustees exercising any function relating to the land must consult any beneficiary who is of full age and beneficially entitled to an interest in possession in the land and so far as is consistent with the general interest of the trust, give effect to the wishes of any such beneficiary

34
Q

Can trustees remove a co-trustee? (Been out of the country for more than 12 months)

A

The two trustees could remove their co-trustee on the grounds that he has been outside the UK for more than 12 months. However, they can only remove the co-trustee on this ground if they appoint a replacement trustee in his place.

35
Q

What can the remaining trustee do if the other trustee loses mental capacity?

A

The continuing trustee can replace the trustee.

36
Q

Forcing the retirement of a trustee

A

Beneficiaries have the power to direct the retirement of a trustee but only if the following conditions are met:
- All the beneficiaries must agree
- Absolutely entitled
- Full age
HAS TO BE TO SERVE A REQUEST ON THE ABSENT TRUSTEE TO RETIRE NOT REMOVE THEM.

37
Q

How can trustees retire?

A

The outgoing trustee can retire without being replaced so long as there will be two trustees still in office and the trustee retires by deed with the consent of the other trustees.

38
Q

When can trustees claim an indemnity from other trustees?

A

If there has been a fraudulent breach. Anything else they must claim a contribution.

39
Q

Will the trustees be liable for their delegates?

A

yes

Equity (14 decks)

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