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Trusts > Trustee > Flashcards

Trustee Flashcards

1
Q

S31 power

A

Maintenance

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2
Q

S32 power

A

Advancement

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3
Q

Can power of maintenance be varied or excluded

A

Yes

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4
Q

Can T be obligated to exercise power of maintenance

A

No it is discretionary

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5
Q

When can power of maintenance be exercised

A

B has interest in income (vested or contingent)
No B with prior interest
B is minor

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6
Q

Who to give income to when exercising power of maintenance

A

Minor cannot give good receipt so give to someone over 18 eg parent of B

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7
Q

Does a life tenant get income

A

Yes

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8
Q

Do adult contingent Bs get income

A

Yes as it arises before trust vests

As long as B has interest in income and no one with a prior interest

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9
Q

If adult contingent B dies before trust vests what happens to trust property

A

Estate gets nothing

Cannot reclaim income properly paid before death

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10
Q

When can T exercise power of advancement

A

B has interest in capital (vested, contingent or remainder)
Payment is for Bs benefit
Not exceed Bs entitlement (or if created pre 1.10.14 not exceed half Bs entitlement)
Payment is taken into account when B becomes entitled to capital
Any B with prior interest is adult and consents

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11
Q

Can advancement of capital be exercised if it would benefit someone other than B

A

An incidental benefit to others is okay but it must be for Bs advancement or benefit too

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12
Q

Rules regarding retirement of Ts

A

S36(1) TA 1925- retiring T must be replaced by new T. Appointment in writing.
Deed vests property in new and continuing Ts (except shares)
Either person nominated in trust doc appoints new T or continuing Ts (plus outgoing T is willing)

S39- T can retire without being replaced where there will be 2 Ts left or trust corp. T retires by deed and remaining Ts consent by deed

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13
Q

Is a retiring T liable for future breaches

A

They remain liable for their own breaches but won’t be liable for future breaches unless they retired to facilitate those breaches

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14
Q

Removal and / or replacement of Ts

A

S36- grounds for replacing T: dead, incapacity, unfit, minor, out of U.K. for 12m, wants to leave, refuses to act
Writing
Deed to best property (except shares)
Person nominated by doc or if non then remaining Ts and leaving T if willing or PR of last T

S41- court replaces T if expensive to and otherwise difficult. B or T applies to court

S19 TOLATA - B serve written direction on T to retire and (poss) appoint replacement. Not if trust doc allocated person to appoint new Ts or excludes s19
Ba must be of age, capacity and absolutely entitled
Reasonable arrangements to protect Ts rights must be made
There must be 2Ts or trust corp left
T must be replaced or continuing Ts must consent by deed to non-replacement

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15
Q

Max and min number of Ts

A

Trusts of land need at least 2 and no more than 4 Ts
Other trusts can have more than 4 Ts
Or have a sole trust corp

Ts must be adults with capacity or trust corp

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16
Q

Appointment of additional Ts

A

S19 TOLATA - B serves written direction on T. Usual s19 requirements apply

S41- court will appoint following application by T or B if expedient and otherwise difficult

S36- the person nominated in trust doc makes appointment or if none then continuing T. In writing. Deed to vest property

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17
Q

If there are two or more Ts how do they hold legal title

A

Joint tenants

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18
Q

Does survivorship operate between Ts

A

Yes because they hold it as joint tenants

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19
Q

Can Ts delegate decisions regarding how to invest trust property

A

Yes can delegate collectively to an independent financial adviser

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20
Q

What if T knows they will be unable to perform their functions for a period of time

A

Can delegate their functions to an attorney
By deed
Max 12 months
Give written notice to Ts and anyone with power to appoint T within 7 days of delegation
T remains liable for acts of attorney

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21
Q

What docs can B demand to see

A

Trust doc/ will
Trust accounts
Details of investments

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22
Q

What docs can be withheld from B

A

Docs recording Ts deliberations on discretion or power
Mins of meeting
Trust diaries
Letters of wishes from S

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23
Q

What if B wants to see a doc that T won’t disclose

A

Apply to court
Presumption not to disclose docs including reasons
But will disclose if in interest of administration of trust
Will refuse if would cause fall out or disclose private info of Bs finances or health

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24
Q

Do Ts need to give reasons for their decisions

A

No but if they do give them the court can enquire into soundness

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25
Q

Can the court enquire into the soundness of Ts reasons for a decision

A

Only if T chooses to give reasons

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26
Q

Exception to general rule that T doesn’t have to give reasons for decisions

A

If B has legit expectation that discretion will be exercised in their favour the T may have to give reasons and advanced warning if they will exercise discretion differently

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27
Q

Ts duties

A 
Inventory of chattels held on trust 
Enquire into past business and remedy any breaches
Review trust doc and familiarise self with trust
Ensure they’re appointed properly 
Ascertain trust property 
Obtain control of trust property 
Consider powers from time to time 
Duty of care
Duty to act fairly between Bs
Duty to act personally and unanimously 
Duty to exercise discretion properly
28
Q

Do Ts have to exercise powers

A

No they are discretionary

But should consider from time to time whether to exercise them and if exercised ensure they do so properly

29
Q

Do Ts have to exercise duties

A

Yes and if they refuse B can enforce the duty by obtaining a court order

30
Q

What is Ts duty of care

A

T must take all those precautions which an ordinary prudent man of business would take in managing similar affairs of his own
Objective standard

31
Q

Are paid professional Ts held to a higher standard

A

Yes. Exercise skill and care reasonably expected of experts in that field

32
Q

What does the duty to act fairly between Bs mean

A

T must not benefit one B at expense of other
Doesn’t mean Bs must be given equal treatment and no need for T to consult both or either B
No need to give each side a fair hearing

33
Q

What is Ts duty to act unanimously and personally

A

CoTs must take decisions unanimously unless doc says otherwise
Ts must be personally active in running trust
Ts cannot let others take decisions for them, can get advice but take decisions themsevles
T must make good loss to B if T allows coT to do all work and doesn’t correct breach of coT

34
Q

What is Ts duty to exercise discretion properly

A

B cannot compel T to exercise discretionary powers but can intervene if T exercised power improperly

35
Q

Once T decides to exercise a power how much it be exercised

A 
In good faith
Rationally
For purpose it was created
With regard to relevant info and not irrelevant info 
And
With regard to Bs legit expectations
36
Q

Fuduciary duties of T

A 
No competing with trust
No payment 
No self dealing
No acting for own benefit 
Avoid conflicts of interest
37
Q

Consequences of T breaching fiduciary duty

A

Personal or proprietary claim
Account for profits
Make good any loss to trust

38
Q

How to prevent T from competing with trust

A

Can get injunction

39
Q

What can B do if T breaches rule against self dealing

A

Decide to keep transaction or set it aside in reasonable time
Not automatically void

40
Q

Is rule against self dealing breached even if T pays a fair price

A

Yes

41
Q

Is self dealing prohibited even if T has retired

A

Yes if retired with purpose of transacting with trust

42
Q

Does honesty of T impact claim for breach of fiduciary duty when there is a conflict of interest

A

No strict liability

43
Q

Can B claim profits made by T for breach of fiduciary duty even if there has been no loss to trust

A

Yes

44
Q

Can B bring proprietary claim for breach of fiduciary duty to recover property owned by T that represents the personal profit they received from breach even if property went up in value

A

Yes

45
Q

Can T ever receive payment without breaching their fiduciary duty

A

If trust doc allows it
Is Bs consent (18, full knowledge and it’s fair or Bs can later set it aside)
Court order in interests of B
Trust corp
Progressional T who is not sole T but others give consent
Reimbursement for expenses properly incurred when acting on behalf of trust
Statute

46
Q

Can T be paid for being a D if they are only a D because trust owns substantial share in company

A

D must give up salary of only a D due to being a T

47
Q

Is it a breach of fiduciary duty for T to exploit an opportunity / info they only had due to being a T

A

Breach of fiduciary duty
Even if trust couldn’t have taken advantage of opportunity
T would need authorisation of Bs to use opportunity

48
Q

Can T delegate investment functions

A

Yes

49
Q

Requirements that must be met when T delegates investment functions

A

Written agreement with agent
Written policy statement for guidance (use care and skill in drafting)
Review arrangement regularly
Use care and skill in selecting person

50
Q

Is T liable for acts of agent if they have delegated their investment functions

A 
Not if all the requirements to delegate are met
Written agreement
Written policy statement 
Review regularly 
Care and skill in selecting person
51
Q

What is an investment

A

Something expected to produce an income return, capital return or both

52
Q

What doesn’t count as an investment

A

Unsecured loans

T cannot make unsecured loans unless trust doc allows it

53
Q

Can T make unsecured loans

A

Not unless trust doc allows it

54
Q

What is the general power of investment

A

That T can make any investment they could make if they were absolutely entitled to trust

55
Q

What investment can / can’t T make

A

General power of investment
Must follow any instructions in trust doc
No unsecured loans unless trust doc permits

56
Q

Can T acquire land

A

Yes freehold or leasehold in U.K. either as an investment, occupation of B or any other reason

57
Q

What is the overarching objective duty of care that applies to investment functions

A

When exercising investment functions T must exercise such care and skill as is reasonable in the circumstances
Higher standard for professional Ts oi

58
Q

When must T consider standard investment criteria

A

When purchasing or reviewing investments

59
Q

What is the standard investment criteria

A

Investment must be suitable for trust (generally the type of investment and specifically that particular investment)
Diversification so far as is appropriate
Review from time to time

60
Q

Who should T get advice from when thinking of selling or purchasing or reviewing investments

A

From someone T reasonably believes is qualified

61
Q

Are there any circumstances in which T doesn’t need to get advice when reviewing, selling it purchasing investments

A

When T reasonably thinks it’s unnecessary or inappropriate

62
Q

How must T act when selecting an investment advisor

A

Reasonably

63
Q

Who makes decisions regarding investments

A

T even where t has recieved advice

64
Q

What factors must B have regard to when exercising investment functions

A

Act fairly between Bs
Secure best return for B (not necessarily highest as it might be too risky)
Secure best financial return

65
Q

Can T consider ethics when investment

A

Financial considerations take priority
Ts ethics are irrelevant
If S gives guidance in doc must follow this
If charitable T can refuse to invest in things at odds with charitable purpose and might alienate supporters

Trusts (10 decks)

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