Trustee duties

Question 1

What are a trustee’s duties in relation to making investments? (generally)

Answer 1

• duty of care
• to treat their beneficiaries impartially
• to take professional advice when needed
• to set aside their own personal interests and views
• to determine the suitability of the fund for diversification
• to review the fund periodically

Question 2

Outline the trustee general power to invest

Answer 2

Trustee Act 2000 s3(1)

A trustee may make any kind of investment that he could make if he were absolutely entitled to the assets of the trust.

Question 3

Outline the trustee duty of care when investing

Answer 3

Case law

• Speight v Gaunt: prudent businessman
• Learoyd v Whiteley: prudent business man making moral provisions

Statutory

• Trustee Act 2000 s1: care and skill reasonable in the circumstances
• -> 1(a): special knowledge they may have
• -> 1(b): special knowledge and skill someone in their profession is reasonbly expected to have

Question 4

Outline the trustee duty to act impartially when investing

Answer 4

Impartiality in their treatment of beneficiaries

Nestle v National Westminster Bank (1994)

Question 5

Outline the trustee duty to take professional advice when investing

Answer 5

Trustee Act 2000 s5

Question 6

Outline the trustee duty to set aside their own personal interests and views when investing

Answer 6

Cowan v Scargill

However, Harries v Church Commissioners: ethical investments can be made so long as it wouldn’t be detrimental to financial performance

Question 7

Outline the trustee duty to determine the suitability of the fund for diversification when investing

Answer 7

Trustee Act 2000 s4(3) - the standard investment criteria

Question 8

Outline the trustee duty to review the fund periodically

Answer 8

Trustee Act 2000 s4(2)

Question 9

Outline delegation in the context of trustee power of investment

Answer 9

Trustee is able to delegate the task of investment to a skilled expert