Trustee duties and powers Flashcards
Trustees should not make a ________ ______ from their position
personal profit
If a trustee is paid for activities undertaken on behalf of the trust, or makes a personal profit due to information gained from their trusteeship, they hold this profit on ____________ ______ for the beneficiaries
constructive trust
Anne appointed 2 trustees to hold her residuary estate on trust for her children. The trust fund includes a holding of 50% of the shares in a family company. One of the trustees holds 10% of the shares in the same company. The trustee is appointed to be a director of the company by a 75% majority vote and is paid £5,000 in director’s fees.
Can the trustee keep the fees? Why/why not?
No - he must hold the fees on trust for the beneficiaries as the trust fund holds 50% of the shares, so the trustee would not have been appointed director without the votes attached to the trust shares
Is a Trustee entitled to be paid for serving as a trustee?
No - unless the trust provides for this
What are 2 exceptions to the rule that trustees generally aren’t paid?
- Professional trustee
- Trust corporations
A professional trustee may charge their normal professional charges for their services in relation to the trust provided that which 3 conditions are met?
(1) They are not a sole trustee
(2) Their co-trustee(s) consent in writing to their charges
(3) No express provision in the trust instrument relating to the trustees’ charges
Trustee may not purchase any _______ owned by the trust - even if they pay ______ or ______ _______ value. Such a purchase is _________ at the instance of the Beneficiaries
property, full, open market, voidable
Can a trustee purchase a beneficiary’s interest? If so, what are the requirements
(clue: there’s 3)
Yes
- Fair price
- Full disclosure of material facts
- No abuse of position
In what two situations is a statutory duty of reasonable skill and care imposed on trustees?
- Investment decisions
- Appointing agents
Can a trustee delegate investment decisions? If so, to whom?
Yes - to an investment manager
If statutory duty doesn’t apply, Ts are under a duty to act with what standard?
Prudence of an ordinary man of business
If there is more than 1 T, they must act _______ and ____________
jointly, unanimously
Trustees must act _________ - they have no general power to ________ their functions except __________ ones
fairly, delegate, administrative
What is an exception to the T’s delegation rule and what’s the term for the implementation of this rule?
T can delegate all functions to another individual/trust corporation through a power of attorney
12 months
Trustees owe a duty to act _________ with respect to the beneficiaries unless the trust provides otherwise
impartially
Trustees have a duty to _______ trust funds to produce income
invest
What three things must trustees consider when making investment choices (particularly to ensure they’re not liable if the investments fall in value)?
- Suitability
- Diversification
- Proper advice
When can Trustees invest in/purchase land?
As an investment, for occupation by the beneficiaries or for any other reason
What is the statutory power of maintenance?
Where T can use trust income for a beneficiary child’s maintenance, education or benefit as they see fit
If a trustee cannot use the power of maintenance for a minor, what must they do with the income of a trust?
Accumulate the income until the beneficiary is no longer a minor
Income accumulated during a beneficiary’s minority is _________ __ ______ to produce further income
reinvested as capital
When does the power of maintenance end?
On B’s 18th birthday
What is the power of advancement?
Where T can pay or apply capital sums for B’s advancement or benefit in the T’s absolute discretion
Is there an age restriction for the power of advancement?
No - but advances to a minor must be applied directly for the purpose or paid to their parent/guardian for this purpose
What type of trusts do the statutory power of advancement apply to?
Fixed trusts
Whose consent must a trustee obtain before using the power to advance capital?
Any beneficiary with a prior interest in the income of the fund
Does consent need to be gained from a beneficiary with a concurrent interest with another before a trustee makes an advancement of capital?
No
Does the power of advancement apply to a beneficiary who only has an interest in the income?
No - the beneficiary must have an interest in the capital
Where trustees have been accumulating surplus income during a child’s minority, the accumulated income accrues to ______ once the child attains the age of 18.
When the beneficiary’s interest in capital vests, he becomes entitled to the ________ income as well as the ______
capital, accumulated, capital
When can trust beneficiaries bring a trust to an end and require Ts to transfer the funds to them in shares they agreed? (3 requirements)
- Bs are of full age and capacity
- Have absolute entitlement to whole equitable interest
- Unanimous agreement
Under the Trustee Act 2000, trustees are limited to purchasing land in which country?
United Kingdom
