Trustee duties: investment

Question 1

Power of investment

Answer 1

Trustees can purchase any form of investment for the trust that they could purchase for themselves. The main exemption is that trustees cannot purchase land overseas.

Question 2

Duties when exercising investment powers

Answer 2

Trustees must select investments with reference to the standard investment criteria (suitability and diversification), they must review investments from time-to-time, and they must select and review investments with the benefit of professional advice. They must do all this and choose appropriate investments with reasonable care and skill. Trustees must also act fairly between beneficiaries when choosing investments and should try to generate the best financial return for the trust.

Question 3

Delegation

Answer 3

Trustees can collectively delegate their investment decisions to an agent. They must comply with various duties when delegating these functions down to the agent, such as ensuring that they select a suitably qualified agent and produce a policy statement that correctly identifies the investment objectives of the trust. So long as trustee comply with these personal duties, they will not be liable for any losses caused by the decisions of the appointed agent.