Trustee Duties: Running a Trust Flashcards
What is the overarching duty of care for trustees running a trust?
Trustees must run the trust in the same way as an ordinary prudent business person would run their own affairs
This is assessed objectively and professional trustees are held to a higher standard
What duties should a trustee consider when starting out?
Ensure you have been properly appointed
Ensure you have the trust property and ascertain what it consists of
Review the trust document to familiarise yourself with the trust and how it works
Review the affairs of the trust to ensure there weren’t any past breaches
What broad duties does the trustee have during the trust’s lifetime?
Act fairly and impartially between beneficiaries
- Cannot continually favour one beneficiary’s interests over the others
Only act on decisions that have unanimous consent
Trustees must act personally and take an active role and supervise the actions of your co-trustees; may be necessary to correct conduct of other trustees too to avoid breach
- Trustees must not be passive and go along with what another says or leave funds in one trustee’s control
What must a trustee consider when they have powers they can exercise at their discretion?
Exercise powers soundly, in good faith and rationally, with regard to relevant facts and legitimate expectations of beneficiaries - no need to give reasons
With a discretionary trust, trustees must consider whether to distribute trust funds from time-to-time
What are the rules around disclosure of documents and information?
- Trustees do not need to give reasons for the decisions they take or the powers they exercise
- Beneficiaries are entitled to see the trust document and some associated core documents (such as accounts and schedule of investments)
i) They cannot demand sight of documents that record the decisions that trustees have taken (such as minutes of meetings)
ii) If beneficiaries want to see such documents, they will need to apply to the court
What can always act as a limitation to these duties?
Express provision in the declaration of trust, as the settlor can vary duties or exclude/limit their liability for breaches
