trustee powers and duties

Question 1

what is the nature of trusteeship in relation to the trust property?

Answer 1

a duty of undivided loyalty and personal liability for breaches of trust

Question 2

what are some examples of personal liability for breaches of trust?

Answer 2

• distributing the property to the wrong beneficiary - honesty is not a defence
• obtaining a personal benefit - even though the trust could not have obtained it

Question 3

what is a fiduciary?

Answer 3

hard to define but normally dependent on a relationship with another and the exercise of power over that person’s property

Question 4

what are some examples of a fiduciary?

Answer 4

• trustee/ beneficiary
• company director/ company

Question 5

what are the fiduciary duties?

Answer 5

• acting in good faith
• no secret profit
• no conflict of personal interest with duty
• no acting for personal benefit

Question 6

what are the remedies for breach of fiduciary duties?

Answer 6

• account for profits - personal remedy - Lister v Stubbs (CA) (2011)
• constructive trust - proprietary remedy - FHR European Ventures

Question 7

what are the trustees’ duties?

Answer 7

• duty of care
• duty of compliance
• delegation of authority
• checks and balances
• professional decision making
• accountability
• transparency
• conflicts of interest

Question 8

what is the function of the trust instrumentg?

Answer 8

expansion and modification of duties
common law and statute provide a menu

Question 9

what three categories can the trustee’s duties be divided into?

Answer 9

• general
• fiduciary
• the distributive or dispositive obligations of the trustee

Question 10

what are the dispositive powers? - decision making powers

Answer 10

• who gets the trust property and when
• courts will interfere rarely

Question 11

what are the administrative powers ?

Answer 11

management of the trust property
especially investment

Question 12

for dispositive powers what happens if they get it wrong?

Answer 12

the courts can wind back the clock

Question 13

what are the two tests for trustees’ duty of care ?

Answer 13

common law
statutory

Question 14

what does the Trustee Act 2000 say - statutory test

Answer 14

s1(1) - such skill and care as is reasonable in the circumstances which include:
- skill and knowledge actually possessed or represented
- objective standard higher for professional trustees

this duty applies to all of the management functions of trustees
investment, appointing and supervising agents or custodians, insurance of trust property