Trustee Powers and Duties Flashcards
What are trustee powers?
What trustees may do
What are trustee duties?
What trustees must do
What do administrative powers/duties relate to?
Management of trust property
What do dispositive powers/duties relate to?
Distribution of trust property
What are the statutory administrative powers and duties?
General power of investment
Power to acquire land
Power of delegation
What power do trustees have under the general power of investment?
make any investment that they could if they were absolutely entitled to the assets
What are the considerations when exercising the general power of investment?
Standard investment criteria
Advice
Duty of care
What are the two key compenents of the standard investment criteria?
Suitability
Diversification
What is considered about the trust fund for the standard criteria?
size of trust fund
period of time intended to subsist
respective rights of beneficiaries
What were the considerations in cowan v scargill?
- beneficiaries’ financial best interests
- balance interests of all beneficiaries
- personal view irrelevant
- moral and ethical considerations rare
- can’t ignore advice if disagree
When may a trustee ignore advice on investments?
Reasonably prudent trustee would do the same
When can trustees prefer an ethical investment?
straightforward choice between two investments of economical equivalence
When can trustees make an ethical investment taking into account the views of beneficiaries?
where the beneficiaries are all of sound mind and agree on the decision
When can trustees make non financial considerations?
charitable trustees where might conflict with charity aims/work
When must trustees obtain proper advice on investments?
Before exercising power and when reviewing
What are the requirements for someone giving proper advice under s5 TA 2000?
- reasonably believed by the trustee to be qualified to give it
- by ability in and practical experience of financial and other matters relating to the proposed investment
What is the exception for giving proper advice?
reasonably conclude in all the circumstances unnecessary
What is the statutory duty of care for the general power of investment?
such care and skill as is reasonable in the circumstances
What are the further specialist requirements of the duty of care for the general power of investment?
- special knowledge or experience trustee has/holds themselves out
- professional trustees - special knowledge or experience reasonably expected
Where can trustees acquire land?
In the uk
What powers can be delegated?
powers of investment
powers to acquire land
Who can trustees not delegate to?
Beneficiaries
How must trustees delegate the power to invest?
by an agreement in writing
What should the delegation of investment agreement include?
term ensuring compliance with written policy statement
What should the policy statement include?
How to exercise function in best interests of beneficiaries
What is the consequence of trustees not distributing capital/income as soon as they are able to?
Breach of trust
What are the dispositive duties?
Duty to distribute capital
Duty to distribute or accumulate income
What is the Duty to distribute or accumulate income to an adult beneficiary?
distribute income as it arises
includes beneficiaries with contingent interests which carry the intermediate income
What is the Duty to distribute or accumulate income to a minor beneficiary?
Accumulate income before they turn 18.
Added to the capital and distributed with that capital.
What is the dispositive duty for discretionary trusts?
Must exercise discretion within reasonable time
What are the trustee dispositive powers?
Powers of advancement
Powers of maintenance
What trust property does the power of advancement relate to?
Capital
What trust property does the power of maintenance relate to?
Income
When can the power of advancement be used?
- adult and minor beneficiaries
- vested and contingent interests
How much advancement can be paid?
up to 100% of entitlement
What does advancement mean regarding the power of advancement?
improve material situation of beneficiary
Can a payment to charity count as advancement?
Yes if the beneficiary would have used their own resources
Who should advancement be paid to where the beneficiary is a minor?
parent/legal guardian or
provider of the goods or services
What is the duty following the power of advancement?
Ensure used for correct purpose
(stop giving money if not)
Can the power of advancement be used where another beneficiary has a prior interest?
Yes if written consent obtained
Is consent from a subsequent/equal beneficiary required for the power of advancement?
No
When can a prior interest beneficiary not provide consent to the power of advancement?
Child or unsound mind
How may trustees bring the payment into account for the power of advancement?
- Proportionately or
- monetary value
When can the power of maintenance be used?
- minor beneficiaries
- vested or contingent interests in the capital
- No other prior interest
What is the power of maintenance for?
Maintenance, education and benefit
How should the power of maintenance be exercised?
- consciously consider/act in good faith
- primary benefit of minor
- not unquestionably paying
what income can the power of maintenance be used in respect of?
Current and accumulated
