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Trusts > Trustee Powers and Duties > Flashcards

Trustee Powers and Duties Flashcards

1
Q

What are trustee powers?

A

What trustees may do

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2
Q

What are trustee duties?

A

What trustees must do

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3
Q

What do administrative powers/duties relate to?

A

Management of trust property

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4
Q

What do dispositive powers/duties relate to?

A

Distribution of trust property

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5
Q

What are the statutory administrative powers and duties?

A

General power of investment
Power to acquire land
Power of delegation

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6
Q

What power do trustees have under the general power of investment?

A

make any investment that they could if they were absolutely entitled to the assets

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7
Q

What are the considerations when exercising the general power of investment?

A

Standard investment criteria
Advice
Duty of care

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8
Q

What are the two key compenents of the standard investment criteria?

A

Suitability
Diversification

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9
Q

What is considered about the trust fund for the standard criteria?

A

size of trust fund
period of time intended to subsist
respective rights of beneficiaries

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10
Q

What were the considerations in cowan v scargill?

A
  • beneficiaries’ financial best interests
  • balance interests of all beneficiaries
  • personal view irrelevant
  • moral and ethical considerations rare
  • can’t ignore advice if disagree
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11
Q

When may a trustee ignore advice on investments?

A

Reasonably prudent trustee would do the same

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12
Q

When can trustees prefer an ethical investment?

A

straightforward choice between two investments of economical equivalence

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13
Q

When can trustees make an ethical investment taking into account the views of beneficiaries?

A

where the beneficiaries are all of sound mind and agree on the decision

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14
Q

When can trustees make non financial considerations?

A

charitable trustees where might conflict with charity aims/work

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15
Q

When must trustees obtain proper advice on investments?

A

Before exercising power and when reviewing

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16
Q

What are the requirements for someone giving proper advice under s5 TA 2000?

A
  • 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
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17
Q

What is the exception for giving proper advice?

A

reasonably conclude in all the circumstances unnecessary

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18
Q

What is the statutory duty of care for the general power of investment?

A

such care and skill as is reasonable in the circumstances

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19
Q

What are the further specialist requirements of the duty of care for the general power of investment?

A
  • special knowledge or experience trustee has/holds themselves out
  • professional trustees - special knowledge or experience reasonably expected
20
Q

Where can trustees acquire land?

A

In the uk

21
Q

What powers can be delegated?

A

powers of investment
powers to acquire land

22
Q

Who can trustees not delegate to?

A

Beneficiaries

23
Q

How must trustees delegate the power to invest?

A

by an agreement in writing

24
Q

What should the delegation of investment agreement include?

A

term ensuring compliance with written policy statement

25
Q

What should the policy statement include?

A

How to exercise function in best interests of beneficiaries

26
Q

What is the consequence of trustees not distributing capital/income as soon as they are able to?

A

Breach of trust

27
Q

What are the dispositive duties?

A

Duty to distribute capital
Duty to distribute or accumulate income

28
Q

What is the Duty to distribute or accumulate income to an adult beneficiary?

A

distribute income as it arises
includes beneficiaries with contingent interests which carry the intermediate income

29
Q

What is the Duty to distribute or accumulate income to a minor beneficiary?

A

Accumulate income before they turn 18.
Added to the capital and distributed with that capital.

30
Q

What is the dispositive duty for discretionary trusts?

A

Must exercise discretion within reasonable time

31
Q

What are the trustee dispositive powers?

A

Powers of advancement
Powers of maintenance

32
Q

What trust property does the power of advancement relate to?

A

Capital

33
Q

What trust property does the power of maintenance relate to?

A

Income

34
Q

When can the power of advancement be used?

A
  • adult and minor beneficiaries
  • vested and contingent interests
35
Q

How much advancement can be paid?

A

up to 100% of entitlement

36
Q

What does advancement mean regarding the power of advancement?

A

improve material situation of beneficiary

37
Q

Can a payment to charity count as advancement?

A

Yes if the beneficiary would have used their own resources

38
Q

Who should advancement be paid to where the beneficiary is a minor?

A

parent/legal guardian or
provider of the goods or services

39
Q

What is the duty following the power of advancement?

A

Ensure used for correct purpose
(stop giving money if not)

40
Q

Can the power of advancement be used where another beneficiary has a prior interest?

A

Yes if written consent obtained

41
Q

Is consent from a subsequent/equal beneficiary required for the power of advancement?

A

No

42
Q

When can a prior interest beneficiary not provide consent to the power of advancement?

A

Child or unsound mind

43
Q

How may trustees bring the payment into account for the power of advancement?

A
  • Proportionately or
  • monetary value
44
Q

When can the power of maintenance be used?

A
  • minor beneficiaries
  • vested or contingent interests in the capital
  • No other prior interest
45
Q

What is the power of maintenance for?

A

Maintenance, education and benefit

46
Q

How should the power of maintenance be exercised?

A
  • consciously consider/act in good faith
  • primary benefit of minor
  • not unquestionably paying
47
Q

what income can the power of maintenance be used in respect of?

A

Current and accumulated

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