Trustee Powers and Duties

Question 1

What are the trustee’s administrative powers?

Answer 1

1. Invest
2. Buy, Sell and Charge trust property
3. Delegation

Question 2

What are the trustees’ distributive powers?

Answer 2

1. Appointment
2. Power of advancement
3. Power of maintenance

Question 3

Which 4 duties are attached to the power to invest?

Answer 3

1. Consider and review standard investment criteria regularly
2. Monitor investments
3. Take advice
4. Duty of care

Question 4

What is the duty to review the standard investment criteria regularly?

Answer 4

• Suitability: size of fund, period of trust and rights of beneficiaries, must act in beneficiaries’ best financial interests and may act in their moral interests where making a choice between economically equivalent investments, for charitable trusts or where beneficiaires with capacity agree.
• Diversity

Question 5

What is the duty to monitor investments?

Answer 5

• if trust property is only a small number of shares, this might require just reviewing public and shareholder info
• If trust property is controlling stake, must vote at GMs, board meetings etc.

Question 6

What is the duty to take advice on investments?

Answer 6

Trustees must obtain proper advice before investing and when reviewing their investments unless they reasonably conclude that it is unnecessary in all the circumstances to do so.

Question 7

What is the duty of care in the context of investments?

Answer 7

It might be excluded by the trust deed.

The trustees must exercise such care and skill as is reasonable in the circumstances having regard in particular to:
* any special knowledge / experience he has or holds himself out as having (subjective)
* Any special knowledge or experience reasonable to expect of a person acting in the course of that kind of business or profession.

Question 8

What is the power to buy and sell land?

Answer 8

May be excluded by the trust deed but allows the trustees to buy or sell land in the UK.

Question 9

Which duties apply to the power to buy and sell land?

Answer 9

• If it is an invesment, the investment duties.
• The duty of care.

Question 10

What is the power of delegation?

Answer 10

Trustees can delegate powers; however, they cannot delegate distributive powers or powers to appoint a new trustee / nominee / custodian.

If delegating the power to invest or buy and sell land, must have agreement in writing and give a policy statement giving guidance on the exercise of functions which must be updated.

Question 11

Which duties attach to the power of delegation?

Answer 11

1. Duty of care
2. Review of agents

Question 11

What is the duty of care in relation to delegation?

Answer 11

Trustees owe beneficiaries a duty of care when selecting and reviewing agents. The trustee will not be liable to the beneficiaries for the agent’s breach (though the agent will) unless the trustee failed to comply with the duty of care.

Question 12

What is the duty to review agents in the context of the power of delegation?

Answer 12

Trustee must review delegation agreement and its implementation and exercise the power to intervene if appropriate. They should also consider whether to revise the written policy statement and do so if necessary.