Trustee Powers and Duties Flashcards
Which of the following is a fiduciary duty of a trustee?
A. To obtain written consent from all beneficiaries before making an investment
B. To distribute trust assets before the vesting date if it benefits the beneficiary
C. To avoid placing themselves in a position of conflict of interest
D. To hold annual meetings with all beneficiaries
C. To avoid placing themselves in a position of conflict of interest
Explanation: Fiduciary duties include avoiding conflicts and not profiting from the role. Annual meetings and consent are not fiduciary requirements.
Sam is a trustee and decides to invest in a high-risk start-up company without taking advice, resulting in a significant loss to the trust. Which duty has he most likely breached?
A. Duty of care under Trustee Act 2000
B. Fiduciary duty not to profit
C. Duty to delegate functions under Trustee Act 1925
D. Duty to advance trust capital early
A. Duty of care under Trustee Act 2000
Explanation: The duty of care under the Trustee Act 2000 requires trustees to exercise reasonable care and skill, including when investing. Sam failed to take advice, which is a breach of this duty.
The trust instrument is silent about investment powers. The trustee wants to invest in land and equities. What should guide their decision?
A. Only the express direction of the settlor
B. The statutory powers under the Trustee Act 2000
C. The Trustee Act 1925 does not apply to investments
D. They must first get court approval
B. The statutory powers under the Trustee Act 2000
Explanation: In the absence of express provisions in the trust instrument, statutory powers under the TA 2000 apply, allowing broad investment powers, including land and equities, subject to standard investment criteria and advice requirements.
Which of the following is not a source of trustee powers and duties?
A. Trustee Act 1925
B. Wills Act 1837
C. Trustee Act 2000
D. The trust instrument
B. Wills Act 1837
Explanation: While the Wills Act 1837 is relevant to the creation of wills and trust interests, it is not a source of trustees’ powers and duties. The relevant sources are the trust instrument and statute (primarily the Trustee Acts).
A trustee distributes a trust asset early without confirming the beneficiary’s interest had vested. The asset later increases in value significantly. Which principle has likely been breached?
A. Duty to avoid delegation
B. Power of appointment
C. Duty to preserve trust property
D. Duty to act within scope of powers
D. Duty to act within scope of powers
Explanation: Distributing trust assets before the vesting condition is met is acting outside the trustee’s powers. Trustees must not exercise powers unless authorised by the trust instrument or statute.
