Trustee powers and duties: Dispositive powers and duties

Question 1

What are dispositive duties?

Answer 1

Trustees are required to distribute the trust property in accordance with the terms of the trust.
(accumulate income, add to the trust capital, distribute income or capital)

Focusing mainly on fixed trusts.

Question 2

What are the three circumstances in which trustees distribute the trust property?

Answer 2

1. When they have an obligation to do so under the terms of the trust.
2. When directed to do so by beneficiaries with Saunders v Vautier rights.
3. In the exercise of a dispositive power such as a power of appointment, maintenance or advancement.

Question 3

What are the trustee duties to distribute capital?

Answer 3

Depends on the terms of the trust.

Simple case: the trustees holding a single asset for a sole beneficiary and will need to transfer legal title to that beneficiary at a particular time.

Complicated case: involve different beneficiaries who are entitled to different shares at different times.

Question 4

What are the trustees duties to distribute or accumulate income?

Answer 4

If the trust property is generating income, the trustees will have an obligation either
to:

1. Distribute the income as it arises - when the beneficiary is over 18 but not yet entitled to the full trust (i.e conditional on reaching 25)
2. Accumulate the income - minor.
   When it is time to distribute the capital - the remainder of the accumulated income will also be included.

Question 5

What are dispositive powers?

Answer 5

Trustees will often have dispositive powers in respect of both capital and income.
- powers of maintenance
- powers of advancement

In the absence of any express provisions in the trust
instrument, there are default powers in TA 1925.