Trustees Flashcards
Trustees power :
Trustees may exercise powers that are given to them by the trust instrument or statute.
Exercising a power is not compulsory, it is permissive and discretionary
In the absences of bad faith the courts will not interfere with the exercise of discretions by the donee of power
3 most important powers
Delegation
Maintenance
Advancement
The power to delegate : B4 Trustees Act 2000
Before the Trustee act 2000
controversy :
1. inability of trustees to delegate their fiduciary discretions to others
2. problem with interpretation under s23&30 of the trustees act 1925 which governed the ability of trustees to delegate their functions to others
The power to delegate : Delegation under trustee act 2000
The Trustee Act 2000 implements the recommendations of the Law commission contained in Trustees power and duties 1999.
a. s.11 provides the power of delegation
Trustees may delegate any function of except :
1. A function relating to the distribution of trust assets
2. A power to allocate fees or other payments to capital and income
3. A power to appoint trustees
4. A power conferred by the trust instrument or an enactment to delegate a trustee function or appoint a nominee of custodian
b. Trustees are under a duty to review the agents activities in respect of the trust property.
S.22 imposés à single duty with 3 elements :
1. review terms of appointment
2. consider whether to exercise intervention if the circumstances make it appropriate
3. intervene if the circumstances requires intervention
c. s.23 governs the liability of trustees for appoint and subsequent supervision. The trustee will not be liable if he complied with general duty which is imposed in s.1 of the act and also complied with duty in s.22
The power of maintenance:
Allows trustee to pay income from a trust fund to an infant beneficiary before that beneficiary’s interest takes effect.
The power is contained in s31 Trustee Act 1925 as now modified by the Inheritance and Trustee’s Powers Act 2014.
s31 Trustee Act 1925
S31 Is very complex and students are expected to understand the general principles as follows:
a. The infant beneficiary who seeks maintenance must have the right to income.
b. The income must be properly applied: see Wilson v Turner (1883) .
c. Accumulated income and attainine maiority: all income which is not given in maintenance must be accumulated
The power of advancement :
The power of advancement, unlike the power of maintenance, allows the trustees to advance capital to a beneticiary betore his or her interest vests. the power is contained in s.23 of the trustees act 1925 as amended by the inheritance and trustees power act 2014
The power of advancement: principles
a. The beneficiary asking for advancement must have the right to capital
b. The advancement must be for the benefit of the beneficiary
Pikington v IRC 1964
Molyneux v Fletcher 1898
c. The provision in s.23 must be met
1. Before the inheritance and trustee power act 2014 not more than 1/2 presumptive shares could be advanced - this restriction has now been removed and there is no limit to the amount that can be advanced
2. Advancement is brought into account on distribution
3. Consent on prior life interest is obtained
Changes made by the Inheritance and Trustees Powers Act 2014 :
A. Section 31 of the Trustee Act is amended to give trustees an unfettered discretion wher deciding whether and how much income to apply for maintenance of trusts created o arising after 1 October 2014
B. Section 32 is amended to remove the limit on advancements of half of the vested or presumptive entitled for trust created or arises after the act comes into force.
C. It is also amended to make clear that trustees have the power to advance assets not merely cash. These amendments apply to all trusts whenever established.
D. It is also amended to make clear that trustees have to power to advance assets mor merely cash. These amendements apply to trust whenever established
The fiduciary nature of Trusteeship :
The trustee stand in a fiduciary relationship to his beneficiary, due to this they are subject to a number of fiduciary duties.
These duties are to refrain from doing certain things
Reading v Attorney general 1951
Two grounds upon which a fiduciary relationship will be found
- property held for the benefit of another
- jobs to be performed for the benefit of another
