Trustees

Question 1

What is power of advancement

Answer 1

trustees power to use capital for the ‘advancement or benefit’ of a beneficiary before the beneficiary becomes

absolutely entitled to the property

Question 2

When can the statutory power of advancement be used

Answer 2

by both adult and minor beneficiaries and applies to both vested and contingent interests.

Question 3

What is different about power of advancement compared to Saunders v vautier rights

Answer 3

Unlike Saunders v Vautier rights, the trustees have no obligation to distribute capital if a request is made to use their power of advancement.

Question 4

what is advancement defined as

Answer 4

any use of the money which will improve the material situation of the beneficiary

Question 5

Can advancement be used to include the improvement of the beneficiary’s moral well-being by giving the money for charitable Purposes

Answer 5

Yes

Question 6

To whom can capital be paid to if beneficiary is a minor

Answer 6

It should be paid either to the child’s parent or legal guardian or directly to the provider of the goods or services that are being acquired on behalf of the

beneficiary

Question 7

The power can only be exercised subject to what

Answer 7

written consent of beneficiaries with a prior interest

Question 8

What does bringing the payment into account mean?

Answer 8

the amount that the beneficiary will receive when their

interest vests will be reduced proportionately to reflect the proportion of the capital that they received early.

Question 9

What must be considered when assessing the suitability of investments

Answer 9

• The size of the trust fund

• The period of time for which the trust is intended to subsist

• The respective rights of different beneficiaries

Question 10

What is the PRs duty of diversification

Answer 10

Trustees should invest across a range of different types of assets, so that the trust fund is not overly exposed to the risks of losses in a particular sector.

Question 11

Can PRs take moral and ethical considerations into account when investing

Answer 11

Only if if they have a straightforward choice between two investments of economical equivalence

Question 12

What must trustees do when exercising their powers of investment

Answer 12

trustees are required to obtain and consider ‘proper advice’

Question 13

Can trustees acquire property outside of the UK

Answer 13

No

Question 14

Is delay in distributing a breach trust

Answer 14

Yes

Question 15

How can trustees be removed

Answer 15

The Court or Charity Commission where the trust is charitable

Question 16

How can a trustee voluntarily retire without being replaced

Answer 16

• The trustee signs a deed declaring an intention to retire.

• After the trustee retires at least two trustees (or a trust

corporation) remain.

• Written consent by deed of the co- trustees is obtained.

• Any action required to vest the trust property in the remaining trustees is carried out.

Question 17

Who has the power to compel a trustee to retire

Answer 17

beneficiaries with Saunders v Vautier rights have the power to compel a trustee to retire from the trust. The direction must be made in writing and requires the agreement of all beneficiaries. the power can only be exercised if at least two trustees or one trust corporation remains