Trustees: Appointment, Removal and Retirement Flashcards
Who can be a trustee?
Most adults with mental capacity can be appointed to act as a trustee and a company can also act as a trustee so long as it is authorized to do so by its constitutional documents.
What is the minimum and maximum number of trustees?
Trusts over land should have at least two human trustees or a sole trust corporation.
Trusts of personalty can have a sole trustee, although as a practical matter it is generally better to appoint more than one.
Trusts over land cannot have more than four trustees. Trusts of personalty can have more than four trustees.
How can a trustee retire?
The trust instrument may contain an express power for trustees to retire.
Section 39 of the TA 1925
Section 36(1) of the TA 1925
How may a trustee retire under s.39 TA 1925?
Allows a trustee to retire without being replaced under the condition that there will be two trustees or a trust corporation left, the trustee retires by deed and the other trustees consent by deed.
How may a trustee retire under s.36(1) TA 1925?
The retiring trustee must be replaced by the appointment of a new trustee chosen by either the continuing trustees or the person nominated in the trust instrument. The appointment must be in writing and a deed automatically vests the trust property in the continuing and new trustees.
Is a trustee who has retired liable for breaches of trust?
A retiring trustee remains liable for their own breaches but will not be liable for future breaches unless they retire to facilitate the breaches.
How can a trustee be removed?
The trust instrument may contain an express power to remove and/or replace trustees.
Section 36(1) TA 1925
Section 41 TA 1925
Section 19 TLATA 1996
How can a trustee be removed under s.36(1) TA 1925?
The grounds for replacing a trustee include the trustee being dead, remaining outside the UK for more than 12 months, desiring to be discharged, refusing to act, being unfit to act, being incapable of acting and being a minor.
The appointment must be in writing and the person who effects the replacement must be the person nominated in the trust instrument, the continuing trustee, and if all trustees have died, the PRs of the last surviving trustee.
How can a trustee be removed under s.41 TA 1925?
The court will replace a trustee if it is expedient to do so and it is otherwise inexpedient, difficult, or impractical to appoint without the court’s assistance.
The court makes the appointment following an application by the trustees or the beneficiaries.
The court will only replace a trustee if it
is not in the best interests of the trust for them to continue. Mere dislike of a trustee is generally insufficient.
How can a trustee be removed under s.19 TLATA 1925?
Allows beneficiaries to serve a written direction on a trustee or trustees to retire and appoint the person (if any) specified in the direction.
Applies only if the beneficiaries are of full age and capacity and taken together are absolutely entitled to the trust property and does not apply if the trust instrument excludes it.
Following a valid written direction, the trustee must retire by deed if reasonable arrangements have been made to protect their rights, after their retirement there will be two trustees or a trust corporation left, and another person is appointed to replace them or the continuing trustees’ consent by deed to their retirement.
How can additional trustees be appointed?
The trust instrument may contain an express power to appoint new trustees.
s.36(6) TA 1925
s.41 TA 1925
s.19 TLATA 1996
How can additional trustees be appointed under s.36(6) TA 1925.
The appointment must be in writing and either the person nominated in the trust instrument or the continuing trustees can make the appointment.
There can be no more than four trustees once the additional appointments are made.
How can additional trustees be appointed under s.41 TA 1925.
The court will appoint a new trustee if it is expedient to do so and it is otherwise inexpedient, difficult or impractical to appoint without the court’s assistance. The court makes the appointment following an application by the trustees or the beneficiaries.
How can additional trustees be appointed under s.19 TLATA 1996.
Allows beneficiaries to serve a written direction on the current trustees requiring the appointment of an additional trustee.
Applies only if the beneficiaries are of full age and capacity and taken together are absolutely entitled to the trust property and does not apply if the trust instrument excludes it.
What is an attorney?
If a trustee is concerned that they might not be able to perform their functions in running the trust for a period of time, they should consider delegating those functions to a ‘deputy’ called an attorney.
