Trustees: Appointment, Retirement, Removal Flashcards
What legal rights and powers do trustees have?
Legal owner of property
Must exercise for the benefit of the beneficiary - have obligations to them
Failure to compete obligations can be enforced personally against the trustee
If you’re named as a trustee are you burdened with that obligation automatically?
No - you can reject the office of trustee
Do trustees get paid?
Lay trustees do not but can recover expenses
Professional trustees can be remunerated
How do joint trustees work?
They must act together and all be active in the maintenance of the trust
Joint and severally liable
What trustee duty is common to all trusts?
General duty to act honestly and in good faith for the benefit of all beneficiaries
How is a trustee normally established for express trusts?
By the settlor when the trust is first established
Who can be a trustee?
Adults of sound mind
Consider conflicts e.g. bankruptcy
Check trust instrument
How many trustees can / should there be for a trust of land?
Can’t be more than four people holding legal title
Should be a minimum of two trustees to give good receipt
Why is it sensible to keep trustee numbers low?
They must unanimously
What happens when settlors transfer on trust to an intended trustee who declines the role?
They will hold the property on a bare trust for the intended beneficiaries pending the appointment of new trustees
If a trustee declines / disclaims - who appoints their replacement?
Trust instrument may say expressly
If not - disclaiming trustee has the power under the Trustee Act to appoint their own replacement
What if the disclaiming trustee does not want to appoint their own replacement?
Beneficiaries with Saunders v Vautier rights have a power to appoint trustees
As a last resort - the court has a statutory power to appoint
What happens if trustees are unwilling or unable to act in a testamentary trust?
The personal representatives will temporarily hold the property on trust until new trustees are appointed
Who can appoint replacement trustees in a testamentary trust?
Express
If named executors want to renounce position - they can appoint new trustees in their place
If the trustee is dead / unable to act - personal representatives temporarily become trustees - they then can appoint permanent trustees
If a 3rd party is a trustee but that person wishes to disclaim the trusteeship - disclaiming trustee can appoint their own replacement
If they don’t want to do this - personal representatives can appoint
What can trustees do if there are testamentary gifts to minors?
As minors can’t give good receipt until they turn 18 -
personal representatives can appoint trustees (usually minor’s parent / guardian) and give legacy to them, instead of retaining it.
Must be at least two trustees here
How can new trustees be appointed of a subsisting trust?
By anyone with an express power to appoint trustees by the trust instrument
By current or outgoing trustees using statutory powers
By beneficiaries with S v V rights
By Charity Commission
Last resort - by the court
When can the power to replace a trustee be exercised, and by who?
Power lies with:
- person named by the will or trust
- If no-one is named - continuing trustees or trustee - or the PR of the last surviving trustee
When can it be exercised?
- Death of a trustee
- Trustee abroad for over 1 year
- Appointed trustee is a minor or lacks capacity
-Trustee wants to retire / refuses / is unfit to act
Must be done in writing
Who can appoint an additional trustee?
Person named for this purpose
If no-one - the current trustees
Must be in writing
What is possible if there is no express power to appoint trustees and all beneficiaries have S v V rights?
They are able to change the trustees of the trust - must be exercised in writing
When the court has to appoint a trustee as a last resort, what will they consider?
Wishes of the settlor or testator
If there is a dispute between beneficiaries as to whether an individual would be appropriate
Will appointment promote administration of the trust?
If a company - court can order payment
Last option - public trustee - who gets paid
What options are there for the power to remove trustees?
Could be express in TI
General statutory power to appoint also extends to removal if it is needed
Court can remove - e.g. trustee is bankrupt / lacks capacity / company in liquidation / cases where it is concluded trustee can’t remain in office e.g. dishonesty
Charity Commission can remove
What must a trustee do if it would like to voluntarily retire?
Sign a deed declaring intention to retire
After trustee retires - at least two trustees must remain
Written consent by deed of co-trustees
Any action needed to vest the trust property in the remaining trustees is carried out.
When can a trustee be made to retire at the direction of the beneficiaries?
All beneficiaries have S v V rights - in writing, unanimously agreed.
Power can only be exercised if after the retirement, at least two trustees remain.
