Trustees Duties Flashcards
What is the difference between trustees powers and duties?
Beneficiaries can COPEL trustee to perform duties.
Beneficiaries have very little control over the exercise of powers.
What is the trustee’s duty of care?
Trustee must stake all precautions which an ordinary prudent man of business would take in managing similar affairs of their own.
Objective.
When is the trustees duty of care standard higher?
If they are a professional trustee, the standard is expected to be higher if they are being paid.
What are the duties when starting out as a trustee?
Ensure they have been properly appointed
Ascertain what trust property consists of and take all reasonable and proper measures to obtain control over it
Review the trust document and associated paperwork, to familiarise themselves with the trust and how it works
Enquire into past business of teh trust, to ensure that there have been no past breaches of trust
Where there are chattels, ensure that an inventory is drawn.
What is the trustees duty to act impartially between beneficiaries?
Trustee may be faced between a chose between 2 beneficiaries who conflict.
Trustee must act impartially in the interest. Not benefit one beneficiary at expense of other.
What is the trustee duty to act personally and unanimously?
Best to have 2-4 Trsutees, to ensure best practice.
Trustee is under duty to take all reasonable and proper measures to take control of trust properly, and ensure the property is vested in ALL THE NAMES of the trustee.
Trustees must take decisions UNANIMOUSLY, for a safeguard.
Must act personally- active in the running for the trust. Not allowed to delegate decision making to others, and cannot sit back adn allow others to take decisions.
What are the 6 requirements that relate to the duty to exercise discretion property?
Beneficiaries cannot compel trustees to exercise discretionary powers. But Trsutees must exercise that power:
In good faith,
Rationally,
With regard to material matters
With regard to all relevant facts
With regard to any legitimate expectation
What information must trustees disclose to beneficiaries?
Trust documents/will that created the trust
Trust accounts
A schedule of trust investments or other documents that show how the trust is invested.
Are beneficiaries allowed to demand to see trust information?
Not allowed to demand documetns that record trustees deliberations on a discretion or power.
Trustees are not obliged to give reasons for decisions.
Trust diaries and minutes are unlikely to be handed over.
What must trustees taken into account when investing trust?
Duly and PROMTLY invest all trust capital and income not being distributed to or applied for beneficiaries, and trustees may become liable for any losses which are left in invested for an unreasonable period of time.
How should trustees invest the trust funds?
If life tenant, will want a stream of income. Contingent beneficiaries will want capital to increase.
Therefore must take into account all beneficiaries.
What are the 5 objectives when tailoring an investment strategy of a trust?
What sort of interests do beneficiaries have?
What are the circumstances of the individual beneficiaries?
How long will trust last for?
Are they investing for shot-term r long-term?
What is the size of trust fund?
What is the tax position of the trust and beneficiaries?
What are the common types of investments?
Share (income and capital)
Bonds (income)
Property (income and capital)
Cash-in-bank (income)
What are authorised investments under TA 2000?
Trustee can make any kind of investment that they could make if they were absolutely entitled to the assets of the trust, save for land investments.
When it comes to land, what may a trustee do with investment?
Can acquire freehold or leasehold land in the UK, either
As an investment,
For occupation by beneficiary, or
For any other reason.
