Trustees: Types, Appointment And Removal Flashcards
What is a lay trustee?
- trustee who has no formal qualifications and is an ordinary person appointed by the settlor to administer the trust property
- may be of a high profession in some other field
- not entitled to remuneration for their services
- more likely to be relived from liability for breach- s28.5 TA 2000
- duty of care under s1 TA 2001 is lower than a professional trustee
What is a professional trustee?
- Dubai aluminium co v Salaam
- belonging to categories such as lawyers, estate agents, bank managers
- simply belonging to one of these professions does not make a person a professional trustee. The person must be acting within that course e.g charging a fee
Appointment of trustees
- no minimum required
- s34 Trustee act 1925 specifies a max of 4 for land
Can be appointed by the following: - settlor/testator
- appointing authority
- other trustees
- beneficiaries
- charity commission
- the court
Appointment by the settlor
- can choose anyone above 18 and even themself
- cannot choose once chosen the original trustees
Appointment by appointing authorities
- settlor may give express powers to a particular person to appoint new trustees
- the AA is authorised to appoint trustees to join, replace or substitute existing trustees
Appointment by other trustees
- empowered to appoint, replace a retiring or removed trustee
- s36 TA 1925
Appointment by beneficiaries
- Saunders v Vautier: beneficiaries can give direction to the trustees to appoint a new trustee provided all the beneficiaries are of full age and capacity and absolutely entitled to the property
- s19 TOLATA 1996
Appointment by the court
- court can also appoint a trustee upon an application by an interested party
- s41 trustee act 1925 and the judicial trustees act 1896
- this power only arises where there is no other person authorised and willing to do so- re gibbons trusts 1882
3 key considerations: wishes of settlor and beneficiaries and proper administration of the trust
Removal of trustees
- death
- out of the UK for 12 months or more
- is unfit/incapable or an infant
- retirement
- removal by the court
Retirement of trustees
Voluntary retirement
- can volunteer for any reason or no reason whatsoever
- to be effective, must do so by deed- s39 TA 1925
- Jasmine trustees ltd v wells and hind: where a trustee fails to retire by deed they are deemed to continue in office
- not liable for breaches committed after retirement however still liable for breaches that occurred before retirement
Retirement on direction of the beneficiaries
- s19 TOLATA
- provided all rules in Saunders v vautier are satisfied
Removal by the court
- court can remove and appoint a new trustee in their place on the grounds of incapacity to exercise the functions of a trustee or to have smooth management
Remuneration of trustees
Knight v earl of Plymouth: it is an act of great kindness and not entitled to any remuneration
- exceptions: reimbursement for expenses, where remuneration is provided in the trust instrument and professional trustees
Reimbursement for expenses
- entitled to reimbursement for expenses reasonably incurred either from the trust fund or beneficiaries themselves- s31 TA 2000
- didnt need to adopt the most cost-efficient way of administering the trust- foster v spencer
- if trustees are uncertain whether or not they are entitled to remuneration they can ask the courts
- stott v Milne= trustees can refuse to make payments to beneficiaries unless their expenses have been reimbursed
- hardoon v Belilos= if money in trust fund is not sufficient to reimburse the trustees they may claim from beneficiaries.
Remuneration in the trust instrument
- trustee will be entitled to remuneration for their services where the trust instrument explicitly states it
Remuneration for professional trustees
- s29 Trustee Act 2000- stat entitled to reasonable remuneration for their services
