Trusts 3 - Removal, appointment, maintenance and advancement Flashcards
Appointment, removal and retirement
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Who can be a trustee?
Most adults with mental capacity.
Company can act if authorised to do so by constitutional documents.
Express power
Appointment, removal and retirement may be in trust deed.
Min and max
Land should have at least two.
(overreaching)
Land cannot have more than four
Personalty - can have more than four.
Retirement
May be express
If not
S39 TA 1925 -
retirement without being replaced.
Conditions -
two trustees or trust corporation left
trustees retire by deed
other trustees consent by deed
S36(1) -
retiring trustee must be replaced by appointment of a new trustee.
Who appoints?
a) person nominated in trust instrument but if none
b) continuing trustees
Appointment must be in writing.
Deed automatically vests trust property in continuing and new trustee.
Remains liable for own breaches but not liable for future unless retired to facilitate breaches
Removal of trustees
Express power
If not
S36(1) Grounds
a) trustee is dead
b) remains outside UK for more than 12 months
c) desires to be discharged
d) refuses to act (disclaims)
e) unfit to act
f) incapable of acting
g) is a minor
Who effects replacement
a) person nominated in trust instrument
IF not
b) continuing trustee including a retiring trustee if they are willing to join in the appointment
c) if all have died PRs of last surviving trustee
Must be in writing.
S40 Automatically vests trust property in continuing and new trustee.
S41 Grounds?
court makes appointment following application by trustees of beneficiaries
court only replace if is not in best interests of trust for them to continue
S19 TLATA 1996 -
allows beneficiary to serve written direction on trustee or trustees to retire and appoint person specified in the direction
S19 - not to trust instrument or if trust instruments nominees someone
Only if applies of full age and capacity and together are absolutely entitled to trust property.
Must retire by deed if
a) reasonable arrangement made to protect rights
b) after retirement there will be two trustees or trust corporation left
c) another person is appointed to replace them or the continuing trustees consent by deed to retirement
Appointment of additional trustees
Trust instrument
If not
S36(6) TA 1925 -
trust instrument if none then continuing trustees. No more than four once additional appointments made
Must be in writing
Automatic vesting of trust by deed
Grounds (s41)-
Expedient to do so and is otherwise inexpedient, difficult or impractical to appoint without courts assistance. Court makes appointment
S19 - beneficiaries serve written direction on current trustees requiring appointment of additional (same grounds as above).
Death of a trustee
Hold legal property as joint tenants
If one dies then will devolve to surviving trustees.
If only one advised to appoint a replacement to ensure continuity.
Appointment of an attorney
If concerned about running should consider delegating to a ‘deputy’
By deed in form prescribed under s25 TA 1925.
Can run up to 12 months delegation.
Written notice to all other trustees and any other person with power to appoint within seven days of delegation.
Delegating trustee automatically liable for acts or defaults of attorney as if they were acts of delagating trustee.
Maintenance and advancement
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Advancement
Express in trust document.
Settlor can modify provisions of TA 1925.
Power to apply income for beneficiaries who are minors.
Income is a return paid on regular basis generated from capital
S31
Power to pay for maintenance, education and benefit under age of 18 years so long as -
a) no contrary provisions
b) can only exercise power in favour of minor beneficiaries who have some kind of interest in cinema, whether vested or contingent, but not when ‘prior interets’ (reminadermen).
Cannot use when someone else is a life tenant.
Should not pay directly (to guardian or education facility).
Discretionary power.
Duty to pay income
Adult contingent beneficiaries
Entitled to trust income as it arises, must pay income pending vesting of beneficial interests.
E.g. when vested now a duty
Before discretionary.
If dies before, no right to anything.
Power to pay capital
Underlying trust property itself
Discretionary power s(32)
Should pay to third party (ill-advised to pay under 18 if under 18).
Beneficiary has interest in capital -
vested interest in trust capital (possession or remainder) and
beneficiaries with a contingent interest in trust capital
Payment must be for beneficiaries advancement or benefit. Includes any use of money that will improve material situation.
Must not benefit someone els.e
Trusts after 1 October 2014 -
advance payment must not exceed beneficiaries entitlement
On or before 1 October 2012 - trustees can only advance up to half of entitlement
Payment taken into account when beneficiary becomes entitled to trust capital
If beneficiary with prior interest, an advancement can only take place if prior-interest holder is an adult and has given written consent to the advancement.
