Flashcards
Trustees Duties and Powers
Cards in this deck (48)
- 1Acceptance of part of the trust is acceptance of the whole?Re Lord and Fullertons Contract
- 2How can a potential trustee disclaim (refuse) to become a trustee?Disclaim by deed
- 3How can trustees be removed?1. Retirement -
Where the Trust Instrument allows it
2. Retirement - where it is intended to replace
3. s39 Trustee Act 1925 - if there are two remaining trustees or a trust corporation and if the remaining trustees consent by deed
4. s19 TOLATA - if all trustees are sui juris and agree that can oblige a trustee to retire
5. The court may require it - 4Can trustees be paid?not strictly but there are ways to be renumerated
- 5How can trustees be renumerated?By an express renumeration clause and if there isnt one: -
1. sui juris benefs collectively consent to renumeration
2. courts inherent jurisdiction to renumerate - very rare
3. s29 TA 2000 - proffessional trustees are entitled to reasonable renumeration
4. all trustees may recover thier expenses incurred in the course of their duties - 6What are the duties on taking up the role of trustee?1. Check they have been properly appointed
2. Familiarise themselves with the terms of the trust and their obligations
3. Ensure trust property is properly vested
4. review the actions of the trustees to check if any breaches have occurred and what action is neccessary - 7Case which says trustees must act unanimously?Luke v South Kensington hotel
- 8What was the old act that contained an overly restrictive approach to the duty to invest?Trustees Investment Act 1961
- 9Where is the duty to invest contained now?S 3 Trustees Act 2000
- 10Where is the duty of care contained?S 1 TA 2000
- 11Why is the new duty to invest from the TA 2000 notable?It contains a significant widening of the investment powers of trustees whilst clarifying the trustees duties and obligations
- 12How can the trustees invest under s 3 TA 2000?as if they were absolutely entitled to the property
- 13What terms of the duty to invest what is the duty to act even handedly?To consider not only the need to provide an income for a life tenants but also how to increase capital for remaindermen - REMEMBER - this is a common law duty
- 14Case which confirmed the duty to act even handedly?Nestle v national westminster bank
- 15The TA 2000 provides a default set of provisions for trustee investments. What are the key elements of this?S1 establish the duty of care
S. 3 & 8 - the broad range of investments available
S. 4 - Factors that should be taken into account in choosing investments
s. 5 - is advice required before investing?
s. 11&15 - What functions may a trustee delegate
S. 22-23 - How should agents be supervised and when is the trustee liable? - 16S. 1 TA codifys the old common law duty of care from which case?Speight v Gaunt - 'to act as an ordinary prudent man of business'
- 17Is the s1 TA duty of care objective or subjective?Objective - a trustees personal view will not excuse liability unless it was reasonable in the circumstances
- 18How does the duty of care vary?according to the actual or professed expertise of the trustee. Therefore a professional trustee will be expected to meet a higher standard than a lay trustee.
- 19Trustees powers to acquire land is what?contained in s8(1) TA 2000 - any freehold or leasehold land in the UK for use as a) an investment, b) for occupation by a beneficiary or c) any other purpose
- 20What is the key case on ethical investments?Cowan v Scargill
Coal Miners Pension Trust - trustees must set aside personal views and the paramount duty is to provide the greatest financial benefit for the present and future beneficiaries - 21Despite the geneal rule for cowen v scargill how can an ethical investment policy be pursued?1. where the trust instrument expressly imposes it
2. Orbiter comments from McGerry in scargil - where the bens have particularly strong views
3. Charities can avoid investment which clashed with its aims
4. where an ethical investment yields as good returns as an unethical one - 22Case which states that adopting an ethical investment policy without considering the best interests of the bens is a breach of trust?Martin v city of edingburgh
- 23Which case set out the 'modern portfolio theory'?Nestle v national westminster bank
- 24What is the 'modern portfolio theory'?Lord Hoffman - Trustees need to consider the risk level for the entire portfolio rather than the risk level of a single investment
- 25Why is delegation important for trustees?The trustees responsibilities are onerous, especially for lay trustees. allowing certain roles to be delegated allows trustees to ensure that the trust is properly managed.
- 26Main section of the TA which allows delegation?s. 11 TA 2000 outlines the roles which can be 'collectively' delegated
s. 25 Trustee Act 1925 deals with individual delegation. - 27What is the difference between collective and individual delegation?Collective = all trustees wish to delegate some of their functions (i.e. employing experts to give advice).
Individual = only one trustee wants to delegate such as appointing an agent to take over their duties whilst they are unable to act. - 28Where are functiosn that cannot be delegated contained?s. 11(2) TA 2000
- 29What functions cannot be delegated?s. 11(2)
1. any function relating to whether or in what way trust assets are distributed
2. whether fees or any trust expenses come out of income or capital
3. appointment of new trustees - 30does the duty of care apply to delegation?Yes
schedule 1 para 3 TA 2000 - 31Which sections of the TA 2000 deal with review of agents?s. 22 = trustees must keep their agents under review and if necessary intervene
S. 23 =trustees will be liable for their agents defaults if they have failed to satisfy the duty of care in appointing or reviewing - 32Case which states that trustees can be forced to exercise a duty but not a power or disretionRe Brockbank
- 33Case which says that trustees cannot blindly follow the orders of the settlor?Turner v Turner
- 34Case which states that Trustees are not obliged to provide reasons for their decisions regarding powers or discretions?Klug v Klug
- 35Trustees have a need to be protected from the need to give reasons for the exercise of a discretion whilst bens have a rights to information about the trust. What case considered this issue and what did it say?Re Londenderrys Settlement
decided that the trustees’ right to exercise their discretion in confidence prevailed over the beneficiaries’ right to inspect documents. - 36Which case stated that there was no proprietary right to seek disclosure of trust documents. However the court could, as part of its inherent jurisdiction to ensure proper administration of a trust, order disclosureSchmidt v rosewood
- 37case which states that Trustees are under a duty to distribute the trust property according to the terms of the trust – any distribution to someone who is not entitled will be a breach of trust even if trustees were not negligentRe Diplock
- 38Ways that trustees can be protected from distributing incorrectly?1. Advertisement - s27 TA 1925
2. Benjamin Orders (Re Benjamin)
3. Insurance (Re Evans)
4. Paying money into court (Gillingham bus disaster fund) - 39What is the power of maintenance?Trustees can use trust income from the bens interest to provide for the maintenance of a beneficiary
- 40Where does the power of maintenance come from?1. an express provision in the trust
2. s. 53 Trustee act 1925
3. s. 31 trustee act 1925 - 41What is the main power of maintenance?s. 31 Trustee Act 1925
- 42What are the purposes for which advancement can be applied?for the maintenance, education or benefit of the minor,
- 43Who are the maintenance payments made to?The parent/guardian
- 44Where is the power of advancement contained?s. 32 TA 1925
- 45What is the power of advancement?trustees can advance some or all of the presumptive or vested share of capital money held on trust for a beneficiary, for his advancement or benefit
- 46Which case defined 'advancement or benefit' as being 'any use of money which will improve the material situation of the beneficiarie'?Pilkington v IRC
- 47Case on advancement which says charitable donation is ok?Re Clore
- 48Case which said no advancement if it is too large a proportion of the whole?X v A
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- post grad Equity and trusts Flashcards on Trustees Duties and Powers, created by Robin Pearce on 01/06/2015.
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- Robin Pearce · Jun 2015
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- Feb 19, 2016
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