Trustee

Question 1

Core duties of trustees

Answer 1

• Preserve the trust capital for the beneficiaries as a whole;
• act only in beneficiaries’ best interests;
• be impartial between beneficiaries;
• exercise reasonable care, skill and diligence when investing.
• The Trustee Act 2000 gives trustees wide investment powers but adds duties about suitability/diversification and to obtain “proper advice” in most cases.

Question 2

Trustee’s power to advance capital or income

Answer 2

s.32 TA 1925 – Advancement of capital: Trustee may advance capital for the advancement/benefit of a beneficiary entitled to capital in the future (discretionary, not a right; includes school fees, training, etc.).

s.31 TA 1925 – Maintenance: Trustee may apply income for maintenance/education of a minor.

At 18, Petra must receive trust income until 25 (when capital vests).

Question 3

Trustee’s investment powers

Answer 3

s.3 Trustee Act 2000 – General power of investment

• (trustees may make any kind of investment as if they were the absolute owner).

s.4 Trustee Act 2000 – Standard investment criteria:

• trustees must consider (a) suitability of the investment, and (b) the need for diversification.

s.5 Trustee Act 2000 – Duty to obtain and consider proper advice about investments,

• unless it is reasonable to conclude it is unnecessary or inappropriate.