What are the trustee’s two primary duties in respect of trust property?
- To safeguard it and
2. To preserve and increase it
What governs the trustee’s powers of investment?
- The trust instrument in the first instance and
- The Trustees Act in the second - s. 3 implies the power to make any investment that the trustee would choose to make himself if the fund was absolutely his.
What is the applicable standard of care to the trustee’s investments?
The higher of
- Reasonable skill and care in the circumstances, i.e. the same level of care as an ordinary man of business would when looking after the assets of another; and
- The standard expected of professional trustees
What are four essential considerations for a trustee when investing?
- Suitability of the type of investment
- Suitability of that specific investment (e.g. if buying shares, do trustees want a controlling interest and the management responsibilities of such?)
- Conflicts of interest
- Diversification (as a prudent man of business usually should)
Are ethical considerations relevant to trustee’s duties of investments?
Trustees are not required to consider making
ethical investments and are only bound to nurture the financial interests of beneficiaries (Cowan v Scargill).
However, trustees are free to invest ethically - as long as it does not compromise financial returns (Harries v Church Commissioner).
When can trustees delegate to their agent (3 requirements)
- Must be in writing
- Agent must be suitably qualified
- Agent must not have any conflict of interest
How can a trustee avoid being liable for any investment?
Appoint an agent and abide by duty of care when making the appointment - will then avoid liability for any act or default of the agent
3 cases where trustees can be remunerated for their management of trust investments?
- Professional trustee entitled to reasonable fee
- Trust deed may express provide for remuneration
- Beneficiaries may all consent to paying trustee
When will trustees have power of maintenance?
Barring contrary provision in trust deed, this is implied by S.69(2) of the Trustees Act
When is beneficiary entitled to maintenance (4 reqs)
- Minor
- Not absolutely entitled to the income
- Intermediate income exists
- No third party with prior income
What duties apply when a trustee exercises power of maintenance?
Section 1 DOC does not apply, but trustee is under duty to review ongoing payments of income rather than pay them automatically
When will trustees have power of adfvancement?
Barring contrary provision in trust deed, this is implied by S.69(2) of the Trustees Act
Distinguish advancement from maintenance?
Maintenance - usually payment of income by instalments; advancement - lump sump capital payment
What does “advancement” include?
includes setting a beneficiary up for life
Pilkington v /RC
