What is the property component of the trust?
- Trustees will usually be the legal owners of the trust property. They have all the rights and powers of the legal owner, while the beneficiary has the equitable and beneficial interest in that property.
What is the obligation component of the trust?
- The trustee must exercise the rights of legal ownership for the benefit of the beneficiary. They owe obligations to the beneficiary, which can be enforced personally against the trustee.
What is an express trust? Name examples
- trust has been expressly created, meaning an obligation has been intentionally imposed upon the trustee.
Example:
- testamentary and family trusts
- trusts for commercial purposes
- charitable purpose trusts
- bare trusts
What are testamentary trusts? What will be a trustees main role in this type of trust?
- Trusts are often set up in a will or for other family purposes.
- The trustee’s main role will be to comply with the terms of the trust, ensuring that the right payments are made to the right people at the right time.
- Sometimes these trusts will only last a short period of time, as once the trustee has distributed the entire trust
- In other cases, the trust will need to last for a longer period of time.
What is a bare trust?
Trustee holds the legal title to the trust property on behalf of adult beneficiaries who have fully vested interest
- very limited obligations
What are the characteristics of a trustee’s role?
Voluntary
Typically unpaid (except professional trustees)
Held in joint office
Broad powers curtailed by duties
What is the irreducible core of a trustees duties?
General duty to act honestly, in good faith & for the benefit of the beneficiaries
What are the two categories of duties of trustees?
Trustee duties + Fiduciary duties
How are trustees appointed?
- usually appointed by the settlor when they establish a trust
- trusts found in a will, the settlor is the executor and therefore not able to appoint a new trustee. Even if the named trustee is not willing or able to act, it is possible for an alternative trustee to be appointed by the court instead.
- Other people may also be given a power to appoint a trustee, which may be necessary in cases where a trustee is no longer able to act.
- If the trust is charitable, the Charity Commission has a power to appoint trustees.
- The beneficiaries of a trust can also use theirSaunders v Vautierrights to appoint new trustees (s19 TLATA)
- general statutory power to appoint new trustees (s36 TA 1925)
How do trustees retire?
- Trustees can voluntarily retire by deed where there are at least 2 people or one trust corporation to act as trustees & consent (s39(1) TA 1925)
- By direction of the beneficiaries - use their S v V rights to compel a trustee to retire. Direction must be made in writing and requires the agreement of all beneficiaries. Still needs at least 2 trustees or one trust corporation left.
What are the rules for removal of trustees?
- The trust instrument may contain rules dealing with removal of trustees.
- The general statutory power to appoint trustees also effectively extends to removing trustees in the circumstances where it is considered necessary to replace them (s36 TA 1925)
- The court also has both statutory and common law powers to remove trustees. (s41 TA 1925)
- The Charity Commission also has the power to remove charity trustees.
- Court also has an inherent jurisdiction to remove trustees in cases where it is concluded that it is not appropriate for the trustee to remain in office (e.g. where they act dishonestly).
