Trustees Powers

Question 1

Unanimity of decision making

Answer 1

• exercise of the powers must be made unanimously in order to be valid- Re Allen- meyricks will trusts
• exception- where trust instrument authorised a majority- re mayo
• exception- charity and pension trusts allow a majority decision

Question 2

Reasons for exercise of powers

Answer 2

• trustees are not required to give reasons for exercising dispositive powers- re londonderrys settlement
• refusal of trustees to provide reasons cannot be challenged in court except when there is bad faith- Klug v Klug
• where a trustee provides reasons these can be challenged- Hartigan Nominees pty v ridge 1992
• required to give reasons for administrative powers- Lewis v Tamplin

Question 3

Fraud on the power

Answer 3

• where trustees exercise their powers for an improper purpose or bad faith, such decision will be void - balls v strut
• Fraud simply means the powers are being exercised for a purpose beyond the scope of the trust instrument- vatcher v paull

Question 4

Administrative powers

Answer 4

• powers associated with the management or administration of the trust property
• power of investment
• power of acquisition
• power to sell trust property
• power to insure
• power of delegation
• power to appoint custodian
• power to compromise or settle claims

Question 5

Power of investment

Answer 5

• administrative power
• s3-7 TA 2000
• s4- mandates trustee to regard the standard investment criteria- time to time review, dont invest all in one company, avoid ethical considerations
  -s5- mandates trustees to seek professional advice in relation to investments

Question 6

Power of acquisition

Answer 6

• administrative powers
• power to acquire freehold or leasehold land in the UK
• s8 TA 2000
• power to convert trusts of money into trusts of land

Question 7

Power to sell trust property

Answer 7

• administrative power
• s12-14 and 16 TA 1925
• land= 2 or more trustees signing the document of sale
• chattels= one trustee can validly sell

Question 8

Power to insure

Answer 8

• administrative power
• s19 TA 1925
• s34 TA 2000
• trustees entitled to ensure trust property against any incidents of loss or damage and pay insurance premiums
• dont need consent of beneficiaries to do this however in a bare trust the beneficiaries are entitled to direct the trustees not to insure

Question 9

Power of delegation

Answer 9

• Administrative power
• s11 TA 2000
• power doesnt extend to dispositive powers or the power to appoint another trustee- s11.2
• can delegate to anyone but a beneficiary
• trustees wont be liable for a breach made by an agent unless they acted with no duty of care when appointing them
• must be done by deed and cannot last more than one year

Question 10

Power to appoint custodian for trust property

Answer 10

• administrative power
• s17 TA 2000
• trustees not liable for breaches made by custodian unless they have not acted with reasonable care and skill in appointing the custodian

Question 11

Power to compromise or settle claims

Answer 11

• administrative power
• can settle any claims due to being the legal owner- Re Earl of strafford

Question 12

Dispositive powers

Answer 12

• powers associated with the transfer or disposition of the trust property to the beneficiaries
• power of appointment (apportionment)
• power of maintenance
• power to accumulate income
• power of advancement

Question 13

Power of appointment (apportionment)

Answer 13

• dispositive power
• obligation vs discretion
• obligation cases= must be done in a reasonable time- tempest v Lord camoys
• discretionary cases= can choose to distribute or just distribute profits
• can be personally liable for omitting valid beneficiaries
  Protection from liability:
• seek direction from the court
• advert in the paper
• Benjamin order
• take out insurance
• retention of fund
• payment into court

Question 14

Power of maintenance

Answer 14

• dispositive power
• distributing income to a minor (s31 TA 1925) or to an adult beneficiary whose interest is contingent but requires some funds to maintain themselves
• must be income only and never capital
• minor= education
• adult= dire financial needs

Question 15

Power to accumulate income

Answer 15

• dispositive power
• s31 TA 1925
• trustees use the trust fund to accumulate income to add to the fund

Question 16

Power of advancement

Answer 16

• dispositive power
• making interim payments out of the capital for the advancement or benefit of a beneficiary before they have the right to receive capital
• s9.3.a inheritance and trustees power act 201 extended power to whole of their prospective share
  Key principles:
• at the discretion- cant compel trustees to do it- s32 TA 1925
• cant exceed potential share
• cant be made if it prejudices another person