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Trusts > Trusteeship > Flashcards

Trusteeship Flashcards

1
Q

Millet LJ’s definition of a fiduciary (Bristol v Mothew)

A

A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence

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2
Q

Key attributes of a fiduciary (5)

A
  • Act honestly
  • Act in good faith
  • No conflict rule
  • Take no unauthorised profits
  • Always act in the very best interest of the trust
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3
Q

Is the extent of fiduciary relationships limitless?

A

No - e.g. simple carelessness in giving advice as a solicitor is going too far

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4
Q

Ward v Ward 1843

A

If the person has not voluntarily accepted the post of a trustee, then there can be no breach of duty

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5
Q

When do trustee obligations start in RTs and CTs?

A

When they are made aware of the existence of the trust

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6
Q

S20 TA 1925

A

Any person who is sui juris (of age and capacity) can act as a trustee

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7
Q

S26 TA 1925

A

Subsequent and additional appointments

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8
Q

S69(2) TA 1925

A

S36 can be excluded by the trust instrument

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9
Q

S41 TA 1925

A

Courts’ power of appointment of trustees

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10
Q

Re Tempest 1886 - what should courts have regard to when appointing new trustees?

A
  • Intention/wishes of the settlor/testator
  • Interests and wishes of ALL the beneficiaries
  • Whether the appointment of a particular person will be beneficial or detrimental to the administration and management of the trust
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11
Q

S19 TOLATA 1996

A

Beneficiaries can appoint trustees too

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12
Q

Provisions dealing with termination of trusteeeship

A

S36(2) TA 1925
S41 TA 1925
S19 TOLATA 1996

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13
Q

S36(1) TA 1925

A

Voluntary retirement of trustees

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14
Q

Westdeutsche requirement of good conscience

A
  • Avoid conflict of interest

- Act in the best interest of the trust

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15
Q

Common law standard of care

A

Speight v Gaunt

Standard of care was that of prudence - dealing with the trust assets fairly

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16
Q

Re Dixon 1826

A

When there is more than one trustee, they have to act together (joint liability) unless the trust instrument provides otherwise and S11 TA 2000

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17
Q

Rights of trustees

A
  • Right to remuneration
  • Right to reimbursement
  • Right to indemnity
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18
Q

Sections dealing with the right to remuneration

A

S28-32 TA 2000

19
Q

Does a trust have a legal personality?

A

No, it operates through the personality of the trustees

20
Q

S31 TA 2000

A

Trustees entitled to reimbursement for expenses incurred in course of trust business

21
Q

Duties of trustee on acceptance

A
  • Trustee is bound by obligations in trust document (Clough v Bond 1838)
  • Trustee should become familiar with terms of trust (Re Pumfrey)
  • Trustee should consider nature of trust property (Moyle v Moyle 1831)
22
Q

Clough v Bond 1838

A

Failure to comply with the duty to obey the directions of trust equals breach of trust

23
Q

Exceptions to the rule in Clough v Bond 1838

A
  • No trust instrument

- Instrument silent on a particular issue

24
Q

What is there a duty to safeguard in trustee duties?

A

Trust property

25
Q

How do trustees have to act between beneficiaries?

A

Impartially

26
Q

Nestle v Westminster Bank plc 1993

A

F: Bank a sole executor trustee, life interest to widow, annuities between two sons and remainder to grandchild, the bank invested very narrowly
I: Could the grandchild sue for bad investment?
H: There’s a human dimension to trusteeship, they should be thinking about all beneficiaries equally and invest with that in mind
Still, the claimant failed

Re investment:
“Modern trustees acting within their investment powers are entitled to be judged by the standards of current portfolio theory, which emphasises the risk level of the entire portfolio rather than the risk attaching to each investment taken in isolation”

27
Q

Ege v Pensions Ombudsman 2000

A

There might be a reasonable justification for differentiating between different classes, but it must be justified

28
Q

S1 Trustee Act 2000

A

Statutory duty of care

29
Q

Statutory duty of care

A

What would a reasonable man do

30
Q

Klug v Klug 1918

A

Trustees under no duty to give reasons for their decisions

31
Q

S31 & 32 TA 1925

A

Powers of maintenance and advancement

32
Q

How to vary a trust

A
  • Using the Variation of Trusts Act 1958
  • Applying the Saunders v Vautier rule
  • Applying the doctrine of cy-pres for charitable trusts
33
Q

Saunders v Vautier 1841

A

It laid down the rule of equity which provides that, if all of the beneficiaries in the trust are of adult age and under no disability, the beneficiaries may require the trustee to transfer the legal estate to them and thereby terminate the trust

34
Q

Berry v Green 1938

A

For the rule in Saunders v Vautier to work, there must be certainty of objects per Knight v Knight, all must be sue juris, all must consent, all must be identifiable

35
Q

S3 TA 2000

A

General power of investment

36
Q

S6(1) TA 2000

A

Trustee has investment power of absolute owner

37
Q

S4 TA 2000

A

Standard investment criteria

38
Q

Standard of care in investments

A
  • Must act prudently and safely
  • Must act fairly between beneficiaries
  • Must maximise financial return
  • Must take professional advice
  • Must manage risks appropriately
39
Q

What characteristics will a balanced portfolio have in this context?

A

Liquidity, stability, growth

40
Q

The duty to exercise sound discretion (4)

A
  • Cannot be influenced by matters unrelated to the purposes of the trust
  • Must manage the fund in a way that is most beneficial to the beneficiaries, even if such a a course conflicts with their personal morality
  • Discretion cannot be exercised dishonestly, capriciously, or subject to trustee’s own benefit
  • Trustees not permitted to abdicate responsibility for decision making, restrict choices available to them or place themselves in a position where they are powerless to exercise free discretion
41
Q

The duty to invest with prudence

A

Basically that investing must be in the benefit of the beneficiaries

42
Q

What are the requirements for the advisor in investment powers?

A

She must be reasonably believed by the trustee to be reasonably qualified

43
Q

Bartlett v Barclays Bank Trust Co (No 1) 1980

A

“The courts must not be astute to fix liability upon a trustee who has committed no more than an error of judgment, from which no businessman, however prudent, can be expected to be immune”

Trusts (12 decks)

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