Trustees' Powers and Duties - Trustees' Powers

  • Created by: Edward
  • Created on: 10-02-17 23:11
TA 1925, s 12
The power to sell the whole or a part of the property at public auction
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TA 1925, s 14
The power to give a purchaser a good receipt for money paid (except when the property is land in which case the receipt must be by at least two trustees or a trust corporation)
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TA 1925, s 15
The power to compound liabilities by, e.g., the payment of debts, accepting security for debts, allowing time for payment of debts and compromising or settling any debt
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TA 1925, s 16
The power to raise money by the sale or mortgage of trust property
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TA 1925, s 19
The power to insure trust property
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Revel v Watkinson (1748)
court has long claimed a limited inherent jurisdiction to authorise payments to maintain or educate a minor
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Fuller v Evans (2000)
In reaching their decision, trustees must have regard to interests of the minor and not consider the interests of the settlor or anyone else (e.g. infants parents
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Wilson v Turner (1883)
Trustees have to make separate decision each time that payment is claimed or made; here, trustees handed over entire income of trust fund to father during infancy of the minor grandchild beneficiary without periodically considering the continuing mer
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Stopford v Lord Canterbury (1840)
Trustees cannot decide upon a blanket refusal ever to make a maintenance payment; if they do so, a beneficiary can apply to court for an approp order
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TA 1925, s 31
Trustees have broad, discretionary power to apply trust income for benefit of a minor (but not an adult) beneficiary
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TA 1925, s 31(1)
Trustees may, at their sole discretion, pay to his parent or guardian, if any, or otherwise apply for or towards his maintenance, education or benefit, the whole or such part of the income of that property as may in all the circum’s, be reasonable
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Inheritance and Trustees Powers Act 2014, s 8(a)
Italicised (underlined) words replaced with “as trustees think fit” to avoid previous requirement that trustee’s decision to maintain must be obj’y justified
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TA 1925, s 69(2)
Statutory power can be modified or excluded whether expressly or by implication
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Re Delamere’s ST (1984)
E.g. here, trustees expressly given absolute discretion which was not subj to statutory temperance by concept of reasonableness; the word “absolutely” displaced operation of s 31
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Re Erskine’s ST (1971)
Here, settlor made provision for income to be accumulated; provision demonstrated an intention to exclude s 31 power
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Re Spencer (1935)
• s 31 not restricted to run-off-the-mill living expenses and may be used to finance purchase of house in which minor beneficiary can live
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Re Walker (1901)
income may be employed to pay past maintenance expenses and might even be used to make donations to charity
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Re Bryant (1894)
Provided that the trustees act in a bona fide and prudent manner, and periodically direct their minds to whether or not the power should be exercised, the court will not interfere
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2014 Act, s 8
“other income” jettisoned as was seen as an unnec and impractical factor for trustees to regard
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TA 1925, s 31(1)(ii)
To assist beneficiary, trustees are obliged to pay the income to the beneficiary until his interest either vests or fails
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Re McGeorge (1963)
Assistance unavailable when there is a direction in trust instrument to contrary, e.g. here, testator bequeathed land to daughter; bequest not to take effect until wife’s death; 21-yr-old daughter claimed income; held: she was not entitled to mainten
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Re Kershaw’s Trust (1868)
Buying premises for a beneficiary to set up business
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Lloyd v Cocker (1860)
Providing a dowry on the marriage of a female beneficiary
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Re Long’s ST (1868)
Paying the beneficiary’s emigration costs
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Marshall v Crowther (1874)
Discharging the beneficiary’s debts
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Re Walker (1894)
Financing improvements to land
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Pilkington v IRC (1962)
Minimising the beneficiary’s tax liability
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TA 1925, s 32
Subj to finding of a contrary intention, every trust created after 1925 offers trustees an absolute discretion to apply capital money for the advancement or benefit of a beneficiary; does not matter whether trust is inter vivos or testamentary
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Pilkington v IRC (1962)
“benefit” widens scope of power to make payments and is to be given a broad construction
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TA 1925, s 32(1)(a)
The money advanced cannot exceed “altogether in amount one-half of the presumptive or vested share or interest of that person in the trust property”
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CD (a minor) v O (2004)
Here, half-share rule varied by court under Variation of Trusts Acts 1958
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TA 1925, s 32(1)(b)
Beneficiary has obligation to account for money advanced or property transferred when he “becomes absolutely and indefeasibly entitled to a share in the trust property”
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TA 1925, s 32(1)(c)
No payment or asset transferred shall be made to prejudice any interest prior to that of the beneficiary’s interest
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Henly v Wardell (1988)
E.g. property held on trust for John for life with remainder to Ann; if sums from capital were advanced to Ann while John still alive, it would reduce fund from which John’s income was to be derived; it would thereby prejudice the prior interest of J
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Re Craven (1937)
e.g. here, express power limited by clause that permitted advancement only for specified purposes; operated to exclude s 32
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Simpson v Brown (1864)
Trustees have to take special care to ensure that their discretion is exercised properly, here beneficiary successfully recovered from trustee money advanced to provide the beneficiary with an apprenticeship with a chemist; chemist unqualified and un
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Hampden v Earl of Buckinghamshire (1893)
Trustees expected consider all relevant considerations and determine that it is a proper case for advancement; thus, court can prevent trustees from an exercise of discretion that is wrong or unreasonable
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Re Pauling’s ST (1963)
Once the discretion to make an advancement is exercised, the trustees must ensure the funds advanced are actually used for the purposes stated by beneficiary
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Re Pauling’s ST (1963)
Here, trustees advanced numerous capital sums to beneficiaries; although supposedly for benefit of beneficiaries, capital really used to finance luxurious lifestyle of their parents; children of full age and did not complain about manner in which mon
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Re Pauling’s ST (1963)
CA presumed children were under undue influence of parents; children succeeded in suing trustees for breach of trust in making improper advances; power improperly exercised and, as payments been made for a particular purpose, trustees had an obligati
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Pitt v Holt; Futter v Futter (2013)
In Futter, trustees given incorrect legal advice re charging of capital gains tax re gains realised by non-resident trustees; conseq’y, within their powers, trustees distributed capital to Mr F and advanced money to his 3 children; trustees later app
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Pitt v Holt; Futter v Futter (2013)
SC: where acts within the power of trustees were said to be vitiated by their failure to consider a relevant factor, a beneficiary had to demonstrate a serious breach of fiduciary duty by the trustees; Lord Walker: “only breach of fiduciary duty just
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Pitt v Holt; Futter v Futter (2013)
Mere forgetfulness, inadvertence or ignorance is not to be regarded as a mistake for these purposes; the mistake normally will concern legal character or nature of the transaction or some matter of fact or law which is basic to the transaction; in Pi
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Speight v Gaunt (1883)
The duty of personal service is that a trustee cannot delegate his trust powers and duties; stance is that a trustee is likely to have been chosen for his personal qualities and wisdom
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TA 2000, s 11
Trustees have a general power to delegate their functions to an agent (including one of themselves, but not a beneficiary)
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TA 1925, s 25(1)
A trustee can formally (by power of attorney) delegate any or all of his individual duties, powers and discretions vested in him as trustee
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TA 2000, s 1
instead, trustees prefer collectively to appoint agents to undertake their functions; here, trustees are liable only for an agent’s actions if the trustees have themselves failed in their duty of care
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Trustee Delegation Act 1999, s 1
It allows such a trustee to delegate indefinitely all trustee functions, re the land and income and proceeds of sale from land, by power of attorney
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TOLATA 1996, s 9(1)
Trustees of a trust of land can collectively delegate their powers, including the power of sale, to any beneficiary or beneficiaries of full age entitled with an interest in possession to the trust land
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Card 2


The power to give a purchaser a good receipt for money paid (except when the property is land in which case the receipt must be by at least two trustees or a trust corporation)


TA 1925, s 14

Card 3


The power to compound liabilities by, e.g., the payment of debts, accepting security for debts, allowing time for payment of debts and compromising or settling any debt


Preview of the back of card 3

Card 4


The power to raise money by the sale or mortgage of trust property


Preview of the back of card 4

Card 5


The power to insure trust property


Preview of the back of card 5
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