Lecture 11 - Managing the Trust - Appointment and Removal of Trustees, their Powers and Duties
Page 1: Managing the Trust
Focus on the Appointment and Removal of Trustees, their Powers, and Duties.
Page 2: Learning Outcomes
Key topics to understand include:
Appointment of Trustees
Retirement of Trustees
Removal of Trustees
Nature of Trusteeship
Trustees' Powers and Duties
Fiduciary Duties and Remedies
Page 3: Original Trustees and Trust Deeds
Trust Deeds and their Elements:
Inter vivos trusts involve trustees who are parties to the trust deed.
Legal title to the trust property must vest in ALL trustees to constitute the trust.
Self-declaration of trust may allow the settlor to act as trustee.
No constitution required for testamentary trusts where executors are the same as trustees.
Page 6: Trust Instrument
Relevant Legislation:
Section 36 of the Trustee Act 1925
Section 19 of the Trusts of Land and Appointment of Trustees Act 1996 (ToLATA)
Section 41 of the Trustee Act 1925
Power of Attorney
Competent Court
Page 7: Section 36 - Trustee Act 1925
Conditions for exercising powers under Section 36 include:
Death of a trustee
Trustee out of the UK for over 12 months
Trustee wishes to retire
Refusal to act by a trustee
Unfitness to serve
Mental or physical incapacity
Trustee is an infant
Dissolution of a corporate trustee.
Page 8: Section 19 - ToLATA 1996
Nominations and Appointments:
If no nominated person exists, beneficiaries of full age can provide written directions for trustee changes.
Section 20 provides for replacing an incapacitated trustee with written notice from beneficiaries to the person controlling the trustee's affairs.
Page 9: Section 41 - Trustee Act 1925
Court Appointments:
Court may appoint a new trustee when it deems it expedient and necessary assistance is required.
Page 10: Section 39 - Trustee Act 1925
Retirement Rights of Trustees:
A trustee may retire if:
A trust corporation or two individuals will remain as trustees.
Consent is obtained from co-trustees and the appointing party.
The wish to retire is documented in a deed.
Page 11: Removal of Trustees
Various Methods for Removal:
Power is expressed in the trust instrument.
Under Section 36(1) of the Trustee Act 1925.
Order from a court (Section 41).
Beneficiary direction under Section 19, ToLATA 1996.
Inherent jurisdiction of the court.
Page 12: Trusteeship, Powers, and Duties
Overview of trusteeship responsibilities and powers.
Page 13: Powers of Trustees
Powers are categorized into:
Administrative Powers
Dispositive Powers
Page 14: Duties of Trustees
Essential fiduciary duties toward trust property.
Page 15: Equitable Duties
Core equitable duties involving:
Duty to observe trust terms.
Duty to act even-handedly.
Duty to exercise reasonable care.
Page 16: Equitable Duties as to Trust Property
Responsibilities include:
Inquire about and control trust property.
Distinction between trust and personal assets.
Detailed listing of chattels when applicable.
Page 17: Duty to Act Even-Handedly
Importance of fairness:
Example: Balancing interests of A and B in trust distributions.
Page 18: Duty to Exercise Reasonable Care
Expectation of care in the management of the trust.
Page 19: Duty not to Profit
Trustees must not make personal gains from trust management.
Page 20: Duty to Act Personally
Trustees are expected to manage the trust directly.
Page 21: Duty to Act Unanimously
Decisions generally require consensus among trustees.
Page 22: Duty of Confidentiality
Requirement to keep trust matters private.
Page 23: Duty of Disclosure
Obligation to disclose relevant information to beneficiaries.
Page 25: Trustees' Fiduciary Duties
Definition and importance of fiduciary duties:
A fiduciary must act for another’s benefit in trust relationships.
Obligation of loyalty is paramount:
No secret profits or conflicts of interest.
Page 27: Managing the Trust: Investment and Delegation
Overview of trustees’ responsibilities regarding investment decisions and delegation of duties.