Delegation (Trustees’ duty to invest) -FS Flashcards
(10 cards)
Why was delegation by trustees historically disallowed, and what has changed under the Trustee Act 2000?
Historically, trustees could not delegate duties due to the duty to act personally. The Trustee Act 2000 relaxed this by allowing trustees to delegate most administrative functions, acknowledging the practical pressures trustees face
What type of trust functions are trustees expressly prohibited from delegating?
Dispositive functions, such as the distribution of capital to beneficiaries, cannot be delegated; these must remain the responsibility of the trustees themselves.
What kinds of functions can trustees delegate under Section 11 of the Trustee Act 2000?
Trustees may delegate administrative functions, such as managing assets, deciding if fees should come from income or capital, and appointing nominees or custodians—but they cannot delegate dispositive functions like deciding who receives trust capital.
Under what section can trustees pay an agent for services rendered?
Section 32 of the Trustee Act 2000 permits trustees to pay agents reasonable remuneration from the trust fund for carrying out delegated functions.
When are trustees liable for the actions of a delegated agent?
Under Section 23(1), trustees are not liable for the acts of the agent unless they breached the duty of care in their appointment, instruction, or supervision of that agent.
What formalities must trustees comply with when appointing an agent under Section 15 of the Trustee Act 2000?
Trustees must enter into an agreement evidenced in writing and must create a written policy statement guiding how the agent should manage trust asse
What obligations do trustees have after delegating functions to an agent?
Under Sections 21 and 22, trustees must keep under review the agent’s performance and the terms of the delegation, ensuring continued compliance and suitability.
What standard must trustees meet when appointing an agent under Section 13(2)?
Trustees must exercise reasonable care and skill, including ensuring that the agent is someone appropriately qualified and suitable for the role.
Can trustees be held liable if an agent causes a financial loss due to poor investment decisions?
Yes, if the trustees failed to investigate the agent’s qualifications, omitted a policy statement, or did not monitor performance, they could be liable for breach of the statutory duty of care.
What is the consequence if trustees appoint an agent without verifying credentials or creating a policy statement?
Trustees may be held liable for failing to comply with statutory duties under the Trustee Act 2000, even if they did not directly cause the loss.
