Reservation of power-FS Flashcards
What is the legal source of an executor’s powers to administer an estate?
Executors derive their powers from statute — primarily the Administration of Estates Act 1925, Trustee Acts (1925 & 2000), and the Trusts of Land and Appointment of Trustees Act 1996, along with any extensions or limitations set out in the will.
What does section 41 of the Administration of Estates Act 1925 allow a personal representative to do?
It allows them to appropriate assets to satisfy a beneficiary’s legacy, with the beneficiary’s consent, unless the asset has been specifically bequeathed.
Example: An executor offers land worth £40,000 to a charity in place of a cash legacy, which the charity accepts.
Under what condition is an executor not allowed to appropriate an asset under s.41 AEA 1925?
If the asset has already been specifically bequeathed to another beneficiary in the will.
Example: A house left to a daughter cannot be partly used to pay a charity legacy.
What power does section 39 of the AEA 1925 give personal representatives?
It allows them to raise funds through loans, mortgages, or charges, and to enter into contracts that bind the estate.
Example: Executors may mortgage estate property to pay debts.
What does section 44 of the Administration of Estates Act 1925 protect executors from?
It gives them the power to postpone distribution of the estate for up to one year from the date of death, protecting them from early liability.
Why might executors delay distribution under s.44 AEA 1925?
To handle complex tasks like locating beneficiaries, dealing with creditors, or resolving unclear provisions — they’re not obligated to distribute within the first year.
Can a personal representative offer a non-cash asset in place of a cash legacy?
Yes — under s.41, they can appropriate a substitute asset if the beneficiary consents and the asset is not already bequeathed.
What should an executor do if the deceased’s estate lacks cash to satisfy a legacy?
Consider appropriating other estate assets of equal value with the beneficiary’s consent, unless those assets are specifically gifted to someone else.
Why would a will extend or restrict statutory executor powers?
To tailor the authority granted — for example, to add powers beyond those granted by statute or to limit discretion in areas like investment or property sale.
In the case of Marge’s will, why couldn’t the executor use part of the house’s value to satisfy a £10,000 legacy to the church?
Because the house had been specifically bequeathed to her daughter Hannah, and appropriation of specific gifts is prohibited under s.41 AEA 1925.
Why can’t a personal representative appropriate part of a specifically bequeathed asset to satisfy another beneficiary’s legacy?
Because section 41 of the Administration of Estates Act 1925 prohibits appropriation of any asset that has been specifically gifted in the will to another beneficiary
What does Section 3 of the Trustee Act 2000 empower personal representatives to do?
It gives trustees the general power of investment, allowing them to invest trust assets as if they were absolute owners.
Example: A trustee invests £100,000 in UK equities after taking advice from a f
What duties must trustees follow when exercising their investment powers under Section 3?
Trustees must take proper advice and review investments periodically to ensure suitability and performance.
Can a trustee make any kind of investment under Section 3 without restrictions?
No — while the power is broad, it must be exercised with reasonable care, and usually with professional advice.
What kind of assets does Section 3 of the Trustee Act 2000 not apply to?
Land — the power to invest in land is governed separately under Section 8 of the same Act.
What does Section 8 of the Trustee Act 2000 allow trustees to do with trust funds?
Trustees may acquire freehold or leasehold land in the United Kingdom for investment, occupation by a beneficiary, or other reasons.
Can trustees purchase land located outside the United Kingdom under Section 8?
No — Section 8 only applies to UK land; trustees cannot invest in foreign property under this statutory authority.
What powers do trustees have over land acquired under Section 8?
They have all the powers of an absolute owner in relation to the land — including leasing, managing, and selling.
What’s the benefit of treating trustees “as if they were absolute owners” under the Trustee Act 2000?
It gives trustees wide discretion and flexibility to manage investments and property in the best interest of the trust and beneficiaries.
Why were Amna’s executors not permitted to invest in land in France under her will?
Because Section 8 permits land investment only within the United Kingdom, and not overseas.
When should a will include an express investment clause despite Section 3 already allowing broad powers?
When the testator wants to customise or limit the trustee’s investment discretion or clarify permissible investment types.
What does Section 31 of the Trustee Act 1925 allow trustees to do for minor beneficiaries?
Use trust income for the maintenance, education, or benefit of a minor or pay it to their parent or guardian.
Is the use of income under Section 31 a duty or a discretion for trustees?
It is a discretionary power — trustees may choose whether or not to advance income during minority.
What happens to trust income once a minor beneficiary reaches 18 under Section 31?
Trustees become obliged to pay out the income relating to that beneficiary’s share.
