Trustees Flashcards
(13 cards)
What is the fundamental role of a trustee in a trust?
The trustee holds legal title to trust property and must exercise that title for the benefit of the beneficiary. Trustees owe personal obligations to the beneficiary, which can be enforced. This is core to the operation of any trust
Is a trustee required to accept the role?
No. The office of trustee is voluntary. A person named as trustee can disclaim the position. Equity will not allow a trust to fail for want of a trustee, so an alternative trustee will be appointed if needed
Are trustees entitled to remuneration?
Lay trustees: Generally unpaid but may recover expenses
Professional trustees: Entitled to reasonable remuneration and are held to a higher standard of care
What is the ‘irreducible core’ of trusteeship?
very trust must impose at least one enforceable obligation on trustees. At minimum, trustees must act honestly and in good faith, and in the beneficiaries’ best interests. A trust without any enforceable duties is not valid
Who can be appointed as a trustee and how many should be appointed?
Any adult (not a minor); must be suitable and not legally disqualified (e.g. bankrupt)
For trusts of land: Minimum 2 and maximum 4
It is good practice to appoint more than one trustee, but not too many to avoid administrative difficulty
How are trustees appointed in new inter vivos trusts?
Self-declaration of trust: Settlor becomes trustee
Transfer on trust: Settlor transfers legal title to trustee, who must be willing to act
If trustee disclaims, the trust property is held on bare trust until a replacement is appointed
Replacement of Trustees?
Allows replacement of trustees where:
A trustee dies, retires, is abroad for 12+ months, lacks capacity, or refuses/ is unfit to act
Applies to inter vivos and testamentary trusts
Must be exercised in writing
Disclaiming Trustees?
A disclaiming trustee may appoint their own replacement. If they decline to do so, the personal representatives (for testamentary trusts) or continuing trustees (for inter vivos trusts) may act instead
How can beneficiaries appoint a trustee?
If all beneficiaries have Saunders v Vautier rights, they can direct trustee appointment (in writing).
This right cannot be exercised if the trust instrument contains an express power to appoint trustees
Court Appointment of Trustees?
he court can appoint trustees where necessary to prevent trust failure.
When exercising this power, the court considers:
Settlor/testator’s wishes
Whether the appointment promotes trust administration
Disputes among beneficiaries
Can also appoint the Public Trustee as a last resort
How can a trustee be removed?
Expressly in the trust instrument
Statutory replacement
Court or Charity Commission can remove and replace trustees
Court may remove a trustee under its inherent jurisdiction for misconduct (e.g. dishonesty)
How can a trustee voluntarily retire from the trust?
Requirements for voluntary retirement:
Retirement must be in a deed
At least two trustees or a trust corporation must remain
Co-trustees’ written consent is required
Legal title must be transferred as necessary
Can beneficiaries force a trustee to retire?
Yes. Beneficiaries with Saunders v Vautier rights can compel a trustee to retire
