Trustees’ general duties (Trustees)-FS Flashcards
(15 cards)
What is the general effect of accepting the role of trustee regarding responsibility and liability?
Trustees assume full responsibility for the administration of the trust and can be held personally liable for any breach of duty.
Can the duties of a trustee be excluded or modified by the settlor?
Yes. The trust instrument may exclude, limit, or amplify trustee duties, including complete exclusion of liability for breaches, where permitted by law.
What is the statutory duty of care under the Trustee Act 2000?
Under Section 1, trustees must exercise such care and skill as is reasonable in the circumstances, taking into account any special knowledge or if acting in a professional capacity.
How does the standard of care vary between lay and professional trustees?
Professional trustees are held to a higher standard, reflecting their expertise, while lay trustees are judged against the standard of a reasonable person
What is the common law duty of care for trustees?
Trustees must act with the care of a prudent person of business, managing trust property diligently and cautiously.
What are the key duties of a newly appointed trustee?
- Ensure proper appointment,
- Transfer trust property,
- Understand trust terms,
- Investigate past trust dealings, and
- Take action to remedy any outstanding breaches.
What are the consequences for a new trustee failing to recognise the rights of different beneficiaries?
The trustee may be held personally liable for distributing property incorrectly and failing to honour the interests of all beneficiaries
What is the duty regarding the holding of trust property among trustees?
Trustees must hold property in the joint names of all trustees to ensure equal rights and accountability unless the trust instrument provides otherwise.
What is the general rule about trustee decision-making?
Trustees must act unanimously, unless otherwise stated in the trust, to prevent unilateral decisions and misuse of power by one trustee.
What does the trustee’s duty to provide information require?
Trustees must maintain accurate accounts, share information like trust investments and documents, and allow reasonable access to beneficiaries.
Are beneficiaries entitled to see all documents and communications of trustees?
No. Beneficiaries may access financial records and documents, but not confidential materials like trustee diaries or meeting minutes, unless the court orders otherwise.
What is the duty to act personally?
Trustees must actively participate in managing the trust. They cannot delegate core responsibilities or be passive in monitoring other trustees’ actions.
What is the duty to act fairly and impartially between beneficiaries?
Trustees must treat beneficiaries fairly, considering all interests without bias, even if equal treatment is not required.
What is the duty to exercise powers and discretions properly?
Discretionary powers must be exercised in good faith, rationally, and based on relevant considerations only
Can trustees be held accountable for how they exercise their discretion?
