Trustees' Liability: Limitation Period

Question 1

When does the six-year limitation run for a beneficiary with a vested entitlement?
A. From the date of the trustee’s breach
B. From the date the interest vests
C. From the settlor’s death
D. From the date of the trust’s creation

Answer 1

A. From the date of the trustee’s breach.
Explanation: For vested-in-possession beneficiaries the clock starts on the breach itself

Question 2

When does the limitation period begin for a beneficiary holding only a future interest?
A. From the date of the trustee’s breach
B. From the date their interest vests in possession
C. From the date they first learn of the breach
D. From the date the trust instrument was executed

Answer 2

B. From the date their interest vests in possession.
Explanation: Future-interest claimants cannot sue until their interest vests; then they have six years

Question 2

Which of these claims is NOT caught by the six-year limitation?
A. Personal claim for negligent administration by a trustee
B. Personal claim by a vested-interest beneficiary
C. Proprietary claim to recover misapplied trust property
D. Personal claim by a future-interest beneficiary before vesting

Answer 2

C. Proprietary claim to recover misapplied trust property.
Explanation: Proprietary (tracing) claims are not time-barred, even if made later

Question 3

Which of these statements about the fraud exception is correct?
A. Fraudulent breaches are barred after three years
B. Fraudulent breaches are never time-barred
C. Fraud suspends the limitation only for personal claims
D. Fraud must be pleaded to shorten the limitation period

Answer 3

B. Fraudulent breaches are never time-barred.
Correction: The correct answer is B – fraudulent breaches escape the six-year bar entirely.
Explanation: There is no limitation for fraudulent breaches of trust

Question 4

In 2014 a trustee misapplies funds. Beneficiary A (vested) sues in 2020. Is the claim in time?
A. Yes—and it runs from the 2014 breach to 2020
B. No—only three years are allowed for such claims
C. Yes—but only if A proves dishonesty
D. No—the period runs from vesting, not the breach

Answer 4

A. Yes—and it runs from the 2014 breach to 2020.
Explanation: Vested beneficiaries have six years from breach; 2020 is within the period

Question 5

B’s future interest vests in 2018; trustee breached in 2015. B sues in 2023. Is limitation valid?
A. No—the six-year run from the 2015 breach
B. Yes—the six-year run from vesting in 2018 to 2023
C. No—the fraud exception must apply
D. Yes—but only if B had notice of the breach before vesting

Answer 5

B. Yes—the six-year run from vesting in 2018 to 2023.
Explanation: Future-interest beneficiaries start the clock on the vesting date; 2023 is within six years of 2018

Question 6

E’s cause of action arose in 2012, but she delayed until 2019. The trustee acted honestly. Which defence might succeed?
A. Beneficiary consent
B. Six-year limitation expired
C. Court relief under s 61 TA 1925 for honesty and reasonableness
D. Presumption of advancement

Answer 6

C. Court relief under s 61 TA 1925 for honesty and reasonableness.
Explanation: Even after delay within six years, trustees can seek s 61 relief if they prove honesty, reasonableness, and fairness

Question 7

Which outcome follows if a beneficiary with vested interest waited eight years after breach to sue fraudulently?
A. Claim succeeds—fraud exception removes any time bar
B. Claim fails—exceeds six-year limit despite fraud
C. Claim succeeds—beneficiary consent overrides limitation
D. Claim fails—fraudulent claims are barred after five years

Answer 7

A. Claim succeeds—fraud exception removes any time bar.
Explanation: Fraudulent breaches are not subject to the six-year limitation, so an eight-year delay is irrelevant