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W301 UNIT 25-26c: Powers of Trustees

By johirst

Open University Law W301

Added: September 06, 2011 20:27:41

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W301 UNIT 25-26c: Powers of Trustees

W301 UNIT 25-26c: Powers of Trustees
1 Power of delegation
1.1 Collective delegation
1.1.1 Governed by
1.1.1.1 Trustee Act 2000
1.1.2 TA 2000 applied retrospectively
1.1.2.1 unless excluded by trust instrument
1.1.3 Can delegate
1.1.3.1 administrative decisions
1.1.3.1.1 investment decisions
1.1.3.1.2 tax returns
1.1.4 Cannot delegate
1.1.4.1 dispositive power to distribute funds to beneficiaries
1.1.4.2 discretions
1.1.4.3 powers of maintenance and advancement
1.1.4.4 power to appoint new trustees
1.1.4.5 see 11(2) TA 2000
1.1.5 Can pay agents reasonble renumeration
1.1.6 Can vest trust assets in nominee
1.1.6.1 Unless is one of trustees
1.1.7 Safeguards
1.1.7.1 Usual duty of care in selecting agents
1.1.7.1.1 s1 TA 2000
1.1.7.2 When delegating asset management
1.1.7.2.1 Written agreement
1.1.7.2.2 Written policy statement
1.1.7.2.3 Trustees must keep under review
1.1.7.3 Cannot delegate to beneficiary
1.1.7.3.1 Except for trusts of land
1.1.8 Liability
1.1.8.1 May be able to sue agent for negligence
1.1.8.2 Beneficiaries can also sue trustees
1.1.8.2.1 If have breached one of duties
1.1.8.2.2 And this has caused a loss
1.2 Individual delegation
1.2.1 Governed by
1.2.1.1 Trustee Act 1925
1.2.1.2 Powers of Attorney Act 1971
1.2.1.3 Trustee Delegation Act 1999
1.2.2 Trustee Act 1925
1.2.2.1 Appointment of attorney
1.2.2.2 Can delegate any powers, trusts or discretions
1.2.2.2.1 Grant general power under s25(5)
1.2.2.2.2 Must be expressed as deed
1.2.2.3 Or specific powers or duties
1.2.2.3.1 Must be expressed as deed
1.2.2.4 Up to maximum of 12 months
1.2.2.5 Must give written notice to other trustees
1.2.2.6 Remains vicariously liable for attorney's acts
1.2.2.7 Can appoint sole trustee as attorney
1.2.3 Trustee Act 2000
1.2.3.1 Appointment of agent
1.2.3.2 Does not permit functions relating to distribution of assets
1.3 Intro
1.3.1 Traditionally could not delegate
1.3.1.1 Turner v Corney (1841)
1.3.2 Now can delegate if have authority to do so
1.3.2.1 Pilkington v IRC [1964]
2 NB
2.1 NB look to trust instrument first for powers
2.2 If no specific power, can apply to courts under s57 TA 1925
2.2.1 Beneficiaries can also authorise
2.3 Advancement and maintenance are dispositive powers
2.3.1 Cannot be delegated
3 Maintenance
3.1 Concerned with trust income
3.1.1 s31 Trustee Act 1925
3.2 Infant's maintenance, education or benefit
3.3 Vested interests
3.3.1 While under 18
3.3.1.1 May apply reasonable part of income for maintenance, education or benefit
3.3.1.2 Rest of income is accumulated
3.3.1.3 Trustees cannot be forced
3.3.1.3.1 Must consider from time to time
3.3.1.4 Would be liable if blindly followed parent's wishes
3.3.1.4.1 Turner v Turner [1983]
3.3.2 If die before 18
3.3.2.1 Will pass to estate
3.3.3 Expressly subject to prior interests
3.3.3.1 Will not apply while life tenant is alive
3.4 Contingent interests
3.4.1 While under 18
3.4.1.1 May apply reasonable part of income for maintenance, education or benefit
3.4.1.2 Rest of income accumulated
3.4.2 From age of 18
3.4.2.1 Entitled to all trust income
3.4.2.1.1 Trustees must pay
3.4.3 At age 21
3.4.3.1 Receives trust capital and accumulated income
3.4.4 If dies before 21
3.4.4.1 Would pass according to testator's will or intestacy rules
4 Advancement
4.1 Definition
4.1.1 Releasing entitlement before beneficiary is strictly entitled to it
4.1.1.1 s32 TA 1925
4.1.2 Advancement is of capital
4.1.3 Trustees cannot be forced to exercise
4.1.3.1 But must consider
4.2 Eligibility
4.2.1 Only applies to beneficiaries who have an interest in trust capital
4.2.1.1 i.e. not life tenants
4.2.2 Applies to contingent interests and remaindermen
4.2.3 Does not apply to beneficiaries of discretionary trusts
4.3 Purpose
4.3.1 Advancement and benefit
4.3.1.1 Purchase of home and furniture
4.3.1.2 Apprenticeship
4.3.1.3 Education
4.3.1.4 Discharge of debts
4.3.2 Young beneficiaries
4.3.2.1 Must be cautious if approached by parents
4.3.2.1.1 Re Pauling's ST
4.3.3 Pilkington v IRC [1964]
4.3.3.1 'Any use of the money which will improve the material situation of the beneficiary'
4.3.3.2 Involved advancement to another trust for tax purposes
4.3.3.3 May incidentally benefit others
4.4 Provisos
4.4.1 Limited to 1/2 entitlement
4.4.1.1 Cannot have further advancement if trust fund increases
4.4.1.1.1 Re Marquess of Abergavenny's Estate Act Trusts [1981]
4.4.2 Must bring into account when becomes absolutely entitled
4.4.3 Anyone with prior interest must be adult and consent in writing
4.4.3.1 Not objects of discretionary trust
4.5 Alternatives
4.5.1 Loan could be authorised investment
4.5.1.1 If secured by mortgage
4.5.2 Variation of trust
4.5.2.1 Saunders v Vautier (1841)