Seminar 14- Week 25 Duties and Powers of Trustees 2.
1. What duties does a trustee have to invest a trust fund? Be prepared to discuss ss. 3,4, 5, and 8 of
the Trustee Act 2000.
Trustees must invest the trust fund in the best interests of the beneficiaries.
Trustees Act Section 3:
General power of investment.
(1)Subject to the provisions of this Part, a trustee may make any kind of investment that he could
make if he were absolutely entitled to the assets of the trust.
(2)In this Act the power under subsection (1) is called “the general power of investment”.
(3)The general power of investment does not permit a trustee to make investments in land other
than in loans secured on land (but see also section 8).
(4)A person invests in a loan secured on land if he has rights under any contract under which—
(a)one person provides another with credit, and
(b)the obligation of the borrower to repay is secured on land.
(5)“Credit” includes any cash loan or other financial accommodation.
(6)“Cash” includes money in any form.
Section 4:
Standard investment criteria.
(1)In exercising any power of investment, whether arising under this Part or otherwise, a trustee
must have regard to the standard investment criteria.
(2)A trustee must from time to time review the investments of the trust and consider whether,
having regard to the standard investment criteria, they should be varied.
(3)The standard investment criteria, in relation to a trust, are—
(a)the suitability to the trust of investments of the same kind as any particular investment proposed
to be made or retained and of that particular investment as an investment of that kind, and
(b)the need for diversification of investments of the trust, in so far as is appropriate to the
circumstances of the trust.
[F1(4)This section has effect subject to section 292C(6) of the Charities Act 2011 (which disapplies
the duties under this section in cases where they would otherwise apply in relation to a social
investment within the meaning of Part 14A of that Act).
Section 5:
Advice.
1. What duties does a trustee have to invest a trust fund? Be prepared to discuss ss. 3,4, 5, and 8 of
the Trustee Act 2000.
Trustees must invest the trust fund in the best interests of the beneficiaries.
Trustees Act Section 3:
General power of investment.
(1)Subject to the provisions of this Part, a trustee may make any kind of investment that he could
make if he were absolutely entitled to the assets of the trust.
(2)In this Act the power under subsection (1) is called “the general power of investment”.
(3)The general power of investment does not permit a trustee to make investments in land other
than in loans secured on land (but see also section 8).
(4)A person invests in a loan secured on land if he has rights under any contract under which—
(a)one person provides another with credit, and
(b)the obligation of the borrower to repay is secured on land.
(5)“Credit” includes any cash loan or other financial accommodation.
(6)“Cash” includes money in any form.
Section 4:
Standard investment criteria.
(1)In exercising any power of investment, whether arising under this Part or otherwise, a trustee
must have regard to the standard investment criteria.
(2)A trustee must from time to time review the investments of the trust and consider whether,
having regard to the standard investment criteria, they should be varied.
(3)The standard investment criteria, in relation to a trust, are—
(a)the suitability to the trust of investments of the same kind as any particular investment proposed
to be made or retained and of that particular investment as an investment of that kind, and
(b)the need for diversification of investments of the trust, in so far as is appropriate to the
circumstances of the trust.
[F1(4)This section has effect subject to section 292C(6) of the Charities Act 2011 (which disapplies
the duties under this section in cases where they would otherwise apply in relation to a social
investment within the meaning of Part 14A of that Act).
Section 5:
Advice.
