FLK2 Appointing Trustees / Trustee Powers / Trustee Duties Trusts
Most adults who are mentally capable can be appointed as trustees.
Some companies (trust corporations) handle trust management as a business.
Power for trustees are found in the Trustee Act 1925
Powers for beneficiaries are outlined in Trusts of Land and Appointment of Trustees Act 1996
KEYWORDS
Income: money generated regularly from trust assets e.g. dividends, interest, rent
Capital: Main trust property
Letter of wishes: when setting up a discretionary trust, the settlor may give the trustees a non-binding letter of
wishes outlining how they would like the trustees to exercise their discretion when distributing trust property.
The standard of care is objective. When managing a trust, a trustee is required to act with the same level of care
and caution that a reasonable businessperson would apply to their own affairs. Speight v Gaunt 1883
When a trustee is appointed, they are required to do the following:
1. Confirm their appointment is valid
2. Determine which assets are part of the trust and take reasonable steps to gain control of those assets
3. Review trust documents to understand how the trust operates
4. Check for any previous breaches of trust and take steps to address them; and
5. If there are physical assets, ensure a proper inventory is created.
, FLK2 Appointing Trustees / Trustee Powers / Trustee Duties Trusts
Trusts involving land:
Minimum of 2 trustees OR a single trust corporation.
No more than 4 trustees
Trusts involving personal property
Only 1 trustee required
Can be more than 4 trustees
Trustee Duties:
Trustees have ‘duties’ the beneficiaries can enforce
Trustees are like managers of the trust and in doing so MUST act in the best interests of the beneficiaries
E.g. trustee duty to distribute trust assets to the correct beneficiaries at the appropriate time in fixed interest
trusts.
General duties:
Duty to follow the trust’s terms while acting in the best interest of the beneficiaries
Investment duties:
Duty to maintain or grow the value of the trust fund for the beneficiaries
Fiduciary duties:
Prevents trustees from exploiting the trust for personal gain and requires them to avoid conflicts of interest
If trustees breach these duties beneficiaries can take the matter to court to hold the trustees liable
In general trustees have a duty to:
1. Act impartially between beneficiaries
Most adults who are mentally capable can be appointed as trustees.
Some companies (trust corporations) handle trust management as a business.
Power for trustees are found in the Trustee Act 1925
Powers for beneficiaries are outlined in Trusts of Land and Appointment of Trustees Act 1996
KEYWORDS
Income: money generated regularly from trust assets e.g. dividends, interest, rent
Capital: Main trust property
Letter of wishes: when setting up a discretionary trust, the settlor may give the trustees a non-binding letter of
wishes outlining how they would like the trustees to exercise their discretion when distributing trust property.
The standard of care is objective. When managing a trust, a trustee is required to act with the same level of care
and caution that a reasonable businessperson would apply to their own affairs. Speight v Gaunt 1883
When a trustee is appointed, they are required to do the following:
1. Confirm their appointment is valid
2. Determine which assets are part of the trust and take reasonable steps to gain control of those assets
3. Review trust documents to understand how the trust operates
4. Check for any previous breaches of trust and take steps to address them; and
5. If there are physical assets, ensure a proper inventory is created.
, FLK2 Appointing Trustees / Trustee Powers / Trustee Duties Trusts
Trusts involving land:
Minimum of 2 trustees OR a single trust corporation.
No more than 4 trustees
Trusts involving personal property
Only 1 trustee required
Can be more than 4 trustees
Trustee Duties:
Trustees have ‘duties’ the beneficiaries can enforce
Trustees are like managers of the trust and in doing so MUST act in the best interests of the beneficiaries
E.g. trustee duty to distribute trust assets to the correct beneficiaries at the appropriate time in fixed interest
trusts.
General duties:
Duty to follow the trust’s terms while acting in the best interest of the beneficiaries
Investment duties:
Duty to maintain or grow the value of the trust fund for the beneficiaries
Fiduciary duties:
Prevents trustees from exploiting the trust for personal gain and requires them to avoid conflicts of interest
If trustees breach these duties beneficiaries can take the matter to court to hold the trustees liable
In general trustees have a duty to:
1. Act impartially between beneficiaries
