Deck 8: Trustees Appointment and Removal; Trustees Fiduciary Duties

Question 1

The trustee holds the legal title to the trust property and manages the trust.

Answer 1

True

Question 2

Can a trustee make a profit from a trust?

Answer 2

Generally, a trustee cannot make a profit from a trust. The trustee's role is to manage the trust's assets for the benefit of the beneficiaries, not for their own personal gain. This is part of the trustee's fiduciary duty, which requires them to act in the best interests of the trust and its beneficiaries. If a trustee were to profit from the trust, it could be seen as a breach of this duty. However, trustees are typically entitled to reasonable compensation for their services, which is usually outlined in the trust agreement. This compensation is not considered a profit, but rather payment for the work they do in managing the trust.
However, there are a few exceptions where a trustee may receive financial benefits:
1. **Trustee Fees**: Trustees are typically entitled to reasonable compensation for their services, as outlined in the trust document or as allowed by state law. This compensation is not considered a profit but rather a fee for the work performed in administering the trust.
2. **Reimbursement of Expenses**: Trustees can be reimbursed for legitimate expenses incurred while managing the trust. These expenses must be directly related to the administration of the trust and not for the trustee's personal benefit.
3. **Pre-Existing Arrangements**: If the trustee is a professional or a business that provided services to the settlor (the person who created the trust) before the trust was established, and if the trust document explicitly allows for the continuation of such services at a fair market rate, then the trustee may continue to be paid for these services.
4. **Special Skills or Expertise**: If a trustee has special skills or expertise (e.g., an investment advisor or attorney), they may be entitled to additional compensation for providing those professional services to the trust, provided that the trust document allows for such compensation and that the fees are reasonable and in line with professional standards.
5. **Beneficiary Approval**: In some cases, beneficiaries may agree to additional compensation for the trustee, especially if the trustee performs duties that go above and beyond the normal scope of trust administration.
It is important to note that any profit or benefit received by the trustee outside of these exceptions could be considered a breach of fiduciary duty and could result in legal action against the trustee. Trustees must always act transparently and in accordance with the terms of the trust document and applicable laws. If there is any doubt about whether a particular benefit is permissible, it is advisable for the trustee to seek legal advice or the consent of the beneficiaries or the court.

Question 3

Name the 4 ways that a trustee can be removed from office:

Answer 3

No Answer.

Question 4

Name the 5 ways that a trustee can retire.

Question 5

Name a section of the Trustee Act 1925 under which the court can appoint a new trustee.

Question 6

Under which section of the Trusts of Land and Appointment of Trustees Act, 1996, do beneficiaries enjoy a right to appoint a new trustee?

Question 7

Under which of these circumstances does s 36(1) of the Trustee Act 1925 give the power to appoint a new trustee? When a trustee…

A)Has died.
B)Is outside of the United Kingdom for a period of more than 12 months.
C)Wishes to resign from the trust.
D)Refuses to act as a trustee.
E)Is unfit to act as a trustee.

Question 8

A trustee's duty to act in good faith underpins their role.

Question 9

If the trustee is the last one of the original trustees to die, his personal representatives will become the new trustees of the trust.

Question 10

An individual chosen by the settlor to be a trustee must accept the office of trustee.

Question 11

It is the beneficiary that normally chooses the trustee for their trust.

Question 12

There can be any number of trustees of a trust.

Question 13

In which case was it established that the trustee must not put himself into a position where his duty to the trust and his own interest may conflict?