Self-test questions: Duty and Powers of Investment and Accountability of Trustees

1. Must every trust grant its trustees the power to invest?

2. Should the trust document fail to set out a clear power of sale, will the trustees have a default statutory power?

3. Under the previous statutory regime of the Trustee Investments Act 1968, which of the following investments were a trustee not permitted to purchase without first taking advice?

4. Is an unsecured loan classified as an investment?

5. Can the purchase of land that is intended to be exclusively occupied by the beneficiary be considered an investment?

6. Which theory underlines a trustees' investment obligation?

7. What are the 'standard investment' criteria set out in s4 Trustee Act 2000?

8. In which of the following situations can a trustee elect not to take investment advice?

9. When making an investment decision, what is the primary consideration that should be adopted by the trustee?

10. Can ethical considerations ever form part of a trustee's investment decision?

11. When must a trustee review the trust's investments?

12. Can a trustee delegate their investment decisions to agents?

13. If a trustee does delegate their investment duties, which of the following actions must the trustee continue to do?

14. If a trust has several trustees, on what basis must they act when making decisions?

15. Can a court compel a trustee to exercise their discretion in a particular manner?

16. Must a trustee give reasons to the beneficiaries for their decisions?

17. Danika is a trustee, and the only assets held on trust is an ancient Roman statue. The terms of the trust state that it is to be vested in Nitin when they reach the age of 36. Which of the following powers will Danika not receive?

18. Aruna has recently been appointed trustee over a fund of £70,000. The trust document is silent on any investment powers that the trustee has. Will Aruna have any powers to invest the trust property?

19. Desiree is a trustee, and has been approached by a work colleague about the trust lending them £45,000. This money will be used to help set up a new business. Does Desiree, who is interested in the 3.56% interest rate offered by her colleague, have the power to enter into such a loan?

20. Cecile wishes to invest trust property in the housing market. However, one of the beneficiaries is in need for a house, and is likely going to need it for 10 years. Will Cecile be able to invest in land in these circumstances?

21. Owusu is a trustee of a fund of £567,000 that he is required to invest. Not wanting to spend too much effort in administering this fund, he wants to purchase shares in 2 companies - one long-haul airline and one short-haul airline. Will Owusu be permitted to make these investments?

22. Tomas is a full-time accountant and has been appointed as a paid trustee. What standard of care will be applicable to them?

23. Tyreece is a trustee. They have no special skills or qualifications and they are not being remunerated for their efforts. Which standard of care will be applicable to them?

24. Gethin is trustee. He has previously, in a personal capacity, only ever bought £4,500 worth of shares. The trustee fund is worth £456,344. Will Gethin be required to seek advice before making an investment?

25. Musa is thinking of investment trust assets. The trust fund has £564,234 in assets. However, Musa is a committed environmentalist, and is only willing to purchase shares in vegan friendly and climate neutral companies, even if they only have a low return rate. The beneficiaries and settlor have no strong views on these issues. Will Musa be permitted to impose these investment restrictions on himself?

26. Ola is trustee of her local temple's investment fund. She is worried of making investments in the entertainment industry because this will involve purchasing shares in companies that sell alcohol, permit gambling and encourage fornication. Can Ola impose such a restriction on the fund's investments?

27. Yusuf has recently been appointed as a replacement trustee. He is worried about how often he should review the trust's investments as the previous trustee only reviewed them every 13 months. How often should Yusuf review the investments?

28. Tatiana is furious with her trustees. They have elected to invest a sizeable chunk of the trust assets in a fashion company that they know Tatiana despises. Are the trustees required to provide reasons for their decision to invest in the company?

Back to top