Self-test questions: Trustee Management Obligations and the Appointment of New Trustees

. Must a trustee have the power to dispose of the trust's assets?

Yes - an absolute discretion to dispose of the assets

No - trustees never a right to dispose of trust assets

No - some trusts merely require the trustee to hold assets and then vest that same property

Yes - a discretion to sell up to half of the trust's assets

. Under s17 Trustee Act 1925, under which of the following mechanisms are trustees authorised to sell trust assets?

By car boot sale

By auction

By private contract

To themselves

. Are trustees under a duty to insure trust assets?

Yes - but only if the assets is a 'priceless and irreplaceable chattel'

Yes - they must insure all trust assets

No - they are never permitted to insure trust assets

No - they merely have a power to insure against a risk of loss or damage

. Is a trustee permitted to enter into a compromise should a dispute arise?

Yes - they can compromise against the wishes of the beneficiaries

No - they have no power to compromise at all

Yes - but only if they have the consent of the beneficiaries

No - because all compromises are against the interests of the beneficiaries

. Under the common law, were trustees permitted to delegate their duties?

No - they could not delegate any of their duties

Yes - where it was in the ordinary course of business

Yes - at their absolute discretion

Yes - at their absolute discretion, and they had not liability for the actions of their agent

. Under s11(2) Trustee Act 2000, which function can be delegated by a trustee?

Decisions as the distribution of trust assets

Decisions as to whether costs should be debited to capital or income

Maintenance of commercial property

The appointment of new trustees

. Which of the following cannot be appointed an agent by a trustee?

A beneficiary

A bankrupt

A fellow trustee

A solicitor

. Under an express trust, which of the following are disbarring characteristics for being a trustee?

Lack of legal capacity

Living in a foreign jurisdiction

Being a foreign national

Being an infant

. At which point may an individual disclaim their position as trustee?

After they accept the position of trustee

Before they accept the position of trustee

They can never disclaim their position

Before they accept the position of trustee, but only if done so through a deed

. For a trustee to retire under s39 Trustee Act 1925, how many trustees must remain after the retirement of the trustee?

1

3

2

1 per beneficiary

. Under s36 Trustee Act 1925, which of the following circumstances is not relevant in allowing the existing trustees to appoint new substitute trustees?

The trustee refuses to act

The trustee remains outside of the UK for more than 12 months and has no intention of returning

The trustee remains outside of the UK for more than 12 months

A trustee has died

. Under s19(2)(b) Trusts of Land and Appointment of Trustees Act 1996, how can the beneficiaries of trust appoint a new trustee?

Orally

By deed

In writing

With the consent of the settlor only

. When can the courts appoint a new trustee under s41 Trustee Act 1925?

'Whenever it is expedient'

'Whenever it is expedient to appoint…if it is found inexpedient, difficult or impractical so to do without the assistance of the court'

'Whenever the trustee lacks capacity'

'Whenever the trustee is a bankrupt'

. Where an express trust has multiple beneficiaries, what duty are trustees under?

To act even-handedly

To act in the interests of the majority

To act in the interests of the minority

To act in their own interests

. Where a discretionary trust has been created, are the trustees under a duty to act even-handedly?

Yes - they must act impartially

No - they only have a duty to no take into account irrelevant, irrational or improper factors

No - they can favour which ever party they personally prefer

No - they must always favour the mostly likely even beneficiaries

. Where a successive interest has been created, are the trustees under a duty to act even-handedly?

Yes - they must

No - they only have a duty to no take into account irrelevant, irrational or improper factors

No - they can favour which ever party they personally prefer

No - they must always favour the life interest

. Britanya is the trustee of a painting that is to be vested in the beneficiary when they reach the age of 40. Which of the following powers would Britanya require to fulfil her role as trustee?

Power to insure

Power to repair and maintain

Power to store

Power of sale

. Tiago is the trustee of a block of flats. What management powers would he require?

Power to maintain and repair

Power to rent out the flats

Power to knock down the flats

Power to sell

. Julio has been appointed as a trustee of John's tangible personal property, and has been instructed to sell them and distribute the proceeds to various charities. Under s12 Trustee Act 1925, how is Julio permitted to sell John's personal property?

Bingo prizes

Auction

Raffle

Private contract

. Ji is the trustee of the late Earl of Bognor's estate. There is a dispute as to what property constitutes the Earl's estate, and his mistress is claiming a substantial amount of the assets belong to her. She has proposed a compromise to resolve the dispute. Given the complexity of her claims, Ji is inclined to accept the compromise as litigation is seen as being too risky. The Earl's family, though, detest the idea of compromising, and wish to fight the mistress' claims. Can Ji enter into the compromise?

Yes - but only if they family consent

Yes - even though the family object

No - compromises are never permitted

Yes - but only if the two parties enter into mediation

. Yudish is the trustee of a Rafael statue. He is worried that because it is stored in a chicken coup, it might get damaged or destroyed. Can Yudish insure the statue?

Yes - he must insure the statue

No - he has no right to insure the statue

Yes - he has the power to use his discretion in insuring the statue

. Chisa has been a trustee for 15 years and is tired of the responsibility. She does not wish to retire as she receives a yearly payment for the services she provides the trust, but wishes to delegate her functions. Which functions will she not be able to delegate?

The physical management and maintenance of the trust assets

The powers to invest

The power to insure

The power to appointment new trustees

. Chisa, still tired of being a trustee, has placed a job advert online looking for an agent. She has received several replies. Which of the following applicants would she not be able to appoint?

A stockbroker

One of the trust's beneficiaries

A recently bankrupted airline pilot

A bouncer

. Harold has recently accepted a job in Namibia, but is also a trustee of his orphaned niece's trust. He therefore wishes to retire as a trustee. There is one other trustee, and there are no express powers concerning retirement. How can Harold retire?

Under s36 Trustee Act so long as a new trustee is appointed at the same time

Under s39 Trustee Act so long as he uses a deed

In mere writing

With the follow trustee's consent

. Clarissa is a trustee and now intends to move to Bolivia. She does not wish to retire as she will have WIFI and believes she can carry out her duties online. Will she be required to retire as a trustee?

Yes - anyone outside of the UK for more than 6 months must retire

No - anyone outside of the UK for more than 12 months may be substituted but does not have to retire

No - trustees can never be made to retire

Yes - anyone outside of the UK for more than 12 months must retire

. Helga is the trustee of a discretionary trust. There are twelve beneficiaries, but she is very fond of 3 of them in particular. She therefore wishes to purchase shares in their favourite cereal manufacturer. Will she be breaching any duty to act even-handedly?

Yes - she must act even-handedly among all beneficiaries

No - so long as the investment benefits all of the beneficiaries and is not irrational

Yes - even having favourites is a breach

No - she has absolute discretion as to what she can invest in

. Abdul is a trustee. The settlor has given a life interest to a parent and the remainder to a child. Abdul wishes to purchase capital accreting assets only. Will Abdul be breaching any duty to act even-handedly?

No - he owes no duty to act even-handedly

No - he must be concerned with the overall value of the trust fund not its form

Yes - he must balance the need for income as well as capital

Yes - he must only purchase income producing assets

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