Chapter 12 Self-Test Questions

Which of the following statements are true?

It is only possible for an individual to be properly classified as a 'trustee' if they are vested with legal title to property.

It is possible for an individual to be properly classified as a 'trustee' when they have an equitable interest.

An individual can be appointed as a trustee even if they do not yet have title in the property.

There is no requirement that there be property at all.

What happens when a sole trustee dies?

The trust fails and the property is held on resulting trust for the settlor.

The trust fails and the property is transferred to the beneficiaries.

The trust property passes to the trustee's personal representative who distributes it according to the trustee's will.

The trust property passes to the trustee's personal representative who is a trustee until a new trustee can be appointed.

In which circumstances will an individual be appointed as a trustee of an express trust?

A person will be an express trustee when their conscience has been affected.

A person will be an express trustee when appointed as such by the settlor, even if they are not aware.

A person will be an express trustee only if they voluntarily accept the position.

A person will be an express trustee only if they agree to the position in writing.

'A person cannot be the trustee of a resulting trust without knowledge of the factors affecting his conscience.'

True.

False.

In her will, Alice leaves property for Benita to hold on trust for Carla. The will states that if Benita is unavailable, then any other suitable person can be appointed. Benita refuses to accept the appointment of trustee.
What is the consequence for the trust?

The court will appoint a trustee.

The trust will fail because Alice specifically named Benita.

Alice will take the property absolutely.

There will be an automatic resulting trust.

Which of the following statements are true?

All trustees are paid for their services.

Most trustees are paid for their services.

It is possible for a trustee to be paid for their services.

Trustees are entitled to receive payment from the trust fund even if this is not provided in the trust instrument.

'Professional trustees are less likely to be relieved of liability for breach of trust.'

True.

False.

'A charity trustee is the same as a trustee of a charity.'

True.

False.

Where an individual intermeddles with a trust, how will they be liable?

They will be liable to compensate the beneficiary for meddling.

They will be liable in tort for trespassing over the trust obligations.

They will be treated as an express trustee.

They will be treated as a constructive trustee.

What duties is a trustee de son tort subject to?

They are not subject to any duties beyond the duty not to breach the terms of the trust.

They are not subject to any duties.

They are subject to duties which are delegated by the other trustees.

They are subject to the same fiduciary duties as the other trustees.

'There are no limits on the number of trustees for trusts of any property.'

True.

False.

Who can appoint new trustees?

The trust instrument may give a power to a particular person to appoint new trustees.

The court can appoint new trustees.

Only existing trustees can appoint new trustees.

The settlor can appoint new trustees.

When considering who to appoint as a new trustee, what should the court consider?

The intentions of the settlor or testator.

The desires of the beneficiaries.

The effect on the administration of the trust.

Ethical issues.

When can the court appoint a new trustee?

The court can appoint a new trustee only when there is no other authorized person willing and able to make an appointment.

The court can appoint a new trustee only when a previous trustee has retired.

The court can appoint a new trustee only when there are no trustees.

The court can appoint a new trustee at any time.

How can a trustee be removed from their office?

The trustee can resign.

The trustee may be removed by the court.

The trustee can be removed by an individual with the power to do so in the trust instrument.

The trustee can be removed by the settlor.

What is the consequence if a trustee purports to retire, but fails to comply with the statutory requirements?

They will remain in office.

They will be responsible for finding their own replacement.

They will no longer have any active responsibilities but will still be liable for any breaches of trust.

They will no longer be in office.

After retirement, what breaches of trust will a (former) trustee be liable for?

They will be liable for all breaches of trust as their duties continue post-resignation.

They will be liable for all breaches which occurred as a direct consequence of their resignation.

They will be liable for all breaches that occurred prior to their resignation.

They will not be liable for any breaches.

'Where a power to remove a trustee has been exercised, the trustee is treated as having died.'

True.

False.

'A trustee cannot be removed simply because they are unwilling to act as a trustee.'

True.

False.

'The fundamental concerns are the welfare of the beneficiaries and the preservation of the trust property. The court may remove a trustee where they have abused the trust or endangered the trust property.'

True.

False.

'The court will automatically remove a trustee from office following a breach of trust.'

True.

False.

When can a trustee be reimbursed from the trust fund for their expenses?

When they subjectively consider the expenses reasonable.

When they subjectively consider the expenses reasonable in the light of the circumstances.

When the expenses were properly incurred.

When the court gives directions allowing reimbursement.

What happens when the trust fund is not sufficient to reimburse the trustee?

The trustee has no course of action.

The trustee can sue the settlor.

The trustee can be indemnified by the court.

The trustee can be indemnified by the beneficiaries.

What happens if a trustee is involved in litigation, but the benefits incurred were outweighed by the risk such that the trustee's costs were not properly incurred?

The trustee will bear the cost personally.

The trustee has a defence if they were advised by a solicitor.

The trustee is entitled to be reimbursed from the trust fund.

The trustee is entitled to be reimbursed by the beneficiaries.

In the event that a trustee has acted in breach of fiduciary duty, what is the equitable allowance that might be awarded by the court?

It reflects the value of the work done by the trustee despite the breach.

It requires the trustee to compensate the trust for more than the loss in reflection of their misconduct in the breach.

It allows the court to nullify the breach because it was beneficial to the trust.

It is a nominal amount reflecting that the trustee was not a professional.

'If the burden on the trustee significantly increases, the trustee is able to apply to the court for an increase in the remuneration provided in the trust instrument.'

True.

False.

How must trustees make decisions?

All trusts require unanimity of decision-making.

All trusts allow decisions to be made by a majority.

Some trusts require unanimity of decision-making and others require a majority decision.

The trust instrument can provide for decisions made by a majority.

'Trustees must give reasons for their decisions as to the exercise of a power.'

True.

False.

What is the consequence of a trustee acting outside the scope of their power?

The exercise will be void.

The exercise will be voidable.

The exercise will be valid, but the beneficiaries can reject the exercise of the power.

The beneficiaries can apply to the court which will determine the appropriate consequence.

What is the consequence of a trustee acting within the scope of a power but in breach of duty?

The exercise will be void.

The exercise will be voidable.

The exercise will be valid, but the beneficiaries can reject the exercise of the power.

The beneficiaries can apply to the court which will determine the appropriate consequence.

'The assessment of whether a non-professional trustee acted in bad faith concerns whether the trustee believed that they were acting in the best interests of the beneficiaries.'

True.

False.

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