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Trusts | Management

Control of Trusts: Overview

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Control of Trusts: Overview

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Variation of beneficial interests

  • Saunders v Vautier: B require Ts / transfer property / to B (end trust) / or new Ts / B: sui juris / sole B entitled / vested interest / extended Bs: all existence & ascertainable / sui juris / all agree / discretionary trusts: Bs ascertainable, sui juris & agree Re Smith
  • uncertain if Saunders v Vautier applies / Denley purpose trusts (valid trusts for non-charitable purposes due to direct or tangible benefit to ascertainable individuals) / purpose merely motive behind gift / trust money belonged to owners of estate / Saunders v Vautier applied Re Bowes / no authoritative case law
  • Variation of Trusts Act 1958 s.1(1) : court can approve variation for B's benefit / if B not sui juris / unascertained B remainder (should trust fail or B die) / unborn B
  • valid variation: tax reasons Bernstein v Jacobson / to contingency / may sought (from 18 to 25 if for benefit: more mature despite risk that won't reach 25) / court satisfied reasonable bargain which adult prepared make / can be risk not result in being better off Re Cohen's WT
  • court only approve variation not resettlement Re Holt's Settlement / variation if leaves the substratum of the trust intact (Bs unchanged even if interests altered) Re Ball's Settlement / variation: Ts & administrative powers remain the same Wyndham v Egremont / irrelevant if variation contrary to S's wishes Goulding v James / no power consent for sui juris B Knocker v Youle

Settlor's control

  • Ts must obey S's directions trust instrument / & duties under general law / Ts duty to act best interest Bs / court set aside: Ts merely did as S ordered / not exercise own discretion Turner v Turner
  • S cannot sue for breach of trust: B's right to enforce / S cannot point or remove Ts: unless clause in trust instrument / himself or nominee statutory power of appointment (under s.36 Trustee Act 1925)
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Control of Trusts: Overview

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Appointment & removal of trustees

  • Bs appoint powers: express power in trust instrument / s.36 TA 1925 / s.41 TA 1925 / s.19 TOLATA 1996 / court's inherent jurisdiction
  • express power: trust instrument / B's may give power / or nominee statutory power under s.36 TA 1925
  • s.36 TA 1925 provides for removal of trustees on certain grounds but a new trustee must be appointed in their place
  • s.36(1): grounds for replacing T: outside UK for more 12 months / refuses to act or wishes to retire / died / unfit to act (bankrupt) / infant / incapable
  • s.36(1): persons able to appoint Ts: nominee in trust instrument / if replacing: surviving or continuing Ts / 36(4): if none: PRs
  • s.36(1): written removal & appointment / s.36(6): additional Ts if not exceed 4 / appointer cannot appoint himself
  • s.36(8): continuing Ts include retiring T / removed for other reasons not Re Stoneham's Settlement
  • property vest automatically s.40 TA 1925 / shares: requires stock transfer form & registration new Ts / land: new Ts need registered at Land Registry
  • s.36 TA 1925 allows Ts control of appointment / trust instrument expressly provides for contrary arrangement / discretionary & Bs cannot dictate Re Brockbank
  • s.41 TA 1925: Bs apply court / court can appoint new T / replacements or additional / if inexpedient, difficult or impracticable to appoint without the court's assistance no power to remove Ts without replacement / not exercise if appointment can be made under s.36 TA 1925 Re Higginbottom
  • s.19 TOLATA 1996: if no nominated person for appointing Ts / & B absolutely entitled & sui juris / Bs give written direction: T to retire / appoint new specified Ts / T must declare retirement by deed / s.19 can be excluded by S
  • Bs & Ts / ask court to exercise inherent jurisdiction / remove T & not replace / no grounds / main factor: welfare of Bs / friction between Bs & Ts Letterstedt v Broers / friction between Ts Re Consiglio Trusts / unlawful acts Clark v Heathfield
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Control of Trusts: Overview

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Retirement of trustees

  • T retire / s.36 TA 1925/ s.39 TA 1925/ express power under trust instrument / court granting order inherent jurisdiction
  • s.36 TA 1925: applies if retiring T replaced / s.39 TA 1925 if not to be replaced (at least 2 remain) / effected by deed
  • T liable breaches when in office / if T retires knowing or suspecting other Ts may breach / duty remain in office & prevent breach

Controlling trustees: beneficiaries

  • Bs enforce T perform administrative duties (management/investments) / & dispositive matters (distribution of funds) / not compel exercise powers or discretion
  • investments: T duty to invest in authorised investments / discretionary choice of authorised investment / Bs force authorised investment but not what
  • discretionary trusts: Ts' duty select object / discretion which object / Bs apply order duty carried out but not how

Controlling trustees: courts

  • courts reluctant interfere / way Ts exercise discretions Tempest v Lord Camoys
  • courts aside decisions: if T acted outside powers or breached duty / act differently not considered relevant factors Re Hastings-Bass / result breach of duties Pitt v Holt; Futter v Futter / capricious Re Manisty's Settlement / fraud on power (aim of benefitting non-object) Duke of Portland v Lady Topham
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Control of Trusts: Overview

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Beneficiaries: right to information

  • Ts not obliged to provide Bs reasons why exercised discretion Re Beloved Wilkes Charity / if B legitimate expectation discretion will be exercised in his favour: entitled warned if Ts change policy Scott v National Trust
  • Ts duty: keep accounts of trust property / evidence how trust fund invested / allow Bs to inspect
  • Bs right disclosure documents (showing how discretionary decisions made): proprietary right from interest in property O'Rourke v Darbishire
  • object discretionary trust / not entitled to disclosure docs / confidential Re Londonderry's Settlement
  • no B or object / right to inspect trust documents / court inherent jurisdiction / order disclosure / not dependant on C having proprietary interest in trust property / court consider: competing interests Bs, Ts & S Schmidt v Rosewood
  • S discretionary trust / letters of wishes / confidential / not binding / court discretion order disclosure Breakspear v Ackland
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