Deck 9: Trustees Non-Fiduciary Duties and Powers

Question 1

A passive trustee will be responsible for decisions which cause loss to the trust fund if he allows an active co-trustee to make decisions on his own.

Answer 1

True

Question 2

What is the 'Londonderry principle'?

Answer 2

No Answer.

Question 3

Trustees are jointly or severally liable for the actions of other trustees.

Answer 3

Trustees are generally jointly liable for the actions of other trustees. This means that each trustee is responsible for the entire amount of any liability incurred as a result of their collective decisions or actions. However, the extent of this liability can depend on the specific laws and regulations in different jurisdictions, as well as the terms of the trust deed. If a trustee can prove that they acted prudently, in good faith and in accordance with the trust deed, they may be able to avoid personal liability for the actions of co-trustees.
In many jurisdictions, trustees are considered to be fiduciaries, which means they have a legal obligation to act in the best interests of the beneficiaries and to manage the trust assets with care, skill, and diligence. As fiduciaries, trustees can be held liable for breaches of their duties.
**Joint Liability:**
Under the principle of joint liability, all trustees are collectively responsible for the actions taken in the administration of the trust. If one trustee commits a breach of trust, all trustees could potentially be held liable for the consequences of that breach, even if they did not directly participate in the action. This is because trustees are expected to act together in the management of the trust and to supervise each other's conduct.
**Several Liability:**
Several liability, on the other hand, means that each trustee is only responsible for their own actions and not for the actions of other trustees. If a trustee acts independently and commits a breach of trust without the involvement or consent of the other trustees, they may be solely liable for that breach.
**Joint and Several Liability:**
In some cases, trustees may be jointly and severally liable, which means that a third party or a beneficiary can choose to hold one or more trustees responsible for the full amount of the liability arising from a breach of trust. The trustee(s) who pays for the liability can then seek contribution from the other trustees.
**Limitations and Protections:**
The trust document itself may include provisions that limit or modify the liability of trustees. Additionally, trustees may be protected from liability if they act in good faith, rely on professional advice, or if they are indemnified by the beneficiaries.
In conclusion, whether trustees are jointly or severally liable for the actions of other trustees is not a one-size-fits-all answer and will depend on the legal framework governing the trust, the specific terms of the trust agreement, and the nature of the actions taken by the trustees. Trustees concerned about liability should seek legal advice to understand their obligations and potential exposure under the law.

Question 4

In Hallows v Lloyd (1888) LR 39 Ch D 686, which trustees' duties were outlined by Kekewich J?

Question 5

What does a breach of non-fiduciary duty generally mean for the trustee?

Question 6

Which of these powers does a trustee enjoy?

A)a power to invest the trust property.
B)a power to maintain beneficiaries.
C)a power to advance capital to the beneficiaries before they become entitled to it.
D)a power to advance the income of the beneficiaries.

Question 7

Under section 5 of the Trustee Act 2000, before investing and when reviewing the investments, the trustees must obtain and consider 'proper advice' as to whether the investment meets the standard investment criteria.

Question 8

Section 3 of the Trustee Act 2000 narrowed a trustee's investment powers considerably.

Question 9

Trustees have a duty to pay the trust fund to the beneficiaries.

Question 10

Over the last century, the courts have narrowed the circumstances when beneficiaries are entitled to see information about the trust.

Question 11

If an agent, nominee or custodian is appointed, the trustees' task does not end upon that appointment.

Question 12

If trustees do not delegate an agent prudently they are liable for his errors.

Question 13

A beneficiary can be appointed as an agent of the trust.

Question 14

Trustees may appoint agents, nominees and custodians to whom they may delegate their functions.

Question 15

Trustees enjoy a wide ability to delegate their powers. This ability is set out in Part IV of the Trustee Act 2000.

Question 16

What does section 27 of the Trustee Act 1925 provide?