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Investment Notes

GDL Law Notes > GDL Equity and Trusts Notes

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E&T: Investment Introduction

- Trustees under duty to invest trust fund for benefit of beneficiaries - source of power to invest:

1. trust instrument.

2. statute: Trustee Act 2000 - applies where trust instrument silent. came into force 1 Feb 2001: repealed Trustee Investments Act 1961. applies to all trusts (whenever created).

- TA 2000: fixes problems with old law.

1. new statutory duty of care. old law: common law duty of prudence (Speight v Gaunt [1883]; Re Whitely; Whitely v Learoyd [1886]). but common law duty still relevant: statutory duty only applies to some aspects of work.

2. widens range of investments. old law: extremely limited options. but still limited - s8 TA 2000: equitable interests in land + overseas land not authorised investments.

3. remuneration for professional trustees allowed. old law: trustees could not charge unless express charging clause in instrument.

4. allows delegation of investment decisions. old law: no delegation unless authorised by trust instrument ? could not invest in discretionary portfolios.

- Structure of TA 2000: 6 parts. Part I: new statutory duty of care. Part II: trustee investment powers (other than land). Part III: trustee investment powers over land. Part IV: agents/nominees and delegation. Part V: remuneration. Part VI: miscellaneous.

Part I TA 2000: Statutory Duty of Care

s1(1): whenever duty applies, t. must exercise care + skill reasonable in circs., having regard to: (a): any special knowledge or experience t. has or holds himself out as having; and partially subjective test: t. judged by higher standard if holds self out as expert. (b): professional trustee - any special knowledge or experience that it is reasonable to expect of person acting in course of that kind of business/profession. objective test: always applies to professional trustee. s2: Schedule 1 - provisions about when duty of care applies. Schedule 1: application of duty of care. para 1: investment. para 2: acquisition of land. para 3: agents, nominees and custodians (inc. selection, determining terms, policy statement). para 7: duty can be wholly/partly excluded by trust instrument.

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