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LPC Law Notes Private Client Notes

Trustee Powers Notes

Updated Trustee Powers Notes

Private Client Notes

Private Client

Approximately 235 pages

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TRUSTEE POWERS

Administrative Provisions – statutory provisions contained in Trustee Acts 1925 & 2000 Examples:

Common Extensions to Powers of Trustees

Power to Invest
  • Wide investment powers in Part II TA 2000 – s.3

    • s.4 – consider suitability and diversification

    • s.5 – take advice from a competent person “unless they decide this is inappropriate or unnecessary in the circumstances”

  • Expand investment powers

    • common to expand to enable widest possible investment, including in foreign and non-income-producing assets

    • extend power to purchase a property for investment or occupation to include power to purchase/improve property and to impose conditions regarding occupation

Power to Purchase a House
  • S.8 TA 2000 – power to buy freehold/leasehold property for occupation by a beneficiary

  • Extension only needed if further powers are required

Power of Maintenance

S.31 TA 1925

  • Permits trustees to apply available income for the maintenance, education, and benefit of minor beneficiaries

  • Amending: give trustees an unfettered discretion, and removing right for contingent beneficiary to receive income at age 18

    • N.B. The Inheritance and Trustees’ Powers Act 2014

Power of Advancement

S.32 TA 1925

  • Permits trustees to apply capital for the advancement or benefit of the person with a vested or contingent interest in the capital

  • Consider excluding some or all of the limitations imposed by s.32

  • All capital may be advanced (up to the limit of B’s share) and it will be deducted from B’s share

  • Must get the consent from the person with the prior interest (ex-person with life interest)

  • Amending: can remove the s.32 power or allow trustees to only advance a limited amount of capital or dispense with consent

    • Could amend as s.32 gives no power to make advancements or loans to life tenants

    • N.B. The Inheritance and Trustees’ Powers Act 2014

Power to Run Deceased’s Business
  • Where the estate includes a business that was run by the deceased as a sole trader, the powers of the PRs to run that business are limited (e.g. may only run the business with a view to sale; may only use those assets used in the business at death)

  • Where appropriate, it will be necessary to extend these powers

Apportionment Rules
  • Advisable to exclude:

    • the rules for apportionment of income contained in Apportionment Act 1870 and Howe v Lord Dartmouth (1820)

    • the rule for apportionment of debts in Allhusen v Whittell

  • This is no longer necessary since The Trusts (Capital and Income) 2013

Right to Appoint New Trustees
  • S.36 TA 1925: if a new trustee needs to be appointed, the choice and appointment rests with the...

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