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Trustees- appointment/removal/replacement - Coggle Diagram
Trustees- appointment/removal/replacement
retirement
1 of 3 options:
1.The trust instrument may contain an
express power
for trustees to retire but
this is unusual
trustee can retire
without being replaced
.
Conditions:
(a) there will be 2 trustees or a trust
corporation left
(b) the trustee retires by deed
(c) the other trustees consent by deed
3. The retiring trustee must be replaced
by the
appointment of a new trustee.
Who appoints the new trustee?
(a) the
person nominated
in the trust
instrument to exercise the s 36 power,
but if none......
(b) the
continuing Ts
(which includes
the retiring trustee if they are willing to
join in the appointment).
appointment by
deed
liability- A retiring trustee remains
liable for their own breaches
but will
not be liable for future
breaches unless they retired to facilitate the breaches
basics
who can be a trustee
most adults with capacity can be trustees
company (alone or with human trustee)
authorised to do so by its constitutional documents
trust corporation- corp trustees that make profit as trustee
maximum & minimum number
trusts over land
Trusts over
land
should have at least
2
human trustees or a
sole trust corporation.
cannot have more than
4
trustees
trusts of personalty
can have a
sole
trustee, although as a practical matter it is generally better
to appoint more than one to ensure that each trustee can supervise what the other is doing.
can have
more than
4 trustees
(although this is unlikely to be either practical or cost-efficient for many trusts)
express trusts
as mix of both land and personalty, it is best practice to
ensure that there are always between
2 and 4
trustees in office at any one time.
appointment (of additional Ts)
allows for the inclusion of a new trustee without requiring any of the existing trustees to step down
-
4 ways
1. express power in trust instrument
2. appointment under s.36(6)
who can make the appointment?
person nominated in trust instrument or...
continuing trustee
Limitation: The
total number of trustees cannot exceed 4
after the new appointments are made.
appointment requirements :
The appointment must be in
writing
, ideally by
deed
3. court appointment
Grounds for Court Appointment:
The court may appoint an additional trustee if it is expedient to do so and if it would be impractical or challenging to make the appointment without the court’s involvement.
Application Process:
The court appoints a new trustee after an application is made by either the existing trustees or the beneficiaries.
4. beneficiary direction
allows
beneficiaries to serve a
written direction
on the current trustees requiring the
appointment of an additional trustee
Restrictions
:
This power does not apply if the trust instrument excludes it or designates a specific person to appoint new trustees.
Eligibility
: This option is available if the beneficiaries are all adults, mentally competent, and collectively absolutely entitled to the trust property.
removal/replacement
4 ways
1. Express Power in the Trust Instrument
to remove and/or replace
trustees but this is unusual
2. replacing under s 36(1) TA 1925
Grounds for Replacing a Trustee:
The trustee is deceased.
The trustee has been outside the UK for over 12 months.
The trustee wishes to retire.
The trustee refuses to act.
The trustee is unfit or incapable of acting.
The trustee is a minor.
Who Can Appoint a Replacement?
A person
nominated
in the trust instrument to exercise the s 36 power, if specified..... or
The
continuing T
s, including any retiring trustee willing to join the appointment.
If all Ts have died, the
PRs of the last surviving T.
appointment requirements :
The appointment must be in
writing
, ideally by
deed
3. replacement- court appointment
Grounds for Court Appointment:
The court can replace a trustee if it is deemed expedient and impractical to make the appointment otherwise.
Process
: The court appoints a replacement following an application from the trustees or beneficiaries. The court generally requires that it is not in the trust's best interest for the trustee to remain, and mere personal dislike is insufficient.
3. retirement & replacement- beneficiary direction
Restrictions
:
This power does not apply if the trust instrument excludes it or designates a specific person to appoint new trustees.
Eligibility
: This option is available if the beneficiaries are all adults, mentally competent, and collectively absolutely entitled to the trust property.
Conditions for Retirement:
following the bs direction, the trustee must retire by deed if:
(a) Their rights are protected reasonably.
(b) There will be at least 2 trustees or a trust corporation remaining; and
(c) Another person is appointed to replace them, or the remaining trustees consent by deed to the retirement.
Beneficiaries can
serve a written direction to a trustee to retire and then appoint a replacement.
death of trustee
If
2 or more
trustees are appointed, they will hold legal title to trust property as
joint tenants
,
with the result that if one dies, the legal title will devolve to the
surviving trustees
(TA 1925,
s 18). If there is only
1
surviving trustee left, that trustee should be advised to appoint a
replacement trustee under s 36(1) of the TA 1925 to ensure the continuity of trust
appointing an attorney
Individual delegation
Form of Delegation:
The delegation must be made by deed using the form prescribed under s 25 of the Trustee Act 1925 (TA 1925).
Duration
:
The delegation can last for a maximum of 12 months.
Notice Requirements:
Written notice of the delegation must be provided within seven days to:
All other trustees, and
Any person with the power to appoint new trustees.
Trustee's Liability:
The delegating trustee remains automatically liable for the actions or defaults of the attorney, as though the trustee had carried them out personally.
collective delegation
Purpose
:
Trustees may collectively delegate decisions on how best to invest trust property to an independent financial adviser.
Scope of Delegation:
This allows trustees to obtain professional advice while still retaining overall responsibility for the trust's administration.