Trustees

Introduction

**Trustees** are the people (or companies) who hold the legal title to trust property and administer it for the benefit of the beneficiaries. This chapter examines the **life-cycle of trusteeship** as it is tested in SQE1 FLK1: **who may be a trustee** and who selects them, the **criteria and disqualifications**, the **statutory limits on the number of trustees**, the various routes for **appointment, retirement and removal** (chiefly under the **Trustee Act 1925** and the **Trusts of Land and Appointment of Trustees Act 1996**), and the **core duties and powers** of trustees — in particular the **statutory duty of care** and the **duty to invest** under the **Trustee Act 2000**, together with the statutory powers of **maintenance** and **advancement**.

Assessment focus

For SQE1 FLK1 (Trusts) you must be able to **apply** the rules on trusteeship to a realistic client scenario rather than merely recite them. Common question types include: whether **beneficiaries** can compel a trustee to retire (s. 19 TLATA 1996 — they must all be **of full age, of full capacity and together absolutely entitled**); how a **new trustee** is appointed where one has died, gone abroad for more than 12 months, wishes to retire, or is unfit or incapable (s. 36 TA 1925); the operation of the **two-trustee rule** for giving good receipt for capital money arising under a trust of land (s. 14(2) TA 1925; s. 27(2) LPA 1925); the **statutory duty of care** (s. 1 TA 2000) and its **higher standard for professionals**; the **standard investment criteria** and duty to take **proper advice** (ss. 4–5 TA 2000); and the **power of advancement** (s. 32 TA 1925), including the requirement for the **written consent of a prior life tenant**. This is a closed-book assessment — learn the section numbers and conditions from memory.

Study tips

1) Memorise the **s. 36(1) TA 1925** triggers for appointing a replacement trustee: trustee **dead / abroad > 12 months / wishes to retire / refuses to act / unfit / incapable / a minor**. 2) Learn the **beneficiaries' direction** route — **s. 19 TLATA 1996**: all beneficiaries **sui juris** (18+, full capacity) and **together absolutely entitled**, acting **unanimously and in writing**. 3) Number limits: a **trust of land** is capped at **four** trustees (s. 34(2) TA 1925); **at least two** trustees (or a **trust corporation**) are needed to give good receipt for capital money (s. 14(2) TA 1925; s. 27(2) LPA 1925). 4) **Duty of care** (s. 1 TA 2000) = care and skill **reasonable in the circumstances**, with a **higher bar for professionals** (Speight v Gaunt; Re Whiteley). 5) **Advancement** (s. 32 TA 1925): since the **Inheritance and Trustees' Powers Act 2014**, for trusts created **on or after 1 October 2014** trustees may advance up to the **whole** of a beneficiary's presumptive share (the old **one-half** cap still applies to older trusts); a **prior life tenant must consent in writing**.