Summary Running a trust: trustees' duties and powers
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Course
Equity And Trusts
Institution
University Of Law (ULaw)
This chapter cover the trustees' duties and powers it cover how running a trust works and the factors that need to be enforced. Essential equity and trusts chapter
EQUITY& TRUSTS TUTORIAL 5
The essence of a trust is that, although the trustees hold the legal title to
the trust property, they have no right to enjoyment of it. The enjoyment
lies with the beneficiaries. The trustees may appear to the outside world to
be the owners of the property and to have control of it, but they cannot do
exactly as they like with it.
Their failure to perform their duties satisfactorily results in a loss to the
trust fund, they will have to make good that loss to the beneficiaries out of
their own pockets.
Investing the trust property
A primary duty for trustees is that they must look after the trust property
properly. Capital profit means the one-off profit which can be achieved if
the value of the thing you purchase goes up and if you sell it. Income
consists of regular payments which are made to you, linked to your
ownership of an asset.
What is the size of the trust fund?
With a large trust fund, you can afford to take more risk
because you have enough money to spread over a large
range of investments - some risky, some safe.
Hopefully, a few of the risky investments will be successful
and show a large profit.
But even if they show a loss, this can be compensated by the
profit on the other investments in the portfolio.
Trustees’ Investment Duties
One important consideration any investor must decide is how risk
averse they are. However, trustees cannot afford to be as adventurous
as ordinary investors. After all, it is someone else's money that they are
risking.
Therefore, there are statutory provisions which they must follow to
make sensible investments. They must ensure that they comply with
these statutory provisions, otherwise they will be in breach of the
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