Trusts Lecture 2
1. Trustees and Appointment
2. Ceasing to be a Trustee
3. Statutory Powers of Trustees
4. The decision-making process
5. Discretion and Delegation
Trustees
Trusts are administered by trustees who are (usually) nominated by the truster in the deed creating
the trust.
Anyone with legal capacity (i.e. anyone over 16) can in theory serve as a trustee.
A foreign citizen or someone resident in a foreign country may serve as a trustee.
Under s.23 of the Trusts (S) Act 1921, the court has the power to remove a trustee in certain cases:
• where the trustee loses mental capacity;
• where the trustee has been absent from the UK for six months;
the Trusts Act was made in 1921. At that time, high technology was a telegram. It was
almost impossible even to telephone somewhere like Australia, for example. So, if
someone went abroad, it was often going to be very, very difficult to stay in touch
with them. So if someone was absent for six months, it could really prevent them from
interacting with the trust usefully. But nowadays, with all the communications
technology that we have, I don't think that a court would apply this with this rule.
or
• where the trustee has disappeared for six months. (The person may be dead)
It is not certain, given modern communications, that a court would consider foreign residence to be a
major obstacle.
1. TRUSTEES AND APPOINTMENT OF TRUSTEES
The original trustees
When a trust is created, the truster will usually nominate trustees by name or will, at least, provide
some means of identifying the people whom he wishes to become trustees.
Alternatively, the truster can appoint someone else to choose the trustees.
If the original nominees accept the office, they become the original trustees. Anyone who becomes a
trustee after this is called an assumed trustee. In terms of their duties and responsibilities, there is no
difference between the two types of trustee. Assumed trustees are not subordinate to the originals.
They do exactly the same job. They have exactly the same authority.
, A truster may also appoint a special type of trustee called the trustee sine qua non (Lat. “without
which not”) who will have a power of veto over all trust decisions.
So, the trustees sine qua non, his or her approval is needed for any decision made by the trust. And
this is a limitation on majority rule. Most trusts are majority rule. You just have a vote. If you have five
trustees and three of them say yes, then the decision is carried. But the trustees sine qua non is a
variation on that. You appoint someone who has a veto and they must always approve a decision
before it can go ahead.
In certain very limited situations, trusts arise by operation of law (constructive trusts) and some
individuals will be deemed to be trustees whether they like it or not.
Ex officio trustees
Instead of nominating an individual, a truster may nominate an officeholder to be trustee.
Such trustees are called ex officio trustees (Lat. “trustees on the basis of office”).
If accepted, it is not the individual person who becomes trustee but anyone holding that particular
office.
Examples would be the appointment of the local minister to head up a parish trust for the relief of
poverty; or the secretary and treasurer of a bowling club serving as the club trustees; or a local
councillor acting as trustee of a public trust in the town.
Depending on context, it may be possible for an ex officio trustee to refuse the position, but only if
the trusteeship is not integral to the carrying out of the office. You are only required to accept it if the
trusteeship is integral to carrying out your office.
E.g. It would seem that it's pretty central to the role of the Treasurer or secretary to be involved in
decision-making, to help run the club as a trust. So they would not be able to get out of it. But a local
councillor might. It's not integral to his or her job as a as a councillor to act as a trustee on a public
trust.
Assumed trustees – Exam questions likely
The Trusts (S) Act 1921 s.3(b) states that trusts by default grant “the power to the trustee, if there be
only one, or to the trustees, if there be more than one, or to a quorum of the trustees, if there be
more than two, to assume new trustees.”
It means that the trustees can appoint new trustees to join them. They are said to assume these
trustees, these new trustees. So if you're a trustee and you're the only one running the trust, you
simply have the power automatically to appoint or assume new trustees to help you. If there are two
of you, then you need to jointly agree on that. Two trustees, you need to jointly agree on the
assumption of new trustees. And if there's more than two, then you need to get a quorum, i.e. a
majority to assume new trustees.
Unless the trust deed specifically states otherwise, this rule operates and a quorum of trustees will be
able to appoint other people as new trustees.
Two factors operate to limit this power:
