PLEASE READ AND USE CASES BELOW TO BACK UP THE POINTS AND TRY USE THE RIGHT LEGISLATIONS SEMINAR 7 TRUSTEESHIP POWERS AND DUTIES Essential Reading G Watt, Trusts Equity , chp 12 OR G Virgo, The Principles of Equity Trusts , chp 13 14 Cases Pitt v Holt 2011 EWCA Civ 197 Target Holdings v Redferns 1996 1 AC 421 at 434 Nestle v National Westminster Bank plc 1993 1 WLR 1260 Bahin v Hughes (1886) 31 Ch D 390 Armitage v Nurse 1998 Ch 241 Walker v Stones 2001 QB 90 Cowan v Scargill 1985 Ch 270 Harries v Church Commissioners for England 1992 1 WLR 1241 Bartlett v Barclays Bank Trust Co Ltd 1980 Ch 515 Legislation Civil Liability (Contribution) Act 1978, s 2(2) Trustee Act 1925, ss 61, 62 Trustee Act 2000, ss 1, 3, 4, 5, 8 QUESTION You are a trainee solicitor and have just been appointed as the trustee of a trust fund with a value of 1,000,000 The beneficiary of the trust is Tsingtao, who is ten years old Your co trustee is a computer programmer and has sent you the following email Use the Trustee Act 2000 and case law to help you respond to her questions From C e i To B r Hi I've looked at the trust deed and it doesn't give any details about what we should do with the money At the moment it's just sitting in a current account, earning a rate of 2 interest I think we should probably invest it somewhere else but I don't really know what we're allowed to do Some suggestions below Land Seems like a sensible investment We could rent it out to make sure we have some income coming in for young Tsingtao And then hopefully the land will have increased in value once she's old enough to deal with it herself If it's in the UK maybe she can live in it once she's older Or we could buy somewhere abroad Maybe a holiday home somewhere in Europe I bet we'd get a good rental income on that Shares I don't really know anything about the stock market but I know shares are a pretty standard investment Not sure what sorts of companies we should invest in though Any other types of asset you think we should invest in I'm not sure if the trust fund is big enough to stretch this far, but maybe we could buy her something cool like a share in a racehorse I know she really likes animals and it could make her loads of money I'm still quite nervous about taking on this trustee gig if I'm honest What will happen if it all goes wrong and we lose the money I don't know much about investing and I'm not sure I know anything about trusts I'm glad I've got you on board to help Since you're a lawyer I'm sure you'll be much better at this than me Let me know your thoughts on the above Clue Less In order to help you with this seminar, it is suggested that you work your way through the questions below Power Do the trustees have the power to make this sort of investment Duty of Care What standard of care will the trustees be held to when exercising their power Relevant Considerations If it is an authorised investment, what must the trustees take into account when deciding whether it is appropriate for the trust Power Where should you look to find out what the trustees can invest in Which of Clue Less's suggested investments are permitted Land Shares Racehorse Duty of Care What standard of care will Clue Less be held to when exercising her trustee powers of investment What standard of care will you be held to when exercising your trustee powers of investment Relevant Considerations What must the trustees take into account when deciding whether an investment is appropriate for the trust fund Application of standard investment criteria Suitability Do you think land is a suitable investment at all If so, what sort of land do you think might be suitable for the trust Do you think a racehorse is a suitable investment for the trust Diversity Given the size and nature of the trust fund, do you think you should spend money on more than one of the investments identified above If so, how much might you spend on each Advice Do you think you need to seek advice before investing If so, what sort of person may be able to provide you with appropriate advice

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PLEASE READ AND USE CASES BELOW TO BACK UP THE POINTS AND TRY USE THE RIGHT LEGISLATIONS. SEMINAR 7: TRUSTEESHIP: POWERS AND DUTIES Essential Reading:

PLEASE READ AND USE CASES BELOW TO BACK UP THE POINTS AND TRY USE THE RIGHT LEGISLATIONS.

SEMINAR 7:

TRUSTEESHIP: POWERS AND DUTIES

Essential Reading:

G. Watt, Trusts & Equity, chp 12

G. Virgo, The Principles of Equity & Trusts, chp 13&14

Cases:

Pitt v Holt[2011] EWCA Civ 197

Target Holdings v Redferns [1996] 1 AC 421 at 434

Nestle v National Westminster Bank plc [1993] 1 WLR 1260

Bahin v Hughes (1886) 31 Ch D 390

Armitage v Nurse [1998] Ch 241

Walker v Stones [2001] QB 90

Cowan v Scargill [1985] Ch 270

Harries v Church Commissioners for England [1992] 1 WLR 1241

Bartlett v Barclays Bank Trust Co Ltd [1980] Ch 515

Legislation:

Civil Liability (Contribution) Act 1978, s.2(2)

Trustee Act 1925, ss. 61, 62

Trustee Act 2000, ss.1, 3, 4, 5, 8

QUESTION:

You are a trainee solicitor and have just been appointed as the trustee of a trust fund with a value of 1,000,000. The beneficiary of the trust is Tsingtao, who is ten years old.

Your co-trustee is a computer programmer and has sent you the following email.

Use the Trustee Act 2000 and case law to help you respond to her questions.

From: C..e@i=

To: B..r@

I've looked at the trust deed and it doesn't give any details about what we should do with the money. At the moment it's just sitting in a current account, earning a rate of 2% interest.

I think we should probably invest it somewhere else but I don't really know what we're allowed to do. Some suggestions below:

Land - Seems like a sensible investment. We could rent it out to make sure we have some income coming in for young Tsingtao. And then hopefully the land will have increased in value once she's old enough to deal with it herself.

If it's in the UK maybe she can live in it once she's older. Or we could buy somewhere abroad - Maybe a holiday home somewhere in Europe? I bet we'd get a good rental income on that.

Shares - I don't really know anything about the stock market but I know shares are a pretty standard investment. Not sure what sorts of companies we should invest in though.

Any other types of asset you think we should invest in? I'm not sure if the trust fund is big enough to stretch this far, but maybe we could buy her something cool like a share in a racehorse? I know she really likes animals and it could make her loads of money.

I'm still quite nervous about taking on this trustee gig if I'm honest. What will happen if it all goes wrong and we lose the money? I don't know much about investing and I'm not sure I know anything about trusts. I'm glad I've got you on board to help. Since you're a lawyer I'm sure you'll be much better at this than me.

Let me know your thoughts on the above.

Clue Less

In order to help you with this seminar, it is suggested that you work your way through the questions below:

Power: Do the trustees have the power to make this sort of investment?

Duty of Care: What standard of care will the trustees be held to when exercising their power?

Relevant Considerations:If it is an authorised investment, what must the trustees take into account when deciding whether it is appropriate for the trust?

Power

Where should you look to find out what the trustees can invest in?

Which of Clue Less's suggested investments are permitted? Land? Shares? Racehorse

Duty of Care

What standard of care will Clue Less be held to when exercising her trustee powers of investment?

What standard of care will you be held to when exercising your trustee powers of investment?

Relevant Considerations

What must the trustees take into account when deciding whether an investment is appropriate for the trust fund?

Application of standard investment criteria

Suitability

Do you think land is a suitable investment at all? If so, what sort of land do you think might be suitable for the trust?

Do you think a racehorse is a suitable investment for the trust?

Diversity

Given the size and nature of the trust fund, do you think you should spend money on more than one of the investments identified above? If so, how much might you spend on each?

Advice

Do you think you need to seek advice before investing? If so, what sort of person may be able to provide you with appropriate advice?