Trustees Retirement, Removal, Death PDF

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This set of notes explains the retirement of trustee, removal of trustee and death of trustee...

Description

Topic: Trustees A. Disclaimer By / Retirement of Trustee No one can be compelled to accept the gift of disposition of trustee. Need to disclaim before any act that suggest that you are performing the role of trustee. A disclaimer by a person appointed to act as sole trustee causes the trust property to revest in the settlor as trustee until the appointment of new trustee. Or, the court may appoint trustee in place of the disclaiming trustee as it does not allow a trust to fail for want of a trustee.  Retirement can be effected : if provision in the trustee to that effect - Pursuant to terms of statute ( s14): trustee may retire provided that there are two trustees left - By consent of court if not provision under trustee or s14 - Litigation to remove trustee

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14. Retirement of trustee (1) Where there are more than two trustees, if one of them by deed declares that he is desirous of being discharged from the trust, and if his co-trustees and such other person, if any, as is empowered to appoint trustees by deed consent to the discharge of the trustee, and to the vesting in the co-trustees alone of the trust property, then the trustee desirous of being discharged shall be deemed to have retired from the trust, and shall, by the deed, be discharged therefrom under this Act, without any new trustee being appointed in his place. (2) Any assurance or thing requisite for vesting the trust property in the continuing trustees alone shall be executed or done. (3) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and has effect subject to the terms of that instrument and to any provisions therein contained.

B. Removal of Trustee Before removal, go through the 3 jurisdictions: i. What are the terms of trustee: trustees may be removed under the express power contained in the trust instrument ii. statutory s13 (circumstances where statute can dictate a trustee can be removed) iii. the court’s inherent power to appoint trustee in substitution of trustee Miller v Cameron (1936) 54 CLR 572

Dixon J: In removing trustee, look at welfare of beneficiary, security of trust property, satisfactory execution of trust and faithful exercise of the powers conferred upon the trustee * Titterton v Oates (1998) 143 FLR 467 Facts: T established testamentary trust for benefit of 3 children: daughter, son, youngest daughter (plaintiff ). Elder daughter is appointed trustee. Son has mental disability. Trustee also one of the beneficiaries. After T died, concern is as trustee daughter dropped the bundle as trustee as she suffered depression and developed animosity towards youngest sister and caused her not to fulfil trustee obligations- failed to provide adequate information to her, repeatedly fail to make distributions of income to her Youngest daughter applied to court for removal of trustee. Crisburn J: -

Should give weight to choice of testator who knew it is potential there is conflict between the daughter

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In family scenario, has to consider there is due consideration for complication down the track.

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Maybe settlor could not have foreseen the degree of animosity, that D prolonged dereliction of duty as she failed to allocate income to the beneficiaries.

*NB: Potential conflict is not automatic ground for removal. But Crisburn J not convinced that the trustee has the best interest of beneficiaries at heart, therefore can order removal. -

Think of trustee as independent to the relationship in question. Independent trustee in this case is a public trustee. Public trustee charges fee for their service $38k annual fee. Property could be depleted as a result of such appointment. Suggestion that public trustee as co-trustee is rejected by court.

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Cost for removal of trustee paid by trustee usually but in this case, court allowed the cost deducted from the trust fund.

Analysis: -

Breach of trust does not necessarily lead to removal- even though the trustee has otherwise acted prudently and honestly in the general administration of the trust. The court will remove trustee if the friction between trustees, or between trustee and beneficiaries is so obstructive to the administration of the trust that there is no prospect of improvement in the future

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Potential conflict of interest not necessarily ground for removal. Court unlikely to remove a trustee where it is evident that the settlor has contemplated the conflict of interest inherent in appointing that person as trustee, unless allowing that person to continue as trustee endangers the security of the trust property

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Incapacity of trustee leads to removal- trustee in financial distress, disappeared, absent for prolonged period,

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Generally, a trustee who is removed pays the costs of the application for removal. However, the court retains a discretion as to award of cost- may allow cost out of trust estate to a trustee whose conduct has been honest although mistaken; may require trustee to bear his own costs where there have been breaches of trust

C. Death Of Trustee Trustee Act 1898 (Tas), s 25(1) Powers of two or more trustees exercisable by survivor (1) Where a power or trust is given to or vested in two or more trustees jointly, then, unless the contrary is expressed in the instrument, if any, creating the power or trust, the same may be exercised or performed by the survivor or survivors of them for the time being....