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Investing the Trust Patrimony
Terms in this set (20)
Melville v Noble's Trs (1896)
Trustees must at least consider investment. The trustees left the estate on deposit for 19 years, this was reasonable short term but not long term.
Brownlie v Brownlie's Trs (1879)
The trustees continued to hold stock the truster held. It was held that it was the duty of the trustees to have sold the stock within a reasonable time after the truster's death. An investment that was reasonable for an individual is not necissarily reasonable for trustees.
Nobile Officium - the court can confer powers on trustees.
Henderson Petr (1981)
Trustees petitioned the court to vary trust powers by providing additional powers of investment. A full bench allowed an extension beyond the implied powers.
Henderson v Henderson's Trs (1900)
A trustee does not adequately discharge his duty by placing trust funds in an inter vires investment. There is also a duty to avoid investments attended with hazard.
Beneficiaries can authorise any investment if they all act together.
Trustee Investments Act 1961
There are different types of investment:
- Narrow with no advice
- Narrow with advice
The Act dictated that at least 1/2 of the trust estate had to be invested in the narrower range.
Trustee Investments (Division of Trust Fund) Order 1996
Altered the proportions to 3/4:1/4. Thus, more wider range investments were allowed.
Charities and Trustee Investment (Scotland) Act 2005, s93-95
Default investment powers were added to the Trusts (Scotland) Act 1921, s4. Trustees can invest in anything unless restricted by the trust patrimony.
Moss's Trs v King (1925)
The trustees had power to invest as if they were beneficial owners of the estate. A purchase of property to be used rent-free was not an investment.
The suitability of the proposed investment must be considered, as well as diversification. There is a requirement to consider proper advice, unless unnecessary.
Clarke v Clarke's Trs (1925)
The trustees held share for many years which were stedily declining in value, until reaching no value. The failure to review this investment
Scott v Occidental Petroleum (Caledonia) Ltd (1990)
Lord President Hope accepted that the trustees may delegate certain administrative powers, but not discretionary powers.
Management functions can be delegated to agents.
Ferguson v Patterson (1900)
A law agent for a trust realised bonds on behalf of the trustees, pending a permanent use. He later uplifted it for his own use. The court held the trustees were liable for the loss due to ceding control.
Tibbert v McColl (1994)
The trustees paid into the company's overdrawn account. The company went into liquidation before it was paid out. The trustees were liable for breach of trust by putting funds out of their control.
Inglis and Others, Petr (1965)
A proposed extension of trustees' powers and immunities was incompetent. Ambiguties could be clarified but new powers could not be added.
England (Trustee Act 2000)
Trustees can make any investment, except heritable investments are restricted to loans secured on land.
This is subject to reveiw considering suitability and the need for diversification.
Modern Portfolio Theory
Diversificaiton will allow protection against risk. No more than 10% of assets should be held in one investment.
Nominees can be appointed for the purpose of investment in restricted circumstances (contrary to the common law). It is strictly applied, requiring writing.