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8. Trusteeship - Termination & Appointment

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Queensland University of Technology

TERMINATION OF T RUSTEESHIP Applies whether or not a contrary intention appears in the trust instrument: s 10 TA A. Death Death of sole trustee • Divested into the public trustee (s16(2)), until a new trustee is decided upon (s16(2)(a)), or probate is granted (s16(2)(b)); • Office of trustee will not devolve to personal legal representative o BUT Legal personal representative of the last surviving trustee may appoint another trustee: s12(1)  Surviving legal representative trustees will have to administer the property until a new one is chosen o Where there is another person already selected, legal representative may transfer the interest to the new trustee  Vesting order may also be made (see above) Death of one of two or more trustees • Property vested in joint tenants, so passes to surviving trustees: s 16(1) B. Retirement • Trustee can’t retire unless: o Trusts instrument permits them to do so; General Investment v Tyson o Trustee retires upon appointment of a new trustee in his or her place under s12(1)(c); o Trustee retires in writing under s14:  There is at least 2 trustees or a trustee corporation/s that can take their place: s14(1); or  Co-trustees consent: s14(2) o Court permits the trustee to retire: Guazzini v Pateson; s80  For example for sickness, infancy or where trustee carrying out testator’s business at a loss: Will of Phillips • Trustee still liable for breaches of trust which occur during trusteeship • Trustee will be discharged by payment of trust funds into court o Still regarded as the trustee of the property remaining in the hands of the trustee C. Removal Statutory Power • Ability to remove a trustee cannot be excluded by the trust instrument: s10 TA Trustee can be removed where— (s 12(1) TA) (a) Dead; (b) Out of state for more than 1 year; Re Walker o Trustee must sign a power of appointment executed through a deed to be a valid delegation: s56 TA o Otherwise trustee may be liable for improper appointment, constituting negligence: s71 (trustees liabile for own acts, negligence or default) (c) Seeks to be discharged Andrew Trotter LWB241 Trusts (d) Refuses to act as trustee (e) Unfit to act as trustee o Bankrupt: Miller v Cameron (solicitor assigns personal assets to creditors—had committed fraud  unfit to act as trustee) (f) Incapable of being a trustee (g) Infant (h) Corporation, ceasing to carry on business eg in liquidation Removal by Court • Jurisdiction— o inherent jurisdiction Guazzini v Pateson (1918) and o statutory power: s 80(1) TA Court may remove a trustee and appoint a new one where—would be inexpedient, difficult or impractical to do so without the assistance of the court: s 80(1) TA. • Specifically, where— s 80(2) o The trustee seeks discharge o Is convicted of a crime/misdemeanour o Is bankrupt o Is a corporation in trouble o Is an undesirable trustee • In determining whether expedient, has regard to— Vagliviello; Porteous per White J o interests of the beneficiaries; McLauchlan v Prince (trustees failing to supervise—depleted trust assets  removed || beneficiary appointed as trustee) o security of the trust property; and o Satisfactory exercise of the trustee’s powers: • Including where— o Trustees failing to supervise—assets being depleted: McLauchlan v Prince o Administration of trust affected (eg by animosity): Re Whitehouse o Misconduct by trustee: Vagliviello (trustee using trust money to buy cars | create business | mortgage | mixing with own funds—beneficiary mentally incapacitated  trustees removed) • Courts will not interfere lightly: Re Whitehouse [1982] Qd R 196 it is not sufficient that— o Mere friction between parties: Re Whitehouse (severe acrimony & other factors  trustee removed) o Severe friction if caused by beneficiaries: Re Whitehouse o Conflict of interest not fatal if the best person for the job: Princess Anne (trustees as directors of trust owned company and liquidators—but best for job) D. Completion of trust purpose | merging of title in beneficiaries • beneficiary of legal age and is absolutely entitled can call upon the trustee for the transfer of that property to that beneficiary and terminate the trust: Saunders v Vautier (1841) Upon ceasing trusteeship • Trustee entitled to have account examined and a formal discharge made when settled accounts o May approach court to do this where the person is not legally capable or refuses to do this: Chadwick v Heatly (1845) - Charitable trust → proceedings may be brought by AG: s106 Andrew Trotter LWB241 Trusts APPOINTMENT OF NEW T RUSTEE • A person can become a trustee, either: o Expressly (under an express trust); o Implication (implied trust); o Operation of law (constructive trust) • Person who is only the executor is not authorised to act as a trustee for the will Person who appoints • New trustee may be appointed through— o Express power to appoint new trustee in the document; o Statutory power; o Powers conferred in the court Person with—Express Power in Trust Instrument Person may appoint a new trustee if given the power to do so by the instrument: s 12(1) • Trust instrument construed strictly No provision in instrument  Outgoing / Continuing Trustee—Statutory Power • If no provision is made in the instrument or person unable or unwilling to act → o continuing trustee s 12(1) o personal representatives of last surviving or continuing trustee s 12(1) o Retiring trustee: s 12(7)  Appointment subject to review by the court: s8 • Power to appoint a new trustee cannot be excluded b
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