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In which of the following circumstances is it permissible for a trustee to make a profit out of their role as trustee?
In which of the following circumstances is it permissible for a trustee to make a profit out of their role as trustee?
Two trustees, A and B, hold a trust fund on trust for C, who is 12 years old. The trust fund includes a house which is currently unoccupied and not producing any rental income for the trust. A and B have decided to sell the house. A would like to buy it. The trust deed does not contain any provisions authorising trustees to purchase trust property.
Which of the following is the most appropriate advice to A?
Two trustees, A and B, hold a trust fund on trust for C, who is 12 years old. The trust fund includes a house which is currently unoccupied and not producing any rental income for the trust. A and B have decided to sell the house. A would like to buy it. The trust deed does not contain any provisions authorising trustees to purchase trust property.
Which of the following is the most appropriate advice to A?
A trust has two trustees, A and B. The beneficiaries are minors. The trustees require legal advice on a tax issue which has arisen in relation to the trust. A is a partner at a law firm so B suggests that there is no need to obtain advice. A specialises in real estate and is not confident in providing tax advice so suggests instructing a tax partner at their firm.
What is the best advice to the trustees?
A trust has two trustees, A and B. The beneficiaries are minors. The trustees require legal advice on a tax issue which has arisen in relation to the trust. A is a partner at a law firm so B suggests that there is no need to obtain advice. A specialises in real estate and is not confident in providing tax advice so suggests instructing a tax partner at their firm.
What is the best advice to the trustees?
In breach of trust, a trustee misapplies £100,000 of the trust fund. A solicitor dishonestly helps the trustee to misapply the money and move it offshore. Later, an accountant dishonestly helps the trustee to falsify the trust accounts.
Which one of the following statements is correct?
In breach of trust, a trustee misapplies £100,000 of the trust fund. A solicitor dishonestly helps the trustee to misapply the money and move it offshore. Later, an accountant dishonestly helps the trustee to falsify the trust accounts.
Which one of the following statements is correct?
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True or false: For the purposes of dishonest assistance claims, the standard of dishonesty is objective.
True or false: For the purposes of dishonest assistance claims, the standard of dishonesty is objective.
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A company director commits a breach of fiduciary duty. The director is dishonestly assisted by an accountant. The breach causes the company a significant loss. The accountant makes a substantial profit as a result of the director’s breach.
Which one of the following statements is correct?
A company director commits a breach of fiduciary duty. The director is dishonestly assisted by an accountant. The breach causes the company a significant loss. The accountant makes a substantial profit as a result of the director’s breach.
Which one of the following statements is correct?
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Study Notes
Trustee Profit Circumstances
- Trustees can generally make a profit from their role only if the trust deed explicitly allows this or under specific circumstances.
- In this scenario, A and B cannot profit from selling the house to A, as the trust deed does not permit the purchase of trust property.
Best Advice Regarding House Sale
- A should be advised against purchasing the house, as this may constitute a conflict of interest and a breach of trust.
- A's intention to buy the house could lead to legal challenges or claims from the minor beneficiary, C.
Legal Advice for Tax Issues
- In situations involving beneficiaries who are minors, obtaining independent legal advice is critical to ensure compliance and proper fiduciary duty.
- A's expertise in real estate does not cover tax issues, thus advising to consult a tax partner is essential for safeguarding the trust’s interests.
Breach of Trust and Dishonest Assistance
- A breach of trust involves a trustee misapplying trust funds, which creates potential liability for both the trustee and any accomplices, such as solicitors or accountants.
- The involvement of multiple parties in the breach complicates liability and can lead to claims for dishonest assistance.
Objective Standard of Dishonesty
- True: For dishonest assistance claims, the standard of dishonesty is objective, meaning it is assessed based on the behavior of the person in question compared to that of a reasonable person.
Impact of Breach of Fiduciary Duty
- A breach of fiduciary duty by a company director that results in significant loss to the company will hold the director liable.
- Any third party, like an accountant, assisting in the breach and profiting from it can also face legal consequences, including claims for damages and recovery of profits made as a result of the breach.
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