Trustees Notes

TRUSTEES TRUSTS | PAGE 20 TRUSTS AND POWERS Donor a? Donee a? Object Person conferring power a? Trustee a? Beneficiary Power is an authority to dispose of real or personal property irrespective of any existing estate or interest in the holder of the power Test 1: Is the power obligatory or discretionary? * Discretions the trustee must exercise = trust power o Trustee bound to distribute income bust discretion about how it is to be divided between beneficiaries * Discretions the trustee may exercise = mere power o Trustee has discretion whether or not to distribute income and how it is to be divided between beneficiaries Test 2: the distinction will be a matter of construction to determine the intentions about obligations and discretions * Obligatory power - MUST act = trust power * Discretionary power - MAY act = mere power Mere Powers v Trust Powers: * Did the settlor intend the holder of the power to be under a duty to exercise it? o Yes = trust power o No = mere power * Does settlor use language that suggests exercise of the power is mandatory? o Yes = trust power o No = mere power * Person with a trust power is under o A duty to consider how to distribute o A duty to distribute * Trustee with a mere power has duty to consider the exercise of the power from time to time o Discretionary trust - does the person have to exercise their discretion or not TRUSTS | PAGE 21 Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 * "I Denis Hourigan do hereby will and bequeath all my property real and personal to my wife Honora Hourigan to be disposed by her as follows. A sum of five hundred pounds sterling to be paid to each one of my six daughters on the completion of the twentieth year of each one respectively namely Winnifred (1) Maria (2) Anastasia (3) Cecily (4) Honora (5) Catherine (6). The residue of my property to be vested in the said Honora Hourigan my wife to be used by her at [discretion] in educating and providing for my two sons namely Richard and Patrick" * HELD: beneficial interest - there was a trust to educate the son - trust power with a duty to consider how to distribute and a duty to distribute Who can be a trustee? * Persons legally capable of holding property, or a legal entity such as a company o Sole beneficiary and sole trustee cannot be the same person * Equity will not allow a trust to fail for want of a trustee Main types of trustees: * Humans * Trustee companies o Usually for wills etc. and regulated by legislation SS? Trustee Companies Act * Public Trustee o Established by statute SS? Public Trustees Act SS? Children, mentally ill etc * Advisory trustees o Provide advice not trust property * Custodian trustees o Appointed by statute to hold trust property that is then managed by other trustees * Bare trustees o Transfer property to the beneficiary when they are legally capable o Su juris TRUSTS | PAGE 22

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