TRUST & POWER

TRUST & POWERUEQ3622 EQUITY & TRUST IIBack to basicsDefinition of a TrustA Trust is an equitable obligation, binding a person (e.g. a trustee) to deal with property over which he has control (e.g. the trust property) for the benefit of persons (e.g. the beneficiaries, of whom the trustee may himself be one), any one of whom may enforce the obligation.

REQUIREMENTSDifference between trust and power POWERBasically a power of appointment gives the donee of the power the right to allocate property (which he does not himself own) in such manner as he may direct.

A power of appointment is discretionary and should the donee not exercise it, the objects of the power (i.e. the potential beneficiaries) can do nothing, nor can the court force the donee of the power to act. Cont.If there is no gift over in default of the power of appointment, then there will be a resulting trust in favour of the donors estate.

Cont.TRUSTThe trustee is under a duty to act in accordance with the terms of the trust deed and, should he fail to act, any potential beneficiary may apply to the court and force the trustee to act.

The trustee is under an equitable obligation to exercise his power in favour of the beneficiaries in accordance with the terms of the trust and the court will see to it that the terms of the trust are carried out.THE APPOINTMENT OF TRUSTEESINITIAL APPOINTMENTGeneral Rule:Any person capable of holding property can be a trustee;

It is the settlor/testator decision;

Court not duty bound to question the reasons of the deceased appointment, - Phua Chui Har v Amanah Raya[2002] 4 AMR 4753Cont.Re Lysaght [1965] 2 All ER 888 - where settlor expressly states that no one else should be the trustee apart from the one/s he had chosen.Re Walker [1901] Ch. 259;Re Tempest (1866) 1 Ch App 485;Henderson v Henderson [1940] Ch 764;Yusof bin Ahmad bin Talib & Ors v Hong Kong Bank Trustee (Singapore) Ltd. & Ors [1989] 3 MLJ 84;

Subsequent AppointmentsStatutory in nature - S40 of TA 1949S40(1)-

dead, out of Msia for 12 months, doesnt want to be trustee anymore, refuse or unfit to act (incapable individuals eg mental illness, old age and infirmity, bankruptcyincapable of acting (corporations) refer S40(3)minor Persons who may exercise power of appointment40(1) a - the person or person nominated for the purpose of appointing new trustees by the instrument

40(1) b - when no person, then the surviving trustee, continuing trustee or trustee for the time being or representative for the last surviving or continuing trustee may in writing appoint one or more persons to be the trusteeAppointment by Court (Ct)Under S45 TA 1949 45(1)(a) - Courts can appoint when it is inexpedient, difficult or impracticable to do so without the assistance of the court;

45(1)(b)- court can exercise power to appoint a new trustee;

Re TempestCt to have regard to the wishes of the person by whom the trust was created ie the beneficiariesThe ct will not appoint a person interested under the trust, in opposition either to the wishes of the testator or to the interest of the other cestuis que trust it is of the essence of the duty of every trustee to hold an even hand between the parties interested under a trustWhether the appointment will promote or impede the execution of the trust.See also Bhikku Daeng v Maung Shwe Tyn [1980] 2 MLJ 184, FC RETIREMENT OF TRUSTEESREMOVAL OF TRUSTEESLigar Fernandez v Eric Claude Cooke[2002] 6 CLJ 152Phua Chui Har v Amanah Raya[2002] 4 AMR 4753Titterton v Oates[1998] 143 FLR 467 and Monty Financial Services Ltd v Delmo[1996] 1 VR 65Re Wrightson ; Re Wrightson

16Cont.Test of Sir Owen Dixon in Miller v Cameron[1936] 54 CLR 572;

Jurisdiction must be exercised with a view of the following:Interest of all the beneficiaries;The security of the trust property;The efficient and satisfactory execution of the trusts; and faithful and sound exercise of the trustees power;Cont.Halsburys Laws of Malaysia:

The Court can remove a trustee if refuse to execute a trust, mismanaged the trust or disqualified himself by circumstances or conduct from continuing to hold office also if detrimental to the trust owing to his being out of sympathy with its objects or his beneficiaries..

Cont.However a trustee will not be removed against his will on account of pecuniary embarrassment which has ceased to exist and which does not appear to have imperilled the interests of the beneficiaries.

When a trustee is removed, he is usually ordered to pay the costs of his removal.

DeathWhere there are 2 or more trustees, and death occurs to one of them, then the remaining living trustee may fulfil his obligations until another trustee is appointed or the trustee can act solely to fulfil the mission of the trust. s 23 (1)In the case of a sole trustee, if he dies, then the personal representatives can exercise the power given to the sole trustee s 23(2) or choose to appoint new trustees as they are not bound to accept trusteeship as per s40(1) of TA.

Disclaimer of TrusteeshipNo. of Trustees

See s39 of TA 1949- no more than 4 persons, if more than 4 named, then first 4 names should act as the trustees