Session 7_DN

Who typically has the power to appoint a new trustee if the trust deed does not specify who has this power?

• The settlor of the trust

• The existing trustees

• The beneficiaries of the trust

Under the Trustee Act 1962 (WA), which of the following circumstances justifies the appointment of a new trustee?

• The trustee visits another state within Australia for 3 months

• The trustee desires to be discharged

• The trustee requests an increase in their remuneration

Under the Trustees Act 1962 (WA), which of the following is NOT a reason for a trustee ceasing to act in their position?

• Retirement with the consent of co-trustees and beneficiaries

• A court order removing the trustee

• Voluntary resignation without the need for replacement

• Death of the trustee

According to the Trustees Act 1962 (WA), what must happen for a trustee to retire if there are multiple trustees and one wishes to step down?

• The trustee can retire without any formalities

• The trustee must write a letter to the beneficiaries

• The trustee must receive approval from the local court

• All co-trustees must consent to the retirement, and a substitute trustee must be appointed to take their place

Nora Bennet, who passed away last year, bequeathed her assets to the Bennet Family Trust, appointing her friend Alice, a licensed real estate agent, as trustee. Under the terms of the will, Alice is permitted to administer the trust property even in situations where her personal interests or obligations may conflict with those owed to the trust or its beneficiaries. Recently, Alice received a purchase offer from her brother, Bob, for a substantial parcel of land held by the trust, intended for use in his new business venture. Although the proposed sale reflects the land’s fair market value, several beneficiaries have expressed concerns, perceiving the transaction as preferential treatment toward Bob. Given the circumstances, is there a conflict of interest that could likely lead the court to remove Alice as the trustee of the Bennett Family Trust?

• Yes, Alice's personal relationship with Bob could influence her decisions as a trustee

• No, Alice's role as trustee is separate from her personal relationship with Bob

• Yes, the favouritism towards Bob creates a conflict of interest that has endangered the trust property

• No, because the trust permits Alice to make such transactions despite the conflict of interest

Eleanor establishes The Greenfield Family Trust to support her descendants, naming her son Peter as sole trustee. The trust includes rental properties, dividend-yielding stocks, and cash. The trust specifies the income from the assets is to be distributed annually to her children: Peter, Megan, and Lucy. Upon the death of the last surviving child, the principal is to be divided among Eleanor’s grandchildren. Megan and Lucy notice declining income distributions while the principal’s value increases. Megan suspects Peter of prioritizing principal growth over current income, affecting her financial stability. When she confronts him, Peter argues that preserving the principal is crucial for future beneficiaries, namely their children. Dissatisfied, Megan plans legal action against Peter. What would be the most suitable breach of duty to substantiate her claim?

• Breach of duty to act impartially

• Breach of duty to get in the trust property

• Breach of duty to avoid conflicts of interest

• Breach of duty not to make personal profit

Sarah is the trustee of the Johnson Family Trust. The trust was established by her late father, who left a valuable art collection to the trust. The art collection is currently in the possession of Sarah’s estranged sister, Emily. Emily refuses to hand over the art collection to Sarah, claiming it was a personal gift from their father. In light of the circumstances, which specific duty should Sarah, as trustee, appropriately exercise?

• Duty to get in the trust property

• Duty to become acquainted with the terms of the trust

• Duty to act impartially

• Duty not to make personal profit

Alice, trustee of a family trust established by her late uncle Joseph White, is tasked with using the trust’s funds exclusively for the education of Joseph’s grandchildren, Emma and Liam, until they turn 25 years. The trust specifies that funds should cover educational expenses like tuition and school supplies. Emma, now 20 years, faces financial difficulties due to medical expenses unrelated to her education. Despite the trust’s clear instructions, Alice feels morally obligated to help Emma with these medical costs, believing it indirectly supports her education. Emma’s mother, Mrs. White, also advocates for using the trust’s funds for medical expenses, arguing it aligns with Joseph’s intent to support his grandchildren. Is Alice, allowed to use the trust funds to pay for Emma’s medical cost?

• Yes, the overall intent of the trust authorises Alice to use the funds for the medical costs

• No, the trust does not authorise Alice to use the funds for the medical costs

Alice, trustee of a family trust established by her late uncle Joseph White, is tasked with using the trust’s funds exclusively for the education of Joseph’s grandchildren, Emma and Liam, until they turn 25 years. The trust specifies that funds should cover educational expenses like tuition and school supplies. Emma, now 20 years, faces financial difficulties due to medical expenses unrelated to her education. Despite the trust’s clear instructions, Alice feels morally obligated to help Emma with these medical costs, believing it indirectly supports her education. Which section of the Trustees Act 1969 (WA) is most appropriate for Alice, as trustee, or any of the beneficiaries to seek a court order authorizing the use of trust funds to cover Emma's medical expenses?

• Section 89, Trustees Act 1962 (WA)

• Section 90, Trustee Act 1962 (WA)

John and Mary inherited land from their late father, placed in a trust with their uncle Robert as trustee. The trust deed requires the land to be sold after five years, with proceeds equally divided between John and Mary. Five years later, Robert sells the land without informing John and Mary of the sale or the sale amount. He simply gives them money, claiming it as their share. John, suspicious of the amount he received, requests a detailed account of the sale from Robert. Robert, however, refuses to provide any information, stating that he has fulfilled his duty by giving them their share of the proceeds. Has Robert effectively fulfilled his duty as trustee?

• Yes, because he has given John and Mary their share of the proceeds

• Yes, because the trust deed does not explicitly state that he needs to provide a detailed account of the sale

• No, because he has not provided a detailed account of the sale

• No, because he had not received permission from John and Mary to sell the land