16. Appointment, retirement and removal of trustees

Who can be a trustee

Any adult of sound mind who can hold property can be a trustee. A company, such as a trust corporation, can act too. Trustees can be original trustees named by the settlor, later trustees appointed under a power, judicial trustees appointed by the court, or the public trustee where one exists. Personal representatives often hold property as trustees once the estate has been administered.

A trustee need not accept

A person named as trustee may disclaim before acting. Once he accepts, by words or by conduct such as dealing with the property, he cannot simply walk away.

Equity will not let a trust fail for want of a trustee

If the named trustee refuses, dies before the testator, or cannot act, the trust does not fail. The court will appoint someone, and until then the settlor or his personal representatives hold the property on the trust.

Appointing new trustees

The trust instrument: the settlor may give someone a power to appoint new trustees. That power is used first.

Statute: in England section 36 of the Trustee Act 1925 lets the persons named in the instrument, or else the surviving or continuing trustees, appoint new trustees in writing where a trustee dies, stays abroad for over twelve months, wants to retire, refuses, is unfit or is incapable. The Trusts of Land and Appointment of Trustees Act 1996 lets adult beneficiaries entitled to the whole fund direct an appointment. Earlier, the Trustee Act 1850 and the Conveyancing Act 1881 contained similar powers. A Sierra Leone student must check which of these provisions the local statute book applies, since only the 1850 Act predates the reception date.

The court: the court may appoint new trustees where it is expedient and difficult to do so otherwise. It considers the settlor's wishes, the interests of all the beneficiaries, and whether the appointment will help carry out the trust.

Retirement

A trustee may retire under a power in the instrument, under statute where enough trustees remain, with the consent of all the beneficiaries if they are adults entitled to the whole fund, or by leave of the court. A trustee who retires to allow a breach of trust may stay liable for it.

Removal

The instrument may give a power of removal. Otherwise the court may remove a trustee under its inherent jurisdiction. Letterstedt v Broers is the leading case: the main question is the welfare of the beneficiaries. A trustee need not be guilty of misconduct. Friction or hostility that makes the trust hard to run can be enough, if it threatens the proper administration of the trust.

Delegation

The old rule was that a trustee must act personally: delegatus non potest delegare. But equity allowed trustees to employ agents where a prudent man of business would, and to rely on them. Speight v Gaunt held that a trustee who employed a stockbroker in the ordinary way was not liable when the broker misused the money. In England the Trustee Act 2000 now lets trustees delegate their administrative functions, but not their discretions about who benefits, and requires them to review agents' work.

Joint action

Trustees of a private trust must act unanimously. A majority cannot bind the others unless the instrument allows it. Charitable trustees may act by majority.