Trustee Act 1936

This Act may be cited as the Trustee

Act 1936.

In this Act (except in

Part

5), unless the context otherwise requires—

contingent right, as applied to land, includes a contingent or executory interest, a possibility coupled with an interest, whether the object of the gift or limitation of the interest or possibility is or is not ascertained; also a right of entry, whether immediate or future, and whether vested or contingent;

convey and conveyance applied to any person include the execution by that person of every necessary or suitable transfer or assurance for conveying, assigning, appointing, surrendering, or otherwise transferring, or disposing of land to which he is entitled or of which he is seised or possessed, or wherein he is entitled to a contingent right, either for his whole estate or for any less estate, together with the performance of all formalities or acts required by law under the

Real Property Act 1886 or otherwise for the validity or completion of the conveyance, including any acts to be performed by married women and tenants in tail for perfect conveyance and assurance under the Acts for, the time being in force in that behalf;

equity of redemption includes—

the right to redeem property which has been conveyed or assigned by way of mortgage:

the estate of the owner of any property which is subject to any legal or equitable mortgage, charge or encumbrance (including a mortgage or encumbrance under the Real Property

Act 1886) created otherwise than by conveyance or assignment of the property;

instrument includes Act of

Parliament;

land includes incorporeal as well as corporeal hereditaments, and any estate or interest therein, and also an undivided share of land;

lunatic means any person who has been found to be a lunatic upon inquiry by the Supreme Court, or upon a commission or inquiry issuing out of the Supreme Court in the nature of a writ of de lunatico inquirendo;

mortgage and mortgagee include every estate and interest regarded in equity as merely a security for money, and every person deriving title under the original mortgagee;

pay and payment, as applied in relation to stocks and securities, and in connection with the expression

into court, include the deposit or transfer of the same in or into court;

person of unsound mind means any person, not an infant who, not having been found to be a lunatic, is incapable from infirmity of mind of managing his own affairs;

possessed includes being in receipt of income of or having any vested estate less than a life estate, legal or equitable, in possession or in expectancy, in, any land;

property includes real and personal property, and any estate and interest in any property, real or personal, and any debt, and any thing in action, and any other right or interest, whether in possession or not;

representative means an executor or administrator, and includes the Public Trustee in cases where the Supreme Court has authorised him to administer the estate of a deceased person;

securities includes debentures, bonds, stock, funds, shares, promissory notes and documents of any kind evidencing indebtedness;

stock includes fully paid up shares, and, so far as relates to vesting orders made by the court under this Act, includes any fund, annuity, or security transferable in books kept by any company or society, or by instrument of transfer either alone or accompanied by other formalities, and any share or interest therein;

Supreme Court includes a judge of the Supreme

Court;

transfer, in relation to stock, includes the performance and execution of every deed, power of attorney, act, and thing on the part of the transferor to effect and complete the title in the transferee;

trust does not include the duties incident to an estate conveyed by way of mortgage, or to the estate or interest of a mortgagee under the Real Property Act 1886 but with these exceptions the expressions trust and

trustee include implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property, and the duties incident to the office of representative of a deceased person, and the expression trustee includes a representative of a deceased person;

trustee company means a trustee company within the meaning of the Trustee Companies

Act 1988.

Notwithstanding the Real Property

Act 1886 this Act applies to land which is subject to that Act, but only to the extent necessary for carrying out the purposes of this Act.

Where an unincorporated body is named in an instrument establishing a trust, the persons for the time being comprising the body will be taken to have been individually named in the instrument.

Subsection (3) applies for the purposes of this Act but not for the purposes of interpreting the trust instrument.

This Part applies to trusts created before or after the commencement of the Trustee (Investment Powers) Amendment

Act 1995.

A trustee may, unless expressly forbidden by the instrument creating the trust—

invest trust funds in any form of investment; and

at any time, vary an investment or realise an investment of trust funds and reinvest money resulting from the realisation in any form of investment.

Subject to the instrument creating the trust, a trustee must, in exercising a power of investment—

if the trustee's profession, business or employment is or includes acting as a trustee or investing money on behalf of other persons—exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons; or

if the trustee is not engaged in such a profession, business or employment—exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of other persons.

A trustee must, in exercising a power of investment, comply with any provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or approval or compliance with any direction with respect to trust investments.

Subject to the instrument creating the trust, a trustee must, at least once in each year, review the performance (individually and as a whole) of trust investments.

Any rules and principles of law or equity that impose a duty on a trustee exercising a power of investment including, without limiting the generality of those duties, rules and principles that impose—

a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust;

a duty to invest trust funds in investments that are not speculative or hazardous;

a duty to act impartially towards beneficiaries and between different classes of beneficiaries;

a duty to take advice, continue to apply except so far as they are inconsistent with this or any other Act, or the instrument creating the trust.

Any rules and principles of law or equity that relate to a provision in an instrument creating a trust that purports to exempt, limit the liability of, or indemnify a trustee in respect of a breach of trust, continue to apply.

If a trustee is under a duty to take advice, the reasonable costs of obtaining the advice is payable out of trust funds.

Without limiting the matters that a trustee may take into account when exercising a power of investment, a trustee must, so far as they are appropriate to the circumstances of the trust, have regard to—

the purposes of the trust and the needs and circumstances of the beneficiaries; and

the desirability of diversifying trust investments;

and

the nature of and risk associated with existing trust investments and other trust property; and

the need to maintain the real value of the capital or income of the trust; and

the risk of capital or income loss or depreciation;

and

the potential for capital appreciation; and

the likely income return and the timing of income return;

and

the length of the term of the proposed investment;

and

the probable duration of the trust; and

the liquidity and marketability of the proposed investment during, and on the determination of, the term of the proposed investment;

and

the aggregate value of the trust estate; and

the effect of the proposed investment in relation to the tax liability of the trust; and

the likelihood of inflation affecting the value of the proposed investment or other trust property; and

the costs (including commissions, fees, charges and duties payable) of making the proposed investment; and

the results of a review of existing trust investments.

A trustee may—

obtain and consider independent and impartial advice reasonably required for the investment of trust funds or the management of the investment from a person whom the trustee reasonably believes to be competent to give the advice; and

pay out of trust funds the reasonable costs of obtaining the advice.

The trustees of a trust established wholly or partly for charitable purposes must, in the administration of the trust estate, have regard to information, representations or advice that is relevant and is given or made to the trustees in writing by a person referred to in subsection (2).

The following persons may give the information or advice, or make representations, to the trustees:

a person who is named in the instrument establishing the trust as a person who is entitled to, or may, receive money or other property for the purposes of the trust; or

a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustees before distributing or applying money or other property for the purposes of the trust;

or

a person who in the past has received money or other property from the trustees for the purposes of the trust; or

a person of a class that the trust is intended to benefit.

If securities of a body corporate are subject to a trust, the trustee may concur in any scheme or arrangement—

for or arising out of the reconstruction, reduction of capital or liquidation of, or the issue of shares by, the body corporate; or

for the sale of all or any part of the property and undertaking of the body corporate to another body corporate; or

for the acquisition of securities of the body corporate, or of control of the body corporate, by another body corporate; or

for the amalgamation of the body corporate with another body corporate; or

for the release, modification or variation of rights, privileges or liabilities attached to the securities, or any of them, in the same manner as if the trustee were beneficially entitled to the securities.

The trustee may accept instead of, or in exchange for, the securities subject to the trust securities of any denomination or description of another body corporate party to the scheme or arrangement.

If a conditional or preferential right to subscribe for securities in a body corporate is offered to a trustee in respect of a holding in that body corporate or another body corporate, the trustee may, as to all or any of the securities—

exercise the right and apply capital money subject to the trust in payment of the consideration; or

assign to any person, including a beneficiary under the trust, the benefit of the right, or the title to the right, for the best consideration that can be reasonably obtained; or

renounce the right.

A trustee accepting or subscribing for securities under this section is, for the purposes of any provision of this Part, exercising a power of investment.

A trustee may retain securities accepted or subscribed for under this section for any period for which the trustee could properly have retained the original securities.

The consideration for an assignment made under subsection (3)(b) must be held as capital of the trust.

This section applies in relation to securities acquired before or after the commencement of the Trustee (Investment Powers)

Amendment Act 1995 but subject to the instrument creating the trust.

Subject to the instrument creating the trust—

a trustee may apply capital money subject to a trust in payment of calls on shares subject to the same trust; and

if the trustee is a trustee company—it may exercise the powers conferred by this section despite the shares on which the calls are made being shares in the trustee company.

Subject to the instrument creating the trust, a trustee may—

purchase a dwelling house for a beneficiary to use as a residence;

or

enter into any other agreement or arrangement to secure for a beneficiary a right to use a dwelling house as a residence.

Despite the terms of the instrument creating the trust, a trustee may, if to do so would not unfairly prejudice the interests of other beneficiaries, retain as part of the trust property a dwelling house for a beneficiary to use as a residence.

A dwelling house purchased, retained or otherwise secured for use by the beneficiary as a residence may be made available to the beneficiary for that purpose on such terms and conditions consistent with the trust and the extent of the beneficiary's interest as the trustee thinks fit.

The trustee may retain a dwelling house or any interest or rights in respect of a dwelling house acquired under this section after the use of the dwelling house by the beneficiary has ceased.

In this section—

dwelling house includes—

any building or part of a building designed, or converted or capable of being converted, for use as a residence; and

any amenities or facilities for use in association with the use of a dwelling house.

A trustee is not liable for breach of trust by reason only of continuing to hold an investment that has ceased to be—

an investment authorised by the instrument creating the trust;

or

an investment properly made by the trustee exercising a power of investment; or

an investment made under this Part as previously in force from time to time; or

an investment authorised by any other Act or the general law.