Law Essays on Equity Text

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They ask if they are able to delegate their trust investment decisions to kerry amp luis. His mother asked the trustees to advance some of the capital fund to marco ahead of time. Marco consented to this because his mother who squandered it on her extravagant lifestyle. The trust instrument provides that the trustees shall not be liable for any breach of trust howsoever caused. Tom amp clement asked the dunn company for information they both acquire shares in dunn company.

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Tom amp clement are both voted onto board of directors of dunn company amp earn substantial fees as directors. The company's profitability increases significantly amp a profit is made by all shareholders. 600 words e paulo took bribes amp secret commissions whilst a trustee of the quicksilver trust. He spent the bribe money amp commissions on a racehorse which is now worth double the price he paid. In 2003 he instructed selma, a senior executive at the bank, to transfer 3 million of bank funds into a newly established account entitled 'theodore enterprise'. It now appears the 3 million has been used fraudulently by theo, for his own purposes, in the following ways: theo gave his wife 1 million. Theo took a further 6 million from prospective purchasers amp placed it the same account.

Theo withdrew 2 million from the account in january 2004 amp purchased property in australia. In february 2004 theo withdrew the remaining 6 million amp used 1 million to pay a life insurance premium. The remaining 5 million was then passed to grabbit accountancy ltd who passed it through a series of accounts amp it eventually ended up in a bank in the cayman islands. He spent 1 million gambling at a casino amp the rest of the money has been dissipated.

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Theo has made further deposits into this account amp the balance stands at 1 million. The beneficiaries of the life insurance policy are theo's two children's amp his wife. Advise the supercash bank amp the investors who did not receive the holiday homes they thought they were purchasing. 10 words the general duty of trustees is the maxim ldquo delegate rsquo s non potest delegare rdquo ndash the person to whom responsibility has been delegated may not delegate the responsibility to another. 1 farewell j stated that ldquo no trustee accepts the responsibility for the term of his natural life, or for more than a reasonable period.

Rdquo it is important to note, however, that horatio and isabella cannot retire on a whim and in some circumstances retirement will not be a valid unless a new trustee is appointed in their place. There are various ways in which horatio and isabella could go about retiring from the trust and appointing kerry and luis in there place. Horatio and isabella may retire if the trust instrument entitles them to so and if it does not then whenever the court approves an application for retirement.

Horatio and isabella may apply for kerry and luis to become trustees under the trustee act 1925 s36 which allows for the appointment of a new trustee or trustees ldquo in the place of rdquo a trustee ldquo desiring to be discharged. Rdquo the important point to note is that a retirement purported to be carried out in pursuance of this section will only be valid to discharge the trustee if at least one new trustee has been appointed in their place as is the case here. This is of course as long as the trust instrument does not contain instructions to the contrary. Horatio and isabella may also be able to retire under s39 of the trustees act and this will permit their retirement without the appointment of kerry and luis.

The circumstances in which this can happen are retirement by deed the trustee must obtain the consent of the other trustees and any person who is empowered to appoint new trustees such consent must be given by deed and most approve of the retirement and of the vesting of the property in the remaining trustees alone and the retirement will only be valid if two trustees remain or a trust corporation remains after the retirement. A trustee continues to be liable for breaches of trust that occur after they have attempted to retire if their ldquo retirement rdquo was technically defective. If however the retirement was valid then they will only be liable for breaches of trust which occurred when they were a trustee. Horatio and isabella may also retire from their position with leave of the court. The court may order the retirement of a trustee when exercising its power under s41.there is also an inherent power for the court to allow retirement. The court will not use this inherent power if it would result in the trust being left with no trustee, and this would not be the case here as there are two trustees to replace the existing trustees and therefore an order of the court may be obtained.

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The general rule is that anyone who has the legal capacity to hold property may be a trustee including corporations and married women.a minor is not capable of being a trustee so as long as kerry is other the age of majority then it should be acceptable for luis and kerry to become trustees. Marco is entitled to an advancement of the trust money under the trustee act 1925 2 which provides t hat trustees may apply capital money for the advancement or benefit of a beneficiary, regardless of whether that beneficiary is an infant or an adult. Advancement is ldquo the establishment in life of the beneficiary who was the object of the power or at any rate some step that would contribute to the furtherance of his establishment 3. Section 32 1 a provides that the money paid for the advancement or benefit of the beneficiary ldquo shall not exceed altogether in amount one half of the presumptive or vested share or interest of that person in the trust property. Rdquo therefore the trustees may only advance to marco one half of the presumptive that is the amount that marco is expected to receive when t he money becomes vested in him of his share in the trust property. Furthermore under section 32 1 c the trustees will not be permitted to make a payment by way of advancement if to do so would prejudice any person with a prior interest in the fund.

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Unless the person with the prior interest gives their consent in writing to the advancement. The first factor is the benefit to the beneficiaries the trustees should ask themselves when considering an exercise under s32 ldquo will the application of capital moneys be for the benefit of the beneficiary 4. Rdquo however, the most important thing to consider as in this scenario is that the power to make advancement is a fiduciary power and therefore the trustees must weigh, against the benefit to the advance, the interests of other persons entitled under the trust. 5 the trustees must make sure the capital moneys paid to the advancee are used by the advancee for the use intended by the trustees. Prescribe a particular purpose, and then raise and pay the money over to the advancee leaving him or her entirely free, legally and morally, to apply it for the purpose or to spend it in any way he or she chooses, without any responsibility on the trustee even to inquire as to its application.

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