Duties, discretions and powers of trustees
Duties and powers of a trustee are listed according to the proper law by which the trust is governed. Duties required for a trustee are set out by different jurisdictions which have their own legislation. In addition to duties imposed by statute, a trustee will always have fiduciary duties and obligations. This means that a trustee has to act in good faith in the interests of the beneficiaries and not act for any collateral purpose.
Duty To Act Unanimously
In the case of private trusts, the general rule is that where there is more than one trustee they must, in the exercise of their functions, act unanimously. A majority of trustees cannot ordinarily rule against the minority. In case there is absolute deadlock, on application of one or other of the trustees or a beneficiary, the intervention of the court may be the only way to break the deadlock: Luke v South Kensington Hotel Co (1879) 11 Ch D 121.
Concerning its general application, the underlying principle requiring unanimity seems to be that a settlor, in appointing a number of trustees to execute the trusts set up by him, is to be taken to have intended the trust to have the benefit of the ‘assistance and discretion' of all the trustees (Swale V Swale (1856) 22 Beav 584). However, the rule is also in a form of protection for the individual trustee whose considerations cannot be outvoted by a majority. This has been well explained in the case of Re Butlin's Sttlement Trusts  Ch 251, in which there was a claim for rectification where the settlor's intention to provide for the trustees to conduct the trust by majority which had not been efficiently carried into the basis that she had not known of the settlor's intention so to provide, but giving no other reasoned objection to the rectification. Brightman J ordered rectification but, despite being satisfied that a mistake had been made, did so only ‘after considerable hesitation'. Although he did not decide the point, he considered that to ‘override the reasonable opposition of the part of a blameless trustee to suit the wishes of the settlor who, or whose advisers, have ex hypothesi, fallen into error might well be thought unjust'.
It is clarified that he meant unjust to an opposing trustee who on practical grounds favoured a retention of the requirement of unanimity. If you have taken these from a book, put the reference.
By means of an express provision in the trust deed, a settlor may provide that, either generally or in specific circumstances, the decision of a majority of the trustees will prevail.
Duty To Exercise Reasonable Care And Skill
Following his duties, a trustee is expected to reach certain standards. It will not benefit an incompetent trustee who causes loss to the trust fund or a beneficiary to argue that he has done his honest but incompetent best. In the management of the trust, if a trustee fails to exercise reasonable skill and care, he will be held to have acted in breach of trust and to be liable for the consequences of that breach.
The fiduciary duty of care
As a common statement of duty of care, in administering the trust, a trustee must exercise the same care and skill as an ordinary prudent man of business would exercise in the conduct of his own affairs (Speight v Gaunt (1883) 9 App Cas 1 at 19).
As a duty, a trustee is to take care as an ordinary prudent man would take if he cared for taking an investment for the benefit of other people for whom he felt morally bound to provide (Re Whiteley (1886) 33 Ch D 347 at 355). This condition helps to reduce the level of risk which a trustee may take in his administration of trust.
Duty To Act Honestly
In the concept of trust, it is fundamental that as a duty, a trustee performs the trusts honestly and in good faith for the benefit of the beneficiaries- there will be essence of trust in case a trustee is not obliged to act honestly for the benefit of his beneficiaries. The rule is applicable to trusts of all kinds including trusts of land, trusts of personalty, settled land, charitable trusts and pension funds. In the case of settled land the duty is imposed on the life tenant as well as the trustees.
Dishonesty in this situation is not restrained to deceit. A trustee acts dishonestly if he pursues a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferently whether it is contrary to their interests or not (Armitage v Nurse  Ch 241).
Duty Not To Benefit Personally
From his position of trust, a trustee cannot make a profit, nor must he place himself in a position where his interest and duty conflict. This rule is of strict application. That is why without the express authority of the trust deed, the consent of the beneficiaries or an order of the court, even a professional trustee could not charge.
Keech V Sandford
The leading case is Keech v Sandford (1726) Sel Cas Ch 61. That was a case where the trustee took advantage of an opportunity to acquire property with which the trust was associated. A trustee held a lease of a market on trust for a child. Before the expiry of the lease he applied to the lessor for a renewal for the benefit of the child. This was refused, so the trustee himself took a lease for his personal benefit. It was held that the trustee was obliged to assign the lease to the child and account for the profits. The Lord Chancellor remarked that if a trustee on a refusal to renew could have the lease himself, few leases would be renewed in favour of beneficiaries. The case is notable because the trustee had attempted to secure the leasehold for the trust but without success- nevertheless, he was not entitled to keep the benefit for himself.
A more recent case is Protheroe v Protheroe  WLR 519 where the husband, a joint owner with his wife of a leasehold property, purchased the freehold reversion; it was held that because he was a trustee the freehold reversion became subject of the trust although the husband was entitled to recoup the expense of the purchase.
Duty To Act Impartially
Between the different beneficiaries, the trustees have the duty to act impartially under the trust and to administer the trust in as fair and detached a manner as possible. By tradition, it can be said that the duty is to hold balance between different beneficiaries or classes or beneficiaries.
In considering the duty to act impartially in relation to the exercise of a discretion, there is a clear distinction to be made between the exercise of an administrative power and the exercise of a dispositive power. In the case of the latter, it is of the essence of the power that the trustees do prefer some beneficiaries over others.
Duty To Get In And Safeguard Trust Property
It is the duty of trustees to take control of the trust assets and subsequently take proper steps to safeguard them. If they substitute other trustees and are aware that their predecessors have not performed their duty well to get in and protect rust assets, they must take reasonable steps to remedy the situation, if that cannot be done, to consider proceedings against the previous trustees who were at fault, in order to make good any lose to the trust fund. The duty to get in assets thought to belong to the trust, however, is not absolute one, and in case of dispute over the trust's entitlement to a particular asset, or if the cost of getting in the asset might outweigh the value of the same, the trustees are entitled to, and should, use their discretion acting as prudent men of business. This is reflected in the provisions of the Trustee Act 1925, s 15.
Duty To Consult And To Obtain Consents And Directions
Restricting to the terms of trust, their fiduciary duties and, where appropriate, the statutory duty of care, trustees can run the trusts as they deem fit. The way of exercise of powers and discretions cannot be impose by the settlor, the beneficiaries, of the court. However, being a prudent trustee wishing to have the goodwill of the beneficiaries with him, should obtain consent to a particular course of action if this is required by the trust instrument.
So, consultation of the settlor, implementation of settlor's wishes or requirement of settlor's consent to a particular course of action will not be needed if there is absence of express provision to the contrary. Indeed a trust under which the settler retained control would be a charade. Trustees must not act for reasons which are irrational, perverse or contrary to any sensible expectation of the settler (see Re Manisty's Settlement  Ch 17 at 26), and there is no reason why the views of the settle should not be obtained and considered, but a trustee must exercise his independent judgment as to what is in the best interests of the trust and the beneficiaries as a whole even if this means going against the settlor's wishes. It is of course not unusual for a settler to retain certain rights to himself, e.g. the power to appoint new trustees.
Power To Delegate
When delegation of power is considered, two different matters are taken into account. The first one is whether and to what extent an individual trustee may delegate his powers to a third party to exercise on his behalf. The second is whether the trustees as a body may delegate to one or some of their number or to a third party the exercise of their powers and the discharge of their duties as trustees.
A distinction was drawn between the primary duties of a trustee where delegation was not possible and the commitment of others to support in the management of a trust fund which was allowed (Speight v Gaunt (1883) 9 App Cas 1 at 29). However, an agent employed by trustees, whereby these trustees are expected to exercise the same care that an ordinary prudent man of business would exercise in respect of his own affairs in the selection and supervision of the agent, an din case there has been a failure in doing so, it could lead to personal liability for loss to the trust fund resulting (Re Lucking's Will Trusts  1 WLR 866).
The trust instrument or statute can grant wider and more defined powers of delegation. In the case of delegation by trustees as a body a statutory power to employ agents was created by the Trustee Act 1925, s 23, which has now been outdated and replaced by the more comprehensive provisions in the Trustee Act 2000 (TA 2000). Trusts Act 2001
Where an individual trustee delegated his power, a restricted power to delegate the functions of trustee by power of attorney during his absence was given by the Trustee Act 1925, s 25. When enduring powers of attorney were introduced by the Enduring Powers of Attorney Act 1985, s 2(8) it was expressly provided that a power of attorney granted under section 25 could not be an enduring power of attorney. However section 3(3) of the 1985 Act provided that, subject to any condition or restriction in the instrument, an attorney under an enduring power, whether general or limited, might execute or exercise all or any of the trust powers or discretions vested in the donor as trustee and might give a valid receipt for capital or other money paid. There was, therefore, an irrational irregularity between the limited power in the Trustee Act 1925 and the broad power in the Enduring Powers of Attorney Act 1985. But on 1 March 2000, when the Trustee Delegation Act 1999 came into force, matters have been rationalised.
In the cast of trust of land, liberal powers of delegation by power of attorney are available. First, a trustee who has a beneficial interest may delegate any of his trustee functions to a third party. Second, the trustees may delegate to any beneficiary or beneficiaries of full age and beneficially entitled to an interest in possession in land of their functions which relate to the land.
Power To Accumulate Income
If the trust instrument or the statute authorise, a trustee may accumulate income. No limit on period which income might be accumulated was imposed at common law, other than the general perpetuity period which limited the life of the trust itself. Thus in Thellusson v Woodford (1805) 11 Ves 112, the testator directed that income be accumulated during the lifetimes of his sons grandsons and great grandchildren living at his death, a direction which was held valid confined, as it was, to the common law perpetuity period. The Accumulations Act 1800 was the first Act to set a greater limitation on permitted period of accumulation ans is commonly called the Property Act 1925, ss 164-166 (as amended). However, it should be noted that the restrictions in section 164 do not apply to accumulations directed in trusts created by a company as opposed to an individual.
Power To Appoint
When a trustee exercises a dispositive power (whether in the nature of a mere power or trust power or a hybrid power) he must do it in a responsible manner and not capriciously. Obviously, the trustee must abide by the trust instrument and make n appointment that is not allowed by it. In Re Hay's Settlement Trusts  1 WLR 202 at 210, Megarry V-C laid down three further duties which he regarded not necessary as exhaustive but containing the essentials. The trustee must consider:
Periodically whether or not he should exercise the power;
The range of objects of the power;
The appropriateness of individual appointments.
Power To Invest
Only in investments chosen from a specific list that trustees were authorised by statute to invest trust funds. Now, legislation in each jurisdiction gives a general power of investment, and trustees may invest trust funds in any form of investment and vary the investments at any time, unless expressly prohibited by the trust deed. The general power of investment is always subject to the prudent person rule, which requires that if the trustee's profession business or employment is or includes acting as a trustee of investing money on behalf of other persons, the trustee must, in exercising powers of investment, 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. When exercising their power of investment, there is legislation in each jurisdiction which sets out a list of matters to which trustees should have regard. And in case of breach of trust in relation to investment it provides that the court may consider whether the trustee considered these issues, whether the investment were made pursuant to an investment strategy, and whether the trustee acted on independent advice.
Power To Appropriate And Power To Partition
A trustee has an implied power to appropriate assets in satisfaction of a beneficiary's share (Re Ruddock (1910) 102 LT 89).
If a trust instrument contains an express power it is normally in clear terms to that effect.
However, an express power to appropriate may be found in less direct words. For example, Re Nicholson's Will Trusts  3 All ER 832, a direction that in the event of the remarriage of the testator's widow his trustees should set apart from the trust fund a sum sufficient to secure to the wife an annual income of £300 was held to authorise the trustees to appropriate for that purpose such of the investments authorised by the will as they should think fit.