CASES
The foundational case which establishes that adult beneficiaries absolutely entitled to the trust property may demand its termination, even before the trust’s stated vesting date.
Saunders v Vautier (1841) 4 Beav 115
“A trustee’s power to invest will often be granted in the _____ ________”
trust instrument
There is a higher standard of prudence for professional trustees compared to amateur investors
True
What is the term for the duty of a trustee to act fairly between different classes of beneficiaries
The duty of impartiality
The appeal case in which a brother successfully invoked Saunders v Vautier to claim his share of company shares held on trust, despite his sister’s objections.
Beck v Henley [2014] NSWCA 201
The statutory duty of care requires a trustee to exercise the care, diligence, and skill that a ______ person would exercise in managing the affairs of others
prudent
(Trustee Act 1925 (NSW) s 14A)
Reviews of investments must be conducted AT LEAST every 2 years
False
How is the word 'invest' defined under s 10 of the Superannuation Industry (Supervision) Act 1993 (Cth)?
Applying assets in any way or making a contract for the purpose of gaining interest, income, profit/gain
The case in which trustees of a miners’ pension fund were found in breach of duty for rejecting investments on political and moral grounds instead of focusing on beneficiaries’ financial interests.
Cowan v Scargill [1985] Ch 270
“One of the defining characteristics of the modern portfolio theory is the importance of ________ to manage risk”
diversification
Apart from the practical limit of the availability of trust money, there are no limits on the duration of a charitable trust fund
True
What is an exculpatory clause?
A clause in a trust that can excuse a trustee from liability for a breach of trust
Which case held that Saunders v Vautier could not apply to a unit trust because the trustee retained an unsatisfied right of indemnity, meaning the unit holders were not absolutely entitled to the trust property.
CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53
“Historically, the act of “investing” was seen as an act of speculation, which was compared to an almost _____________”
reckless state of mind
Beneficiaries can direct the Trustees on how to invest the funds under Saunders v Vautier
False
What is the difference between an income beneficiary and a capital beneficiary?
An income beneficiary is entitled to receive the income generated by the trust property (e.g. interest, rent, dividends) whereas a capital beneficiary is entitled to receive the trust capital (e.g. the property, shares, or money forming the trust fund)