UNIT 7

APPOINTMENT OF TRUSTEES

The appointment of trustees is a critical aspect of estate and trust administration. Trustees are individuals or entities appointed to manage and administer a trust or estate according to the terms set out by the settlor or testator. In Nigeria, the appointment of trustees is primarily governed by the Trustee Act, Cap T22, LFN 2004. See section 25 of the Trustee Act which provides for the appointment of new trustees in place of deceased, retiring, or removed trustees. Additionally, the Wills Law of various states also provide for the appointment of trustees under a will. See the case of Re Lechmere and Lloyd (1901) 2 Ch 641 which highlighted the court’s power to appoint trustees when the existing trustees are incapable of performing their duties and the case of Re Tempest (1866) LR 1 Ch App 485 which established that the court can refuse to appoint a trustee if there is a conflict of interest or if the appointment is not in the best interest of the beneficiaries. The methods of Appointment includes the following;

1. By the settlor or testator: this is where the settlor (in the case of an inter vivos trust) or the testator (in the case of a testamentary trust) can appoint trustees in the trust deed or will.
2. By beneficiaries: this is in certain circumstances, where the beneficiaries of a trust may appoint a new trustee if the existing trustee is unable or unwilling to act.
3. By the court: this is provided under section 26 of the Trustee Act, where the court has the power to appoint new trustees if it is expedient to do so. This can occur when there is no capable trustee available or when a trustee needs to be replaced due to incapacity or other reasons.

DUTIES OF TRUSTEES

Trustees owe a fiduciary duty to the beneficiaries of the trust or estate they are administering. Their duties are both general and specific, as outlined by statute and case law. See the case of Speight v Gaunt (1883) 22 Ch D 727 which emphasized the trustee's duty of care in managing trust investments and the case of Tito v Waddell (No 2) (1977) Ch 106 which reiterated the duty of loyalty and the need to avoid conflicts of interest.
The general duties of trustees includes the following;

1. Duty of loyalty: this is where the trustees must act solely in the best interests of the beneficiaries and avoid conflicts of interest.
2. Duty of care: this is where the trustees are required to administer the trust with the same care and skill as a prudent person would in managing their own affairs.

The specific duties also includes the following;

1. Duty to invest: this is where the trustees must invest trust property prudently and in accordance with the terms of the trust (See section 2 of the Trustee Investments Act, Cap T23, LFN 2004).
2. Duty to distribute: this is where the trustees must distribute the trust assets according to the terms of the trust deed or will.
3. Duty to keep accounts: this is where the trustees must maintain accurate records and accounts of the trust property.
4. Duty to inform and report: this is where the trustees are required to keep beneficiaries informed about the administration of the trust and provide reports as necessary.

POWERS OF TRUSTEES

Trustees have various powers that enable them to effectively manage and administer the trust property. These powers are either expressly granted by the trust instrument or implied by law. See the case of Tempest v Lord Camoys (1882) 21 Ch D 571 which discussed the extent of the trustees' power to sell trust property and the case of Re Whiteley (1886) 33 Ch D 347 which highlighted the trustees' power to invest and the need for prudence in investment decisions. The powers of trustees can be classified into two and they are statutory powers and express powers. Where express Powers is where the trust deed or will may also grant specific powers to trustees, such as the power to mortgage trust property, the power to lease, and the power to appoint agents, the statutory powers inlcudes the following;

1. Power to invest: this is where the trustees have the power to invest trust property in a wide range of investments (See section 3 of the Trustee Investments Act).
2. Power to sell: this is where the trustees can sell trust property when it is in the best interest of the beneficiaries.
3. Power to compromise: this is where the trustees have the power to compromise claims relating to the trust property.

BREACH OF TRUST

A breach of trust occurs when a trustee fails to fulfill their duties or exceeds their powers, causing loss or harm to the beneficiaries. See the case of Armitage v Nurse (1998) Ch 241 which established that trustees can be exempted from liability for negligence if the trust deed includes an exemption clause and the case of Boardman v Phipps (1967) 2 AC 46 which discussed the fiduciary duty of trustees and the consequences of a conflict of interest.
The types of breach of trust include the following;

1. Negligence: this is the failure to exercise the required level of care and skill.
2. Misappropriation: this is the misuse or misapplication of trust property.
3. Conflict of interest: this is where the trustee is acting in a manner that benefits the trustee at the expense of the beneficiaries.

The remedies of breach of trust also includes the following;

1. Compensation: this is where the trustees may be required to compensate for any loss caused by the breach.
2. Restoration: this is where the trustees may be ordered to restore the trust property to its original state.
3. Removal: this is where the trustees may be removed from their position for serious breaches.

RETIREMENT AND REMOVAL OF TRUSTEES

Trustees may retire or be removed from their position under certain conditions. See section 39 of the Trustee Act which allows a trustee to retire with the consent of the co-trustees and the beneficiaries. The trust deed may also provide specific procedures for retirement. However, the court has the power to remove a trustee if it is in the best interest of the beneficiaries. The grounds for removal include incapacity, breach of trust, or conflict of interest. See the case of Letterstedt v Broers (1884) 9 AC 371 which outlined the principles for the removal of trustees by the court and the case of Miller v Cameron (1936) 54 CLR 572 which emphasized that the primary consideration for removal is the welfare of the beneficiaries.

ESSENTIALS OF ADMINISTRATION OF ESTATES

The administration of estates involves managing and distributing the deceased's property according to their will or the law of intestacy. See the Administration of Estates Law, Cap A3, LFN 2004 which provides the framework for the administration of estates in Nigeria and the Wills Law of Various States which governs the making, revocation, and administration of wills within the respective states. See also the case of Afolabi v Afolabi (2012) LPELR-7795(SC) which discussed the duties of an executor in the administration of an estate and the case of Olowu v Olowu (1985) 3 NWLR (Pt 13) 372 which highlighted the court's role in supervising the administration of estates. The steps in the administration of estates includes the following;

1. Obtaining probate or letters of administration: this is where the executor or administrator must obtain the legal authority to administer the estate.
2. Collecting assets: this is where the executor or administrator must identify and collect all the deceased's assets.
3. Paying debts and taxes: this is where the executor or administrator must settle any debts and taxes owed by the deceased.
4. Distributing assets: this is where the remaining assets are distributed to the beneficiaries according to the will or the law of intestacy.

CONCLUSION

By adhering to the legal framework and fulfilling their duties, trustees can effectively manage and administer trusts and estates, ensuring the interests of the beneficiaries are protected.