#13751 - Administrative Provisions - Private Client

Administrative provisions in wills 1) Power to invest - s.3(1) Trustee Act 2000 What is the power? a) Trustee or PR can 'make any kind of investment that he could make if he were absolutely entitled to the assets' - s.3(1) TA 2000 b) Advice can be taken when reviewing investments from someone who is 'reasonably believed to be qualified' to give such advice - s.5 TA 2000 c) The management of trust assets can be delegated - s.11 TA 2000 What are the restrictions on the power? a) Does not include power to invest in land (this is s.8 TA 2000) b) Trustees /PRs, when making an investment, must have regards to the 'standard investment criteria' in s.4 TA 2000 How is the power commonly extended? a) Purchasing of foreign investments, including land b) Retention of non-income producing assets e.g. insurance policies c) Allow an ethical investment policy d) Allow borrowing for the purpose of investment e) Exclude the requirement for diversification of assets 1 2) Power to purchase land- s.8 Trustee Act 2000 What is the power? To buy freehold or leasehold UK law as: * An investment * For beneficiary's occupation * For any other reason What are the restrictions on the power? UK land only How is the power commonly extended? To purchase land abroad To purchase an interest in land with another (e.g. with the beneficiary) 3) Power to advance capital - s.32 Trustee Act 1925 * Mention this most of the time (especially where is a minor) What is the power? Trustees / PRS have absolute discretion to apply capital for the advancement or benefit of a person with a vested or contingent interest in capital - s.32 TA 1925 What are the restrictions on the power? a) The trustes / PRs cannot advance more than 1/2 of the beneficiary's share However if the beneficiary has taken assets under intestacy, and has a life interest they will have a right to capitalise that life interest under s.47A AEA 1925 b) Any beneficiary with a prior interest must consent (e..g life tenant or earlier capital interest holder) c) Any advancement made to a beneficiary must be taken into account at final distribution 4) Power to insure - s.34 Trustee Act 2000 How is the power commonly extended? Removing all or some of the above restrictions What is the power? Trustees / PRs can: * Insure comprehensively up to the value of the property * Pay premiums from income or capital What are the restrictions on the power? How is the power commonly extended? Good practice to still include the clause for clarity 2