Examination Timing: 00H01M06S
Sophie and Laura have agreed to act as trustees of a trust which contains a range of property, including land. Under the trust, Sarah is entitled to the income of the trust for 15 years, after which time the remainder will pass to her two children. The trustees have no experience in administering and managing a trust and would therefore like to delegate the selection and management of trust investments to more experienced individuals. Which of the following best describes the person to whom the power of investment should be delegated?
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Your selected option: B
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The correct answer is B. In selecting an agent, the trustees must exercise such care and skill as is reasonable in the circumstances pursuant to s. 1 of the Trustee Act 2000. Choosing someone who has a dishonest track record would not be reasonable, especially where a central asset management function is involved, giving the agent access to the trust property pursuant to s. 15 of the Act. A trusted friend (despite his successful business credentials) or solicitor may lack the relevant experience required to choose and manage investments, and even a bank manager may not have the appropriate skills required (added to which is the potential conflict of interest should something go wrong within the family, Emma being Laura's sister).
Key Point: Trustees must exercise reasonable care and skill in selecting agents for trust management, ensuring the agent has the appropriate expertise and integrity to handle trust investments.
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