Corporate Trusteeship

Trusts Discussion
1

Hi All

I was in a meeting discussing the setting up of a trust department. The discussion moved to trusteeship, I stated you will need one corporate trustee or 2 individuals as trustees.

The discussion moved to corporate trusteeship, I was informed we could have one corporate trustee requiring a £250,000 set up or 2 companies as trustees. I did not respond as was unsure if they are correct.

Please could someone confirm if we need 2 companies as trustee?

Thank you

Richard

2

If you set up a Trust Corporation, that Corporation can act as a sole trustee.

If it is not a Trust Corporation and it attempts to act as a sole trustee, there may be problems about holding land, issuing valid receipts and taking decisions. See s.14 Trustee Act 1925:

(1) The receipt in writing of a trustee for any money, securities, [or other personal property or effects payable, transferable, or deliverable to him under any trust or power shall be a sufficient discharge to the person paying, transferring, or delivering the same and shall effectually exonerate him from seeing to the application or being answerable for any loss or misapplication thereof.

(2) This section does not, except where the trustee is a trust corporation, enable a sole trustee to give a valid receipt for—

(a) proceeds of sale or other capital money arising under a trust of land;

(b) capital money arising under the Settled Land Act, 1925.

(3) This section applies notwithstanding anything to the contrary in the instrument, if any, creating the trust.A Trust corporation can also act as an Executor and as a Deputy.

Therefore, depending on the activity envisaged, if a corporate trustee is not a Trust Corporation, you may need two companies.

Peter Harris

www.overseaschambers.cm

3

A “Trust Corporation” has a specific definition under s68(18) Trustee Act 1925, which is not the same as a “corporate trustee” (i.e. a company acting as a trustee).

You can strictly, in some cases, have a sole trustee (including a sole corporate trustee) that is not a Trust Corporation, but it’s inadvisable because of (1) the potential that you could have a trust of land (where a sole corporate trustee would be insufficient) and (2) general continuity purposes (if that sole trustee became unable to act for some reason). Most deeds will generally also require two trustees or a Trust Corporation as standard.

For the sake of managing one extra company, I wouldn’t see any reason not to use two corporate trustees (or your firm’s corporate trustee plus a client acting as a trustee if the circumstances make that sensible).

4

Thank you for your reply

5

Hi James

Thank you for your e-mail.

They are going to make a decision sometime this year which way they wish to go.

Thank you

Richard

1 Like
6

When I was young and even more stupid than now, and so was a partner in a large firm, we had 2 trustee companies. Perpetual succession is handy but succession machinery is then transferred to the composition of the board and members.

As Peter says s.14 TA is the main obstacle although s.37 (1)(c) does not require 2 trustees ( persons, not necessarily individuals) after discharge of a trustee if a sole trustee was originally appointed.

Jack Harper

Jack Harper

7

Hi Jack

Thank you for your e-mail.

Kind regards

Richard