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IAI Actuarial Core Principles · Business Management · Trusts and agency

Three trustees hold a trust for a charity-linked beneficiary. Trustee A, without consulting B and C, sells a trust property flat in Mumbai at a fair price. The deed requires trustees to act jointly and gives no power for one trustee to act alone. What is the legal position?

The sale is not properly authorised. Co-trustees of a private trust must act jointly and unanimously unless the deed allows otherwise. A fair price does not cure the lack of joint action, and one trustee cannot bind the others merely by acting alone or claiming seniority.

  1. AThe sale is valid because a majority of one is enough for a sale
  2. BThe sale is valid because the price was fair
  3. CThe sale is valid only if the beneficiary later complains
  4. DThe sale is not properly authorised, because private trustees must act jointly in exercising their powersCorrect
  5. The sale is valid because the senior trustee always has authority

Explanation

Where there are several trustees, the general rule is that they must act unanimously in exercising trust powers unless the deed provides otherwise. A fair price does not cure lack of authority. Seniority or a lone trustee's judgement does not replace joint action.

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