Administration of Trust

1. Chapter1: Appointment,Retirement andRemoval of Trustees
Sect40 - the firsttrusteesare usuallyappointedbythe settlor(incase of intervivostrust) orthe
testatorina will.If notrusteesare appointedthenthe courtwill ultimatelyappointone.
Sect40(1) (a) - settlormayhave alsoappointedcertainpersonstoappointtrusteeswhenaneedto
appointtrustee arisesandfrequentlythe settlormayreserve the powerhimself.Butitmustbe
notedthat the personor personswhohasthat powerare not trusteesthemselves.
England- a minorcannot be a trustee of an expresstrustandtrusts of landunderS 120 of the Law of
PropertyAct(English) Case:Re Vinogradoff -same positioninMalaysia.
Whenthe trusteessoappointed,the propertywill vestinthemandtheywill holdthe propertyuntil
theydie,retire orremoved.[Section40(1) (b),Section40 (5) & BhikkuDaeng19802 MLJ]
Example:
- S (Settlor) appointsTl,T2,T3 and T4tb holda landon trustfor X and Y, hisinfantsons.The trust
was createdin1970.
- Tl diedin1971
- The propertythenvestsinT2, T3 and T4.
- ThenT2 retiredin1973.
- The propertythenvestswithT3 and T4T3 was removedin1975.
- The propertythenvests'inT4 as sole trustee.
- T4 diedin1976, the propertythenvestedinthe personal representativeof T4
Section40 containspowersof appointmentandalsoremoval anditconferswide powerstoappoint
newtrustee ortrusteesinplace of a trustee who:-
1. Unfitto act - Re Roche (bankrupt)
2. Is deadS.40 (8)
3. Refusestoact
4. Disclaimer
5. An infant
6. remainoutof MalaysiaRe Walker/LigarFernandez2002 5MLJ
7. Has beenremovedunderapowercontainedinthe instrumentcreatingthe trust - s 40(2)
8. Desirestobe dischargedfromall or any of histrust or powers
9. Incapable of actingin the trustse.gold age or infirmnity - Re Lemann'swill Trust
Numberof trustees?Usually 4(s.39 (1))

2. Who may appointtrustees?(s.40(1) (a) and (b))
(a) The personsnominatedinthe instrument,or
(b) The survivingorcontinuingtrusteesORthe personal representative (ie.eitheranexecutoror
administrator) of the lastsurvivingorcontinuingtrustees.
If no personsinthese categoriesisavailable tomake the appointment,the courtwill use Section45
to appointa trustee asa lastresort.
Mode of Appointment
By the Trusteesor PersonsNominated
Section40(1):
An appointmentof a trustee be inwriting
Sometimesatrustmay have namedonlyone ormay be two trustees(notexceeding4trustees).In
these casesthe trusteesmayappointnew trusteestofill avacancy
Section40(6):
There may be circumstanceswhere the trusteesmayneedtohave some otherpersonstobe co -
trustees.
Here,itwill be notedthatthere isno "vacancy" as notrustee wasremovedundersection40 or
section45 (appointmentorremoval bythe court),butstill statutorypowerisgiventothe trustees,
but subjecttothe provisothat the total numberof trusteesdoesnotexceed4
Appointmentof apersonas a trustee canbe made withouthisknowledge/consentandinhis
absence.
Case lawseemsto drawa distinctionbetweenanappointmentandhisacceptance of trusteeship
Re Tyron:A personappointedasa trustee cannotbe compelledtoacceptthe office andhe may
disclaimit
Mount fordV Cadogan:Acceptance of trusteeshipmaybe expressorimpliedforexamplewhenthe
trustee appointedactsinthe trust
The groundsfor removal underS40(1) are onlyexercisablewhere areplacementtrusteeisbeing
appointedsince the sectionisconcernedprimarilywiththe appointmentof trusteesratherthan
theirremoval (see the lastlimbof s40(1)...inplace of the trustee sodeceased...)
Appointment/RemovalBvthe Court
Section45: This powerrestsonit being"inexpedient,difficultorimpracticable"tomake an
appointmentoutcourt. Ithas beenusedinthe followinginstances
 Where all the trusteesnamedpredeceasedthe testator(Re Smirthwaite)
 Where the trustee wasincapable of actingbecause of oldage or some otherinfirmityas
mental illness(Re LemannsTrust)
 Where there wasdoubtas to whetherthe statutoryoran expresspowerof
appointmentwasexercisable (REWoodgate)
 Where the trustee wasinenemyoccupiedterritory(Re Mary)

3. Removal
Section45 (I) (b)
The court can alsoremove atrustee againsthiswill andreplace him suchas whena trustee is
imprisoned,mentallydisorderedorbecomesabankrupt,butat the same time the court must
appointa newtrustee inplace of him.
Re Hodson'sSettlement:
Where a personhas a statutoryor expresspowertonominate trusteesof atrust the court will
generallynotinterfere
Re Gadd:
Evenif trusteesare nominatedwhomthe courtbelievescouldhave beenbettereditwillnot
interfere.If howeverthe courtconcludesthatthe trusteesnominatedare unsuitable,itcancall for a
freshnomination.Severalunsuitablenominationsmaybe regardedasa refusal tonominate andthe
court wouldmake itsownchoice
Terminationof Trusteeship
1. Disclaimer
Re Lister:A personappointedasa trustee isnotobligedtotake up the office andhe may
therefore disclaimitatany time before acceptance.However,there canbe no disclaimerafter
acceptance.
A disclaimerisusuallyeffectedbydeedbutthisisnotessential,itcanbe oral or impliedfrom
conduct or evenfromthe factthat a longtime has elapsedsince the appointmentof the trustee
and he has done nothing.
2. Death
On the deathof a trustee histrusteeshipautomaticallyterminates.If there are survivingtrustees
thenthe trust estate will vestinthemautomaticallyastrusteeswill invariablyholdthe trust
estate as jointtenants.
On the deathof a sole orlast survivingtrustee the trustestate devolvesorhispersonal
representativeswhoisnotobligedtoacceptthe trust and theymayappointnew trusteesof the
trust underthe provisionsof Section40(1)
3. Retirement
A trust maycontainan expresspowerpermittingatrustee toretire. Apartfromthis,a trustee
can retire whena newtrustee isappointedinhisplace underSection40(1).If no new trustee is
to be appointedthenhe mayretire underthe provisionsof Section43(1).
4. Removal
Sections40 and 45 givesroomfor the removal of certaintrusteesbutthe trusteessoremoved
mustbe replacedgenerally.