Trust Law Problem Question
Issue from Fact Pattern
Whether Miss Shaw is liable for financial losses as CEO instructing the trustees of the Tilney Family Trust? Tilney Family Trust beneficiaries decided to take on a higher yield investment, and they approached April Investments Ltd CEO MS. Shaw and demanded that they need to generate returns 10% returns on a yearly basis. As a result, the firm’s CEO instructed the trustees from the Tinley Family Trust to determine the best approach to how such returns will be generated.
However, Tinley Family trustee had different options concerning the best investment options that will ensure that the expected return is achieved. After the trustee presented their investment options, the beneficiaries instructed April Investment Ltd to invest in forex and cryptocurrency and rejected investment on renewable energy. However, Papen personally invests in renewable energy and in return, earned $50, 000.
A cyber-attack happened in Asia, and the platform used by April Investment to invest in cryptocurrency crashed, and the firm lost all the money they had invested with. Luckily, one investment makes losses while the other investment performs better than expected, generated an annual return of 20%, April Investment Ltd achieving beneficiaries’ demands. Thus, MS. Shaw of the investment firm is capable of making losses when investing on behalf of beneficiaries.
Rule of Law
Under the Trustee Act 1998, trustees dispense a list of investments that are authorized and also provide the trustee with unlimited power in investment. Scargill V Cowan (1985) Ch 270, the duty of a trustee is to generate the best available return on the trust fund regardless of other considerations. Under section 4 of the Trustee Act 1998, trustee powers are subjected to direction or consent that is required by the trust instrument or written trust law with respect to the trust of investing on behalf of beneficiaries.
Statutory guidelines under section 5(1) of the Trustee Act 1998 states that trustees have to apply for the whole theory of portfolio. That is, investments should be considered not in isolation but also towards that context of trust law as a whole.
Application
Yes, the statutory guidelines and the Trustee Act 1998 are applicable to this case. Since the April Investment Ltd CEO duty is to generate the best available returns for beneficiaries, failure to do that held her guilty of neglecting her duties as trustee under that assertion of Scargill V Cowan (1985) Ch 270 case. Trustee powers and duties, therefore, should be directed in the generation of returns for beneficiaries and investors.
This case is also applicable to trust law since statutory guidelines under section 5(1) of the Trustee Act 1998 states that trustee must apply the theory of portfolio and that investments have to be done in a manner that does not include isolation but in context of the trust law. Therefore, failure by trustee incorporate the necessary statutory instruments is constrained by trust law in courts.
Conclusion
Since the April investment Ltd CEO is reliable for losses made, the case is, therefore, more applicable in trust law. As a trustee, the firm CEO must take appropriate measures to ensure that beneficiaries’ demands are met, and no losses should occur. If the investment firm CEO refuses to take the necessary measure to invest as per the beneficiaries’ demands, then the firm can be found guilty in court.