APPOINTMENT OF TRUSTEES
CONTENTS
1.0 Introduction
2.0 Objectives
- Main Content
- Appointment of Trustees
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment (TMA)
7.0 References/Further Readings
INTRODUCTION
In trust matters, trustees are indispensable and their appointment is equally an essential issue that needs to be examined. Although a trust will not fail by reason of lack of trustees as the court can appoint trustees on application to it. There are several ways of appointing trustees for a trust and the settlor can also appoint himself as trustee for the trust either solely in conjunction with other trustees, by a declaration of trust. Apart from the law guiding the issue of appointment of trustees, it is importance to ensure that reliable and trust worthy people are appointed as trustees in order to ensure that the wishes of the settlor or testator are carried out.
OBJECTIVES
In this Unit, you will learn about the appointment of trustees and the different means of appointing or replacing a trustee. The statutory powers of appointing a trustee will also be considered and the various cases of what will happened when a trustee is unable to act, unwilling to act or is incapable of acting or is dead. At the end of this Unit, you should be able to:
- The manner of appointing trustees expressly
- Explain what will happen if no trustee is appointed
- Understand circumstances when the court can appoint trustees
- Explain the hierarchy stated by statute in respect of appointment of trustees
- Navigate the manner or replacing trusts and mode of appointment generally
MAIN CONTENT
Appointment of Trustees
Appointment of trustees may take various forms, depending on the mode of creation of the trust, whether it was created by settlement or in a will. Also, appointment may be in respect of the first trustees known as the original trustees or replacement trustees in the case of a retiring, dead, incapacitated or unwilling to act trustees, etc. The position of appointment is government both by equity, case law and statute. An examination of the various modes of appointment of trustees will now be considered as follows:
i.) Appointment of Original Trustees by Settlor/Testator
The original trustees may be expressly by the settlor of the trust in case of inter vivos trust and the testator in the case of trust by will by insertion of a clause in the settlement instrument or will, naming particular persons as trustees. In situations where the settlor desires to make himself as a trustee, he can do this by making a declaring a trust, stating that from the creation of the deed of settlement, he holds the trust property as trustee either as sole trustee or together with others, for the benefit of the beneficiaries of the trust.
Where the testator or settlor did not appoint any trustee, the court on application to it can appoint the original trustees as equity will not allow a trust to fail for lack of trustee. In the alternative, the settlor or testator instead of naming particular persons as trustees may reserve the power of appointment in the trust instrument to be made by a named individual or an institution. In that case, it will be unnecessary to make application to the court for appointment of trustees as the donee of such power will make the appointment.
You must note however that if a settlor did not appoint a trustee when creating the trust, he losses the right to do so or the right to appoint additional trustees after the trust is operative. He can however only do so after the trust is operative where such power is reserved in the trust instrument.
Where the power of appointment is conferred on an individual or an institution, such person or institution then retains the right to appoint the original trustees or additional ones in cases where there is vacancy. See Re Power’s Settlement [1951] Ch. 1074. A donee of a power of appointment cannot appoint himself as a trustee by virtue of the Trustee Act 1893. See Re Power’s Settlement (supra) and Re Skeats (1889) 42 Ch. 522. However, by virtue of Section 24 (1)(b) of the Trustee Law, Cap. 128, Laws of Oyo State and the corresponding laws in the States where the Property and Conveyancing Law is applicable, it is permitted for the donee to appoint himself as trustee except where such an appointment is for the purpose of appointing additional trustees. See Section 24 (1)(b) of the Trustee Law.
Note that appointment of trustees can be done in writing without more but it is better if the appointment is done by deed because this has the advantage of vesting the trust property in the trustees directly. If the deed of appointment contains a vesting declaration, vesting the trust property in the new trustee, there is no need for another conveyance or assignment to vest the trust property in the joint name of the new trustees. See Section 12 of the Trustee Act.
ii.) Appointment under Statutory Provisions
Under both the Trustee Act 1893 (Section 10(1) and the Trustee Law (Section 24(1), (the Act is operative in the States outside the Property and Conveyancing Law States) there is provision for the appointment of new trustees subject to such limitations as may be contained in the trust instrument. Statutory appointments can be made in the followings in the following orders.
- Appointment by persons nominated in the trust instrument: Persons nominated or named in the trust instrument for the purpose appointing new trustees, can make such appointments
- Where there is no such person nominated as contained in (a) above, or there is no such person that is able and willing to act, in that case, the survivor or continuing trustee or trustee for the time can make such appointments
- In the absence of (a) and (b) above, the personal representatives of the last surviving or continuing trustee can make such appointments
According to the statute, new trustee may be appointed when there is vacancy due to an outgoing trustee or where it has become expedient to appoint new trustees in addition to the existing ones.
A replacement of an outgoing trustee may occur in the circumstances where a trustee remains out of Nigeria for more than twelve months, desires to be discharged, refuses to act, is unfit to act, incapable to act, is an infant, or being a corporation which has been dissolved and thereafter incapable of acting as from the date of dissolution. See Sections 10(1) of the Trustee Act and 24(1) Trustee Law.
iii.) Appointment by the Court
It is also possible for new trustees to be appointed under its inherent jurisdiction of the court and such power may also be conferred by statute on the court. As mentioned above, where no provision is made in the trust or will for trustees or power to make such appointment conferred on an individual or an institution, the court on application to it can such appointment. In cases where all the trustees appointed in a will are dead before the testator or by any other reason such trustee cannot act or is unfit to act or make appointment, the court can appoint the trustees.
Apart from appointment by the court under its inherent jurisdiction, statutes can also confer power of appointment of new trustees either in substitution for or in addition to any existing trustee expressly on the court. See Sections 25 Trustee 1893 and 28 Trustee Law 1959. Note however that the statute provides that such statutory powers became exercisable by the court only in situations when appointment is found to be inexpedient, difficult or impracticable; e.g. where a trustee is incapable of acting or where there is problem between the continuing trustees, etc. See Re Henderson (1940) Ch. 764.
When the court is exercising its power of appointment, what must be taken into consideration by the court are the wishes of the testator (express or implied), the overriding interest of all the beneficiaries and the efficient administration of the trust. See Re Tempest (1866) 35 L.J Ch. 632.
SELF ASSESSMENT EXERCISE (SAE) 1
A trust cannot fail by reason of lack of the appointed of trustees in a trust. Discuss with respect to the power of appointment reserved in a trust instrument.
CONCLUSION
Appointment if trustee as noted above is an important one but what you must note is that where the trustee has not appointed trustees expressly, a power of appointment may be reserved in the trust deed and the in the absence of the two, the court can appoint trustees on an application being made to it. Perhaps, it is better for efficient administration of the trust to ensure that trustees are expressly appointed in the trust instrument in order to avoid unnecessary litigation with its attendant costs.
SUMMARY
In this Unit, you have learnt about the appointment of trustees, the formality of appointment and the various ways of appointing the first or original trustees. You also learnt that principally, appointment of trustees can be made expressly by the settlor or testator; trustees can also be appointed under statutory provisions and by power of appointment by the court both under its inherent jurisdiction and under statutory powers. You further learnt that the settlor loses the power to appoint trustees after the trust becomes operative if such power is not reserved in the trust instrument. Situations when the court can make appointments were also examined with the guiding principles for the court to follow when exercising their power of appointment. You learnt that it is of utmost importance to ensure that people of integrity are appointed as trustees if the interest of beneficiaries is not to suffer. In the next Unit, you will learn about duties of trustees.
TUTOR-MARKED ASSIGNMENT (TMA)
- Discuss the order of statutory appointment trustees under as contained in Section 10(1) of the Trustee Act 1893 and Section 24(1) and the Trustee Law and the instances when the instances when a replacement of the trustee can occur
- Discuss the express appointment of the first or original trustees by the settlor or testator and what will happen in situations where only power of appointment was reserved in the trust instrument and no trustee was named
REFERENCES/FURTHER READINGS
Banire, Muiz. (2002). The Nigerian Law of Trusts. Lagos: Excel Publications.
Fabunmi, J.O. (2006). Equity and Trusts in Nigeria. Ile-Ife: Obafemi Awolowo University Press Ltd.
Hayton, D.J. (2001). Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies. London: Sweet & Maxwell.
Jegede, M.I. (1999). Law of Trusts, Bankruptcy and Administration of Estate.
Lagos: MIJ Professional Publishers Limited.
Property and Conveyancing Law, Cap. 100, Laws of Western Nigeria.
Trustee Act 1893.
Trustee Law, Cap. 128, Laws of Oyo State,