Administration of trusts—trust investment strategy
Administration of trusts—trust investment strategy

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Administration of trusts—trust investment strategy
  • Powers to invest
  • Different types of investment strategies
  • Identifying objectives
  • Investment time scale
  • Risk versus reward
  • Appointment of investment advisers
  • Investment policy statement
  • Supervision of investment advisers
  • Mismanagement by the trustees of the trust investments

Powers to invest

Trustees' powers to administer a trust are set out in statute, mainly the Trustee Act 1925 and the Trustee Act 2000 (TrA 2000) as supplemented by the terms of the trust instrument. Trustees are often given extended powers of investment by way of express provision in the trust instrument. Express powers give the trustees more flexibility in their choice of investment and, in the past, were often used to avoid the complex administrative provisions of the Trustee Investments Act 1961 (which was substantially repealed by TrA 2000).

Trustees’ statutory powers of investment are set out in TrA 2000, s 3 (commonly known as the general power of investment) and apply in addition to powers conferred on trustees by the trust instrument but subject to any restriction or exclusion the instrument imposes (TrA 2000, s 6). The general power of investment applies to trusts and Will trusts created both before and after the commencement of TrA 2000. The general power of investment is very wide; a trustee may purchase ‘any kind of investment that he could make if he were absolutely entitled to the assets of the trust’. However, the power is subject to:

  1. the statutory duty of care

  2. the standard investment criteria

  3. the requirement to take advice—usually, before exercising any power of investment and when reviewing the