Personal representatives - Trustee Act 1925 and Trustee Act ...

Learning Outcomes

This article outlines the statutory duties and powers of personal representatives under the Trustee Act 1925 and Trustee Act 2000, including:

• The scope, nature, and practical application of the statutory duty of care when PRs administer and invest estate assets.
• How general investment powers operate, with emphasis on the standard investment criteria, diversification, and documented investment reviews.
• When PRs must obtain and record proper investment advice and the consequences of failing to do so.
• The statutory framework for delegating functions, appointing agents, nominees, and custodians, and supervising their performance.
• How maintenance and advancement powers permit application of income and capital for beneficiaries, especially minors and young adults.
• The limits, safeguards, and consent requirements affecting maintenance and advancement, including key changes introduced by the Inheritance and Trustees’ Powers Act 2014.
• Situations in which Trustee Act 2000 provisions expressly apply to PRs (investment, land acquisition, insurance, delegation) and how these interact with AEA 1925 duties.
• Core exam-focused issues in estate administration, such as avoiding devastavit, evidencing decision‑making, and recognising where express will provisions displace statutory powers.

SQE1 Syllabus

For SQE1, you are required to understand the statutory framework governing personal representatives' duties and powers when administering estates, with a focus on the following syllabus points:

• the statutory powers and duties of personal representatives under the Trustee Act 1925 and Trustee Act 2000
• the statutory duty of care and its application to estate administration
• the scope of investment powers and the standard investment criteria
• the rules on delegation of functions and appointment of agents
• the powers relating to maintenance and advancement for beneficiaries, especially minors
• how the Trustee Act 2000 provisions (investment, land acquisition, insurance, delegation) expressly apply to personal representatives
• the effect of the Inheritance and Trustees’ Powers Act 2014 on s.31 (maintenance) and s.32 (advancement)

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the statutory duty of care imposed by the Trustee Act 2000, and when does it apply to personal representatives?
2. Which statutory powers allow a personal representative to apply trust income or capital for the benefit of a minor beneficiary?
3. Can a personal representative delegate investment decisions to a professional agent? If so, under what conditions?
4. What are the standard investment criteria that personal representatives must consider under the Trustee Act 2000?

Introduction

Personal representatives (PRs) are responsible for administering a deceased person's estate. The Trustee Act 1925 and Trustee Act 2000 set out the main statutory powers and duties that apply to PRs, whether they are executors or administrators. These Acts provide the legal framework for the management, investment, and distribution of estate assets, and establish the standards of conduct required of PRs in fulfilling their fiduciary role. In addition to these trustee-focused provisions, PRs remain subject to core estate administration duties under the Administration of Estates Act 1925 (AEA 1925), including the duty to “collect and get in” the assets and to administer the estate according to law, typically within the “executor’s year.”

The Trustee Act 2000 expressly applies to personal representatives when they exercise certain functions, such as investing estate funds, acquiring land for the estate, insuring assets, and delegating asset management. Thus, PRs must not only comply with fiduciary obligations and common law duties (including avoiding devastavit), but also meet the statutory standard of care and process requirements when making investments or appointing agents.

Key Term: personal representative
A person appointed to administer a deceased person's estate, either as executor (named in a will) or administrator (appointed under intestacy rules).

Statutory Powers and Duties of Personal Representatives

PRs are subject to the same statutory powers and duties as trustees when administering estate assets. The Trustee Act 1925 and Trustee Act 2000 are central to understanding the legal obligations of PRs. These trustee Acts operate alongside AEA 1925 powers (e.g., sale, appropriation, insurance, and accepting receipts for minors), but in an SQE1 context the emphasis is on the Trustee Acts’ investment, delegation, maintenance, and advancement regimes as they apply to PRs.

The Trustee Act 1925: Core Powers

The Trustee Act 1925 provides the original statutory framework for trustees and, by extension, personal representatives. Key powers include:

• The power to delegate functions temporarily (s.25)
• The power to apply income for the maintenance, education, or benefit of minor beneficiaries (s.31)
• The power to advance capital for the benefit of beneficiaries (s.32)

Key Term: maintenance
The application of trust income by a trustee or PR for the benefit, education, or support of a minor beneficiary.

Key Term: advancement
The application of trust capital by a trustee or PR for the benefit or advancement in life of a beneficiary, up to the whole of their presumptive share.

Delegation under s.25 TA 1925 allows a PR (or trustee) to delegate their trustee functions by power of attorney for up to 12 months. The Trustee Delegation Act 1999 tightened the regime: delegation must follow s.25 formalities; co-trustees and persons with power to appoint new trustees must be notified, and the delegating PR or trustee remains liable for the acts of the attorney. Enduring and lasting powers of attorney no longer enable long-term trustee delegation outside s.25; the 12‑month limit and safeguards apply.

Section 31 (maintenance) and s.32 (advancement) are widely used by PRs administering testamentary trusts for minors. Section 31 allows application of income during minority and requires accumulation of surplus income; it also obliges payment of income once a beneficiary reaches 18 if their capital interest is still contingent (unless the will validly postpones the income age). Section 32 permits advancement of capital for “advancement or benefit,” including education, home deposits, or career development. Since 1 October 2014, the Inheritance and Trustees’ Powers Act 2014 (ITPA 2014) expanded s.32 to permit advancement of the whole presumptive share; prior restrictions to one-half no longer apply for trusts arising on deaths on or after that date.

Where there is a prior interest (e.g., a life tenant’s income entitlement), any advancement affecting that prior interest generally requires consent of the person with the prior interest. PRs must also consider the overall fairness among beneficiaries when exercising these discretions.

Key Term: life tenancy
An interest in possession under which a beneficiary is entitled to income (or occupation) during their lifetime; capital passes to remainder beneficiaries afterwards.

The Trustee Act 2000: Modern Duties and Powers

The Trustee Act 2000 updated and expanded the statutory duties and powers of trustees and PRs, especially in relation to investment and delegation.

Statutory Duty of Care

Section 1 of the Trustee Act 2000 imposes a statutory duty of care. PRs must exercise such care and skill as is reasonable in the circumstances, considering any special knowledge or experience they have, and whether they act in a professional capacity. This duty applies when PRs exercise functions such as investing estate funds, acquiring land, insuring assets, and appointing agents, nominees or custodians.

Key Term: statutory duty of care
The legal obligation on trustees and PRs to act with reasonable care and skill when performing certain functions, especially investment and delegation.

The statutory duty of care overlays the PRs’ common law duty to avoid devastavit (waste) and their fiduciary duty to act in beneficiaries’ best interests and not to make unauthorised profits. In appropriate cases, courts may relieve PRs of liability under s.61 Trustee Act 1925 if they have acted honestly and reasonably and ought fairly to be excused.

Investment Powers and Standard Investment Criteria

Section 3 gives PRs a general power of investment, allowing them to make any investment as if they were absolute owners, unless the will or trust instrument restricts this power. Section 8 separately authorises acquisition of land in the UK for investment, for occupation by a beneficiary, or for any other reason. If the will/trust contemplates investment in land outside the UK, an express power is needed; s.8 does not extend overseas without such drafting.

Section 4 requires PRs to have regard to the standard investment criteria:

• Suitability of investments to the trust or estate
• The need for diversification

PRs must review investments “from time to time” and s.5 requires them to obtain proper advice on investments (and on reviewing investments) unless it is unreasonable to do so. Proper advice means advice from a person whom the PR reasonably believes to be qualified by ability and experience of financial matters.

Key Term: standard investment criteria
The statutory requirements that trustees and PRs must consider when making or reviewing investments: suitability and diversification.

Key Term: proper advice
Advice on investments or investment reviews given by someone the PR reasonably believes has appropriate ability and experience; required under s.5 TA 2000 unless unnecessary.

Suitability involves assessing risk, term, liquidity, and how each proposed investment fits the estate’s cash‑flow needs (e.g., pending legacies, IHT instalments) and the beneficiaries’ interests. Diversification requires spreading risk across asset classes and issuers unless there is a good reason not to (e.g., a short administration period or an asset to be sold imminently). PRs should keep records of decisions, advice taken, and periodic reviews.

Delegation and Appointment of Agents

Sections 11–23 allow PRs to delegate certain functions to agents, nominees, or custodians. Asset management functions (e.g., portfolio management) can be delegated, but core discretions—such as deciding how to distribute estate assets or whether to appoint new trustees—cannot be delegated. When delegating, PRs must:

• Select agents with due care
• Set clear terms for delegation
• Prepare a written policy statement for asset management delegation, setting out investment objectives and risk parameters
• Review the agent's performance regularly and keep the policy statement under review
• Consider appointing nominees or custodians where administration practicality or market practice requires it

Key Term: delegation
The statutory power of trustees and PRs to appoint agents to carry out certain functions on their behalf, subject to conditions and ongoing supervision.

Key Term: policy statement
A written statement provided to an asset management agent that sets investment objectives, risk profile, and constraints; required when delegating asset management functions under TA 2000.

Where PRs appoint a professional investment manager, they must provide the written policy statement and put in place monitoring mechanisms (e.g., periodic reports, benchmark comparisons). PRs remain responsible for proper selection, instruction, and supervision of agents; the duty of care applies throughout. If an agent fails to perform reasonably, PRs should consider intervention or replacement.

Maintenance and Advancement for Beneficiaries

Sections 31 and 32 of the Trustee Act 1925 (as amended) allow PRs to apply income for the maintenance of minor beneficiaries and to advance capital for their benefit. The Inheritance and Trustees' Powers Act 2014 extended the power of advancement to the whole presumptive share. Section 31 authorises PRs (and trustees) to use income for maintenance, education or benefit during minority, requires accumulation of surplus income, and—unless varied by the will/trust—requires payment of income once a beneficiary reaches 18 if their capital interest remains contingent. Section 31 applies to contingent interests only where intermediate income is carried by the limitation (most testamentary gifts do carry intermediate income, apart from contingent pecuniary legacies).

These powers are discretionary; PRs must justify that the application is for maintenance, education, or benefit (s.31) or is for advancement/benefit (s.32), and should document reasons, amounts, and any effect on other beneficiaries’ shares.

Worked Example 1.1

A deceased's estate includes a trust fund for a minor, Sam, who will inherit at age 21. Sam is 15 and needs funds for school fees. The will is silent on maintenance and advancement.

Answer:
The PRs may use the statutory power of maintenance (s.31 Trustee Act 1925) to apply income for Sam's education. If more funds are needed, the PRs may advance capital under s.32 (as amended), up to the whole of Sam's presumptive share, provided this is for Sam's benefit.

Worked Example 1.2

An executor is not a financial expert and wishes to delegate investment decisions for the estate's assets to a professional investment manager. What must the executor do?

Answer:
Under the Trustee Act 2000, the executor may delegate investment functions to a professional agent, provided they select the agent with reasonable care, set clear written terms, and regularly review the agent's performance. The executor must also provide the agent with a written policy statement outlining investment objectives.

Worked Example 1.3

An estate holds £250,000 in cash and a single company’s shares worth £250,000. The residuary beneficiaries will be paid in 9–12 months. The executor invests most of the cash into the same company’s shares to “keep things simple,” without seeking advice.

Answer:
This likely breaches the s.1 TA 2000 duty of care, s.4 standard investment criteria, and s.5 proper advice requirements. Concentration risk increased and diversification was ignored; proper advice should have been taken unless clearly unnecessary. If loss results, the executor may be personally liable unless relieved under s.61 TA 1925.

Worked Example 1.4

The will directs that the deceased’s adult child may continue living in the family home for two years before sale. The property is in Ireland. The executor proposes to acquire the property into the estate’s trust and permit occupation.

Answer:
TA 2000 s.8 permits acquisition of land in the UK only. An express power is needed to acquire land outside the UK. Without such a power, the executor should not attempt to “acquire” the Irish property for occupation; instead, they should administer the asset as part of the estate and follow the will’s directions consistently with local law.

Worked Example 1.5

A residue trust pays income to a surviving spouse for life, remainder to adult children. One child requests a £50,000 capital advance to buy a flat.

Answer:
Under s.32 TA 1925 (as amended), advancement up to the child’s whole presumptive share is possible if for advancement/benefit. If the advancement would prejudice the spouse’s life interest (e.g., capital reduction affecting income), the spouse’s written consent is typically required. The PRs/trustees should document the decision and terms (loan vs. outright) and consider fairness among beneficiaries.

Worked Example 1.6

A minor beneficiary has a contingent legacy at age 25. The trust carries intermediate income. The executor has accumulated income for two years but now receives a request to pay income directly to the minor’s guardian for a specialist summer course.

Answer:
Section 31 permits application of income for maintenance, education or benefit during minority; accumulated income may be applied if appropriate. The PRs should assess the educational benefit, and, if satisfied, make a payment to the guardian or directly to the provider, recording reasons and amounts.

Application of Statutory Powers in Practice

PRs must apply these statutory powers and duties in all aspects of estate administration. This includes:

• Collecting and safeguarding estate assets, arranging insurance, and avoiding waste
• Investing funds prudently, considering suitability and diversification, taking proper advice, and reviewing investments periodically
• Delegating functions only where appropriate and with ongoing supervision, keeping a written policy statement for asset management delegation
• Applying income and capital for the benefit of beneficiaries (especially minors), documenting maintenance and advancement decisions and any necessary consents from prior interest holders
• Acting at all times with reasonable care and skill, mindful of their fiduciary duty to act in beneficiaries’ best interests

Where PRs hold land on trust (for example, under a will trust), the Trusts of Land and Appointment of Trustees Act 1996 (TLATA) may impose additional duties. Trustees of land must consult beneficiaries with interests in possession (s.11 TLATA) before key land decisions and may have to consider occupation rights (s.12 TLATA). While PRs administering an estate do not automatically become trustees of land, if a continuing trust of land arises under the will, these duties may become relevant.

Exam Warning

The statutory duty of care applies to PRs whenever they exercise investment powers or delegate functions. If a PR has professional qualifications (e.g., is a solicitor or accountant), they will be held to a higher standard. Failing to meet this standard may result in personal liability for loss. PRs should also remember:

• s.5 TA 2000 requires proper investment advice unless unnecessary
• s.8 TA 2000 limits land acquisition to UK land unless an express power extends it
• s.25 TA 1925 delegation is time‑limited and does not absolve liability
• s.31/s.32 discretions must be exercised for maintenance/advancement and recorded carefully

Revision Tip

Always check the will for any express restrictions or extensions to statutory powers. The statutory powers in the Trustee Acts apply only where the will or trust instrument does not provide otherwise. Be alert to ITPA 2014 changes: for trusts arising on or after 1 October 2014, advancement can be of the whole presumptive share and s.31’s earlier restrictions on quantum and other available funds were removed. Maintain clear records of advice received, reviews undertaken, and policy statements provided to agents.

Key Point Checklist

This article has covered the following key knowledge points:

• The Trustee Act 1925 and Trustee Act 2000 set out the main statutory powers and duties of personal representatives.
• The statutory duty of care requires PRs to act with reasonable care and skill, especially in investment and delegation.
• PRs have broad investment powers but must consider suitability and diversification (standard investment criteria) and obtain proper advice unless unnecessary.
• TA 2000 s.8 permits acquisition of UK land for investment or occupation; express powers are needed for land outside the UK.
• PRs may delegate certain functions to agents, nominees, or custodians but must select, instruct, and supervise agents carefully and provide a written policy statement for asset management delegation.
• The powers of maintenance and advancement allow PRs to apply income and capital for the benefit of beneficiaries, with ITPA 2014 enabling advancement up to the whole presumptive share.
• The statutory powers apply unless the will or trust instrument provides otherwise; PRs must also comply with AEA 1925 duties and may engage TLATA duties if a trust of land arises.
• Courts may relieve PRs of liability under s.61 TA 1925 where they acted honestly and reasonably; nonetheless, documentation of decisions and advice is critical.

Key Terms and Concepts

• personal representative
• maintenance
• advancement
• statutory duty of care
• standard investment criteria
• delegation
• proper advice
• policy statement
• life tenancy