In general the ability to be a trustee is co-extensive with the ability to own property. Therefore if an alien can hold land, he can be a trustee of such land. Capacity to be a trustee is also now extended to corporations. A very large number of Trust Corporations have arisen and every big bank for example has a Trustee Department.
A trust corporation is defined under Section of the Trustee Act Cap 167 as
1. The public Trustee
2. A corporation appointed by the court;
3. A trust corporation as defined by the law of Succession Act Cap 160 S. 3 (1)
Certain administrative conveniences attach to trust corporations for example they do not need to give security to the court when taking out letters of administration. The court considers that they are good for the money except where under the law of Succession Act the Corporation has a subscribed Capital of less than KShs. 500,000/-.
An infant or minor cannot be appointed a trustee and any conveyance to one as trustee will give rise only to a declaration of trust under a resulting trust in favour of the settlor. If the appointed trustees are partly infant and partly adult then only the adults will take as trustees.
Section 36 of Cap 167 provides that there shall not be more than 4 with the exception of a charitable trust. If there is a private trust you cannot have more than 4 trustees. If more than 4 are appointed then only the 1st 4 names who are able and willing to act will alone be trustees. However this applies only to trusts which came into effect after the commencement of the Trustee Act on 16th November 1929.
The rule as to the maximum of 4 trustees does not apply to trusts for charitable ecclesiastical and public purposes or where the net proceeds of sale of the trust property are to be held for those purposes.
The saying goes that Equity does not want for a Trustee’ therefore a trust can be variedly brought into being even if there are no trustees for example because they have to be appointed or have all renounced their duties as trustees or have died or are unable to act or any other reason for example insanity or bankruptcy. In such cases the trust continues and on application of those entitled the court will appoint new trustees.
APPOINTMENT OF TRUSTEES
Initial trustees are normally named in the Trustee Document and they could also be named by the personal representatives of the testator and in very rare cases by the courts.
These are appointed either by the surviving trustee or trustees or under a direction of the Will or Trust Deed or by the courts. Once the trust is constituted the settlor has no power to appoint trustees unless he has reserved such a power for himself.
The trust deed may vest or reserve power to some specific persons to name new trustees. Normally the power will be vested in the surviving trustee or trustees. Therefore unincorporated bodies such as clubs and societies their constitutions and rules will normally vest the power of appointment of trustees in the general membership or a specific committee such as the executive committee of the organization.
APPOINTMENT OF NEW TRUSTEES
There is power vested in the court under Section 42 of the Trustees Act to appoint new trustee which is exercisable
(a) When it is expedient to appoint a new trustee or new trustees;
(b) Where it is found inexpedient difficult or impracticable to appoint without the court’s assistance;
(c) The court may also appoint in circumstances where Section 37 would have been invoked but however these powers do not empower the court to appoint an executor or administrator of an estate which powers are specifically and exclusively dealt with under the law of Succession Act Section 51 – 55 of Cap 160.
The Public Trustee under the Public Trustee Act Cap 168 is the Corporation sole and is therefore self perpetuating and does not need substitution by individuals other government offices like the PS Treasury are also corporation sole.
HOW TRUSTEEISHIP ENDS
(a) By disclaimer; a person appointed as a trustee is not bound to act as such unless he or she has received consideration. However if the trustee has accepted the trust, he cannot therefore disclaim it. Disclaimer must be ab initio. Refer to Re Lister  Ch. 149; for the disclaimer to be effective it must be of the whole trust and not just a part of the trust. The effect of disclaimer is that if there are other trustees the property will vest in them. If the disclaiming trustee was sole trustee or if all the trustees disclaim then if inter vivos the settlor himself will become the Trustee and if the Trust was through a will, the personal representative will hold on trust. If the instrument creating the trust vests someone with power to appoint new trustees this power may be used to fill the gap. If all else fails the court will appoint new trustees on application of those entitled.
(b) By retirement – formerly a trustee could not retire save under stringent express powers or by order of the court or by consent of all the beneficiaries if sui juris. Application may now be made to the court and the court will first examine if there are sufficient surviving trustees to continue the trust before allowing retirement.
(c) On appointment of new trustees e.g. where the term of office of the trustees is fixed, for the clubs societies and so on normally the term is fixed and after expiry of 4 years the board meets and appoints new trustees
(d) On removal by the court either by statutory power or under its inherent jurisdiction. Refer to the case of Lettersdet V. Browers 9 App. Cas 371 where trust and respect between the Trustee and the beneficiaries had broken down and where even though no evidence of misconduct had been alleged by the beneficiaries the court allowed an application for removal of the trustee in exercise of its inherent jurisdiction.
DUTIES & DISCRETIONS OF TRUSTEES
Snell in his principles of Equity points out that “the office of a trustee is onerous. A trust is an office necessary in the concerns between man and man and if faithfully discharged attended with no small degree of trouble and anxiety so that it is an act of great kindness in anyone to accept it”.
A trustee has to perform many duties and in doing so he must observe the utmost diligence in addition he must comply with the provisions of statutes with the principles of equity with any directions of the court and with the provisions of the trust instrument itself. However the trustee also exercises discretion for example where to invest the trust fund and how much to advance a beneficiary.
In carrying out his duties the trustee must act honestly and must use such diligence as a prudent man of business would exercise in dealing with his own affairs. He must do his best to enlarge and not to endanger the trust fund. His is an active duty and not merely a passive one of keeping the assets. He must not commit fraud in dealing with the trust fund or profit himself out of it. The courts take the view that a prudent man of business will act profitably and so should a trustee.
As part of his duties the trustee must keep the trust property in a state of security. He must firstly reduce it into his possession. He has to take control.
Secondly he must invest it whenever there is a surplus, the duty to invest also includes a duty to convert and then invest. For example wasting assets such as motor vehicle would mean selling and investing in income generating investments, it is an active duty.
Thirdly he must pay the expenses and debts of the trust or the Estate and in respect to the Estate he must also pay any Legacies provided under a will. When the trust invests he must invest only in authorised investments namely those investments authorised under the Will or the Trustee or by Section 4 of the Trustee Act or by Equity.
The Categories of Investments and the manner in which they must be invested are prescribed by the schedule to the Trustee Act. In choosing investments the Trustee is under a duty to take advice in the way prescribed in the schedule for example a valuer’s advice, surveyor’s advice, Estate Agents and even legal advice etc.
Alongside the duties to convert invest and manage is the duty to keep accounts and records. He has to remember that a trustee is an accounting fiduciary party.
CONTROL OF THE TRUSTEE BY THE BENEFICIARIES
In carrying out his duties a trustee is guided by the trust instrument as well as by statutes and by the rules of equity. He must carry out the will of the settlor or the testator. The beneficiaries cannot therefore determine how the trustee’s duties are to be exercised. However if all the beneficiaries are sui juris and are together entitled to the whole of the beneficial interest, they can put an end to the trust and direct the trustee to hand over or distribute the property.
CONTROL BY THE COURTS OVER THE TRUSTEE’S PERFORMANCE:
The court can always supervise the trustee and it does so through its inherent powers and through the power set out in the Trustee Act as well as Section 62 of the Civil Procedure Act for purposes of Public Trust.
The court does not administer the trust itself. What it does is to constantly supervise and it has wide powers under the Trustee Act
1. In the management and administration itself for example by approving a certain sale or other transaction and in giving directions for the appointment of new trustees;
2. To permit variation in the trust and in doing so the court will have the best interests of all the beneficiaries in mind.
ENTITLEMENT OF TRUSTEES UNDER A TRUST
Trustees may not profit from the Trust either directly or indirectly. They are generally not entitled to remuneration for the care and trouble they undertake. So for example if the trustee is an advocate, he may not charge legal fees. There are however exceptions to the rules:
1. By agreement with the beneficiaries if they are sui juris;
2. By express authority in the Trust instrument;
3. Through court order by application;
4. Advocates costs in litigation; so if the trustee is an advocate and she acts on her own behalf and on behalf of court trustees profits costs on successful litigation may be retained by the advocate trustee.
5. A trustee is entitle to be indemnified against actual expenses which have been properly incurred in the trust administration. If he went on a frolic f his own, he should be surcharged. For example he may pay insurance premium on the trust property, pay for expert advise maintenance, etc, these he is entitled to recoup.