5 - Trustees in the commercial context

Summary

The essential nature of the trust as a private arrangement of property interests, conceived and developed to preserve, maximise and transmit wealth, inevitably required its trustees to operate in a commercial context. In some instances the commercial context was intensely practical, as in the common situation where the trust fund consisted of the settlor's business, which the trustees were directed to conduct after his death. In other cases the commercial context was less immediate, but not only did it determine the nature and extent of the demands of beneficiaries, it also determined in some cases their actual entitlement. So, for example, the current return on fixed interest securities and the yield of an unconverted trust fund would determine whether or not a life tenant would challenge a conversion, and the rate of interest allowed under the rules of apportionment would be equally determined by the commercial context. The latter was broadly accepted at 4 per cent and remained so throughout most of the nineteenth century, being perceived as a figure which represented financial solidity, security and wise investment. But when in the later years of the century the economy was in difficulties, the issue became one of some uncertainty and judicial disagreement, and the actual rate which a tenant for life received was allowed to fluctuate with the return from Consols.