Trustees Act

This section lists definitions for terms used in the Act, including 'authorised investments', 'contingent right', 'court', 'instrument', and 'land'.

This Act applies to trusts and to executorships and administratorships whether constituted before or after its commencement; it grants trustees powers in addition to those in the creating instrument (subject to any contrary intention in that instrument) and does not affect the legality or validity of acts done before commencement except as later provided.

Trustees have specified powers to lend, mortgage, sell, subscribe for or assign securities and are protected from certain liabilities, subject to consent requirements and court directions.

Trustees may deposit trust money in a bank account pending mortgage arrangements or while seeking an investment, and may apply capital trust funds to pay calls on shares under the same trust.

A trustee may invest trust funds in specified securities, public debentures, government-issued stock, and certain immovable property in Uganda, subject to limits on lease terms and rent.

Trustees must exercise powers granted by section 3 at their discretion, subject to any consent or direction required by the trust instrument or by law regarding investment of trust funds.

A trustee is exempt from liability for breach of trust solely because they continue to hold an investment that is no longer authorised by the trust instrument or general law.

Trustees with power to invest in freehold or mailo estate securities may invest on certain mortgages, are deemed to have had that mortgage-investing power, must accept securities in mortgage form under the Registration of Titles Act, and may invest in debenture stock of railway or similar companies.

A trustee may retain or invest in bearer-payable securities unless expressly prohibited by the trust instrument; bearer securities held by a trustee (not a trust corporation) must be deposited for safe custody and income collection with a banker or banking company until sold; the trustee is not responsible for loss from that deposit, and any fees for deposit and collection must be paid from trust income.

Trustees are not to be treated as breaching trust for loans secured on property if certain conditions about independent valuation, loan size (not more than two thirds of value in report), and reliance on the valuer's advice are met; a similar protection applies for leasehold security except where the trustee dispensed with production or investigation of the lessor’s title.

A trustee who improperly advances trust money on a mortgage security that would have been a proper investment only for a smaller sum must make good the excess advanced with interest.

If a trust for sale or power of sale is vested in a trustee, the trustee may sell (alone or with others) all or part of the property by public auction or private contract, subject to conditions, and has power to vary, buy in, rescind and resell contracts without being answerable for loss.

Beneficiaries generally cannot challenge a trustee's sale for being unnecessarily depreciatory unless the consideration was thereby rendered inadequate; after transfer a sale cannot be impeached against a purchaser unless the purchaser colluded with the trustee; purchasers may not object to title on those grounds. Applies to sales before or after commencement of the Act.

The receipt in writing of a trustee for any money, securities, or other movable property or effects payable, transferable or deliverable to the trustee under any trust or power shall be a sufficient discharge to the person paying, transferring or delivering the same and shall effectually exonerate that person from seeing to the application or being answerable for any loss or misapplication thereof.

Trustees and personal representatives may settle, compound, accept, apportion or otherwise deal with debts, claims and property relating to the estate or trust and may execute necessary agreements; they are not responsible for loss caused by such acts if done in good faith.

Where trustees are authorised by the trust instrument or by law to apply capital money, they have power to raise required money by sale, conversion, calling in or mortgage.

A purchaser or mortgagee who pays or advances money under a sale or mortgage purporting to be made under a trust or power vested in trustees must not be concerned to check whether the money is needed, whether more than is needed is raised, or how the money is applied.

If trustees hold a power or trust jointly, the surviving trustee(s) may exercise it; until new trustees are appointed, personal representatives of a sole or last surviving trustee may exercise such powers, subject to restrictions on receipts by a sole trustee who is not a trust corporation.

A trustee may insure buildings or other insurable property against fire and pay the premiums from the income of that or other trust property without obtaining beneficiaries' consent.

Insurance money payable under a policy kept up for trust property is to be treated as capital of the trust; non-trust recipients must recover and pay the net residue to trustees; trustees may apply the money to rebuild or repair, subject to required consents; rights of other persons and mortgagees are preserved.

Trustees may deposit trust-related documents with bankers, banking companies, or other firms that provide safe custody; any sum payable for such deposit shall be paid out of the income of the trust property.

Trustees have broad discretions to value, accept investments, make deductions, execute releases, pursue proceedings, and order audits (typically not more than once every three years); they must produce vouchers and information to auditors and pay audit costs from trust capital or income as directed; trustees are not liable for omission in certain circumstances.

Trustees or personal representatives may employ and pay agents (including advocates, bankers, stockbrokers) to transact trust or estate business and are entitled to be paid expenses; they are not responsible for agent defaults if employed in good faith and are not chargeable with breach of trust for such appointments.

Trustees or personal representatives may act together with others to exercise trusts or powers over an undivided share of sale proceeds or other property when that share is subject to a trust or forms part of an estate.

A trustee who intends to remain out of Uganda for more than one month may, by power of attorney, delegate the exercise of trusts and powers during their absence; the power must be attested, registered within specified timeframes, does not operate until the donor is out of Uganda and is revoked by return; the donor remains liable for the donee's acts.

If a personal representative or trustee satisfies existing liabilities and (where necessary) sets aside a fund for future claims in respect of rents, covenants or indemnities under a lease or grant, they may transfer the property and distribute the residuary estate, and thereafter are not personally liable for subsequent claims; the lessor or grantor (and successors) retain the right to follow distributed assets.

Trustees or personal representatives may transfer or distribute property after the notice period and are not liable for claims they had no notice of; trustees may advertise and must require interested persons to send claim particulars within at least two months.

A trustee or personal representative acting for more than one trust or estate is not affected by notice about a particular trust or estate when the notice was obtained only because they act for another trust or estate, except where there is fraud.

A trustee who, in good faith, acts or pays money under a power of attorney is not liable for that act or payment if the trustee did not know the attorney was disabled, bankrupt, dead, or had avoided the power.

Trustees are liable only for money and securities they actually receive and only for their own acts; they are not liable for others' acts or for deficiencies unless due to their wilful default; trustees may reimburse expenses from the trust property.

Trustees may pay or apply income for a minor's maintenance at their discretion; they must accumulate residue as compound interest during infancy and hold accumulations according to whether the beneficiary becomes absolutely entitled, with a specified 5% interest rule in certain contingent legacy cases; the section does not apply to instruments operative before this Act.

Trustees may at any time pay or apply capital money from a trust for the advancement or benefit of a person entitled to the capital, subject to specified limits and conditions.

When income is directed to be held on protective trusts for a named beneficiary for life or a lesser period, the income is to be held on specified protective trusts for the trust period and, if that trust fails during the period, the income is held for specified alternative beneficiaries.

Limits trustees of land on trust for sale so that, generally, there are no more than four trustees and where more than four are named only the first four able and willing act as trustees subject to certain vacancy appointments.

Where trustees die, are absent for over twelve months, wish to be discharged, are unfit, incapable, or are infants, the instrument or, where absent, nominated persons, surviving trustees, personal representatives, executors or administrators may appoint new trustees; new trustees have the same powers as original appointees; executors and administrators may exercise appointment powers under stated conditions.

A trustee shall not be discharged from the trust unless there will be a trust corporation or at least two individuals to act as trustees, with an exception where only one trustee was originally appointed and a sole trustee can give valid receipts for all capital money.

A statement in a post-commencement instrument appointing a new trustee for land stating certain facts (for example that a trustee has remained out of Uganda for more than twelve months, is unfit or incapable, or is not entitled to a beneficial interest) is conclusive evidence in favour of a purchaser of a legal estate; appointments and consequent vesting declarations depending on that statement are valid in favour of such purchaser.

If a trustee by deed declares they wish to be discharged, and co-trustees and any appointing person consent by deed, and there will remain a trust corporation or at least two individual trustees, then the declaring trustee is deemed to have retired and is discharged by that deed.

A deed can vest estates, interests or rights in newly appointed or continuing trustees without transfer or assignment, where the deed contains (or is treated as containing) a declaration by the appointor or retiring/continuing trustees and subject to statutory requirements and express contrary provisions in the deed.

The court may order that a new trustee or trustees be appointed when it is expedient or when it is inexpedient, difficult or impracticable to do so without court assistance; it may appoint substitutes or additional trustees and may substitute trustees who are convicted, of unsound mind, bankrupt or corporate trustees in liquidation or dissolved; the section does not allow appointing an executor or administrator.

When the court appoints a person or corporation (other than the public trustee) as trustee, the court may authorise that person or corporation to charge remuneration for trustee services.

Every trustee appointed by a competent court shall have the same powers, authorities and discretions and may act as if originally appointed by the instrument creating the trust.

The court may make a vesting order transferring or disposing of land or contingent rights vested in a trustee when it appears expedient or in specified cases involving incapacity, absence, uncertainty or refusal.

The court may order that land be released from a contingent right of an unborn person or may vest the estate or interest in a person.

The court may order that an infant's security interest in land be vested, released or disposed of.

When a court orders the sale or mortgage of land, affected persons are deemed trustees for the Act, and the court may make a vesting order transferring the land to a purchaser or mortgagee.

The court may declare that parties are trustees of land interests or that unborn persons' interests will be trustees on coming into existence.

A vesting order consequential on appointment of a trustee has the same legal effect as if the prior trustees (if any) had properly transferred the land, or if no such person of full capacity existed, as if such a person had existed and executed those transfers.

The court may, where a vesting order could be made and if more convenient, appoint a person to transfer or release land interests; such transfers/releases by that person in conformity with the order shall have the same effect as an order under the appropriate provision.

The court may make vesting orders for rights to transfer stock or to recover things in action in specified cases; corporations must obey such orders and, after notice, may not transfer related stock or pay dividends except under the order.

The Act allows vesting orders to be used to vest interests in land, stock or things in action in a trustee of a charity or society.

The court may order transfer of an infant’s property or vest rights concerning stock or things in action to a person to apply the capital or income for the infant’s maintenance, education or benefit.

Where a vesting order is made on certain allegations, the fact that the order has been made is conclusive evidence of the matter alleged in any court.

The court may by order give trustees the power to deal with trust property (e.g. sell, lease, mortgage or invest) when such powers are absent, may direct how related money and costs are allocated, may rescind or vary such orders, and trustees or beneficiaries may apply to the court under this section.

Persons with beneficial or trustee interests in property or mortgage-related interests may apply for orders under this Act.

If the court finds that a diligent search was made for a trustee-defendant and the trustee cannot be found, the court may hear the case and give judgment against the trustee in their capacity as trustee, without affecting any interest the person may have in another capacity.

The court may order that the costs and expenses connected to applications or orders relating to trustees or vesting be paid from the relevant property or its income, or allocated among persons as the court sees fit.

The court may relieve a trustee, wholly or partly, from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused for the breach and for omitting to obtain the court's directions.

The court may order that all or part of a beneficiary's interest be impounded as indemnity to a trustee where the trustee breached the trust at the beneficiary's instigation, request or with the beneficiary's written consent; this applies even if the beneficiary is a married woman restrained from anticipation and to breaches before or after commencement of the Act.

Trustees (or a majority of trustees) who hold trust money or securities may pay them into court; the court may order payments by the majority without others' concurrence and may order delivery from depositaries; the proper officer's receipt discharges trustees for money or securities paid into court.

The Act and orders made under it provide a complete indemnity to all persons for acts done under the Act, and persons need not inquire into the propriety of such orders or the court's jurisdiction.

The Chief Justice may make rules of court regulating practice and procedure for proceedings in the High Court under this Act.

The provisions of this Act bind the Government of Uganda.