Teja was appointed as a trustee involving RM5 million worth of asset including property, shares and general investment. Due to the amount of the trust property, beneficiaries agreed to appoint a co-trustee, Lana to help Teja in managing the trust property. Teja has a lot more experience in managing trust hence she is the decision maker for any problems and issues occurred. Lana who is very new to the profession, only assisting her in management and administrative work if necessary.

One day, Teja assigned to Lana an important job to expand the general investment of the trust property worth RM2 million. Teja asked Lana to seek advice from the expert in banking investment and proceed with any necessary arrangement if required. Following the instruction, Lana met an expert and agreed to venture in an offshore investment which will give high profit in return yet very risky.

Lana informed Teja about the type of investment and asked Teja if the settlor allowed them to invest in such area. Teja did not answer directly but told Lana to make decision only for the benefit of the beneficiaries. Lana then proceeds with the investment thinking that the high-return of profit will benefit the beneficiaries. However, the investment suffered a great losses and Lana lost the whole capital of RM2 million.

Advise the liability of both trustees, Teja and Lana. Support your answer with relevant authorities.

Answer rating: 100% (QA)

In this scenario Teja and Lana are both trustees of the trust property with Teja being the more expe... View the full answer