Appointment and removal of trustees

Who may act as a trustee?

Any person except a minor may act as trustee under section 20 of the Law of Property Act 1925, subject to fitness, conflicts, the trust instrument and any specialist statutory restrictions.

Can a minor act as a trustee?

A minor cannot act as a trustee under section 20 of the Law of Property Act 1925.

What personal factors should be considered before appointing a trustee?

Potential conflicts of interest and the person’s general fitness to act, including matters such as bankruptcy.

Can the trust instrument restrict who may act as trustee?

The trust instrument may impose its own eligibility requirements or restrictions.

Can specialist trusts impose additional restrictions on trustees?

Pension trusts, charitable trusts and other specialist trusts may be subject to additional statutory rules.

Is there a general statutory rule prescribing how many trustees must be appointed?

There is no general rule prescribing a particular number of trustees.

How many trustees is it generally good practice to appoint?

It is good practice to appoint more than one trustee.

How many people may hold legal title to trust land?

Legal title to land may be held by a maximum of four people.

What is the minimum number of trustees generally required for a trust of land?

At least two trustees are generally required so that they can give a good receipt for capital money.

Can the trust instrument regulate the number of trustees?

The trust instrument may prescribe or limit the number of trustees.

What is the order of priority for appointing trustees?

The trust instrument, statutory appointment under section 36 of the Trustee Act 1925, appointment by beneficiaries under section 19 of TOLATA and, as a last resort, appointment by the court.

What is the first source to consider when appointing a trustee?

Any express appointment power contained in the trust instrument.

Which provision provides the principal statutory power to appoint replacement or additional trustees?

Section 36 of the Trustee Act 1925.

Which provision allows qualifying beneficiaries to direct the appointment of a trustee?

Section 19 of the Trusts of Land and Appointment of Trustees Act 1996.

When is court appointment of a trustee used?

It is used as a last resort where no other effective appointment mechanism is available.

What two broad methods can a settlor use to establish an inter vivos trust?

Transfer property to another person on trust or declare themselves trustee.

When is a transfer-on-trust arrangement constituted?

When the settlor validly transfers legal title to the intended trustee.

What should a settlor confirm before transferring property to an intended trustee?

That the intended trustee is willing to accept the appointment.

Can a person named as trustee decline the office?

An intended trustee may disclaim the trusteeship.

What happens if legal title is transferred to a person who then disclaims the trusteeship?

They hold the property on bare trust for the beneficiaries pending appointment of a replacement trustee.

What appointment mechanism applies first after a transferee disclaims trusteeship?

Any express power of appointment in the trust instrument should be used first.

What power does a disclaiming trustee have under sections 36(1) and 36(8) of the Trustee Act 1925?

The disclaiming trustee may appoint a replacement trustee.

What happens if a disclaiming trustee does not wish to appoint a replacement?

Beneficiaries with Saunders v Vautier rights may be able to appoint, with court appointment available as a last resort.

Which provision gives the court power to appoint trustees as a last resort?

Section 41 of the Trustee Act 1925.

How is a self-declared inter vivos trust created?

The settlor declares themselves trustee, provided the requirements for an enforceable trust are satisfied.

Who is normally named in a will to administer a deceased person’s estate?

Executors.

What happens if the named executors are willing and able to act?

Legal title to the deceased’s estate vests in them.

What happens if no executor is willing or able to act?

Administrators are appointed.

What collective term describes executors and administrators?

Personal representatives.

What are the main duties of personal representatives?

To administer the estate, pay the deceased’s liabilities and distribute property in accordance with the will.

What must personal representatives do with property intended for a testamentary trust?

Ensure that legal title is vested in the intended trustees.

What happens if a testamentary trustee is unwilling or unable to act?

The personal representatives temporarily hold the property on trust until replacement trustees are appointed.

In what capacity do executors hold trust property if they are also named as trustees?

They hold it in their capacity as trustees rather than as personal representatives.

How may a replacement trustee of a testamentary trust be appointed?

Under an express power in the will or trust instrument, under section 36, by beneficiaries under section 19 of TOLATA or by the court under section 41.

What can executors named as trustees do if they wish to renounce their trusteeship?

They may appoint new trustees in their place under section 36(5) of the Trustee Act 1925.

What happens if a third-party trustee named in a will predeceases the testator?

The personal representatives temporarily become trustees and may appoint permanent trustees under section 36(1).

What happens if a third-party testamentary trustee is unable to act?

The personal representatives temporarily hold the property and may appoint permanent trustees under section 36(1).

What power does a third-party trustee who disclaims a testamentary trusteeship have?

Section 36(8) allows the disclaiming trustee to appoint a replacement.

Who may appoint a replacement if the disclaiming testamentary trustee does not act?

The personal representatives may exercise the appointment power.

Can beneficiaries appoint a replacement trustee of a testamentary trust?

Beneficiaries satisfying section 19 of TOLATA may direct an appointment.

What happens if no other appointment mechanism resolves a testamentary trustee vacancy?

The court may appoint under section 41 of the Trustee Act 1925.

Why can an absolute legacy not normally be paid directly to a minor?

A minor cannot give a valid receipt.

What must personal representatives do with an absolute legacy for a minor?

Hold the relevant assets on trust until they can be properly transferred.

What powers may personal representatives use while holding a minor’s legacy?

The statutory powers of investment, maintenance and advancement.

What does section 42 of the Administration of Estates Act 1925 permit for a minor’s legacy?

Personal representatives may appoint trustees and transfer the legacy to them.

Who might be appointed to hold a minor’s legacy under section 42?

The minor’s parent or guardian may be appointed.

How many individual trustees must be appointed under section 42 for a minor’s legacy?

At least two and no more than four, unless a trust corporation is appointed.

What is a subsisting trust?

An existing trust that is already in operation rather than a newly created trust.

What appointments may occur during a subsisting trust?

Appointment of an additional trustee or replacement of an existing trustee.

Who may initiate the appointment of a trustee during a subsisting trust?

The trustees or the beneficiaries.

Does the settlor automatically retain a power to appoint new trustees after creating the trust?

The settlor’s involvement ordinarily ends unless the trust instrument reserves an appointment power.

How may the settlor retain involvement in trustee appointments?

By expressly reserving an appointment power in the trust instrument.

Who may appoint under an express power in the trust instrument?

The person specifically given that power by the trust instrument.

What does section 36(1) of the Trustee Act 1925 govern?

Replacement of an existing trustee.

Who holds the section 36(1) replacement power?

The person named in the trust instrument or, if none is willing and able, the continuing trustee or trustees.

In what circumstances may section 36(1) be used to replace a trustee?

Death, prolonged absence abroad, minority, lack of capacity, retirement, refusal, unfitness or inability to act.

Can section 36(1) be exercised when a trustee has been abroad for more than one year?

Prolonged absence abroad for more than a year is a recognised ground for replacement.

Can an appointed trustee who lacks capacity be replaced under section 36(1)?

Lack of capacity permits appointment of a replacement.

Can a trustee who wishes to retire be replaced under section 36(1)?

A replacement may be appointed where the trustee wishes to retire.

What formality applies to appointment under section 36?

The appointment must be made in writing.

How does section 36(2) treat a trustee who has been removed?

A removed trustee is treated in the same way as a trustee who has died.

How does section 36(3) treat a dissolved corporate trustee?

It is deemed incapable of acting.

What does death include under section 36(8) for a testamentary trust?

It includes a named trustee having died before the testator.

Can a disclaiming trustee participate in appointing a replacement?

A disclaiming trustee may be treated as a continuing trustee for appointment purposes.

Which provision gives disclaiming trustees an appointment role as continuing trustees?

Section 36(8) of the Trustee Act 1925.

What does section 36(6) of the Trustee Act 1925 govern?

Appointment of additional trustees.

Who may appoint an additional trustee under section 36(6)?

The person named in the trust instrument or, if none is willing and able, the current trustees.

Must appointment of an additional trustee be made in writing?

Section 36(6) appointments must be made in writing.

What numerical limit applies when appointing additional trustees under section 36(6)?

The number cannot be increased beyond four unless the trust instrument expressly permits it.

How does section 19 of TOLATA assist beneficiaries with Saunders v Vautier rights?

It allows them to direct the trustees to appoint a new trustee without first terminating and recreating the trust.

In what form must a direction under section 19 of TOLATA be made?

It must be made in writing.

When is section 19 of TOLATA unavailable?

It cannot be used where the trust instrument contains an express power to appoint trustees.

Can the Charity Commission appoint trustees of a charitable trust?

The Charity Commission has powers to appoint charity trustees.

How is the court’s section 41 appointment power extended to charitable trusts?

Section 69(1)(b) of the Charities Act 2011 extends it to charitable trusts.

What principle underlies the court’s power to appoint trustees?

Equity will not allow a trust to fail for want of a trustee.

What must the court consider regarding the settlor’s wishes when appointing a trustee?

Any wishes expressed or evidenced in the trust instrument.

Should the court appoint a proposed trustee whose suitability is disputed between beneficiaries?

The court should avoid appointing someone whose appropriateness is the subject of a beneficiary dispute.

What administrative consideration guides the court’s appointment decision?

Whether the appointment will promote or impede proper administration of the trust.

May the court consider the views of existing trustees?

Their views may be considered, together with whether those views are reasonable.

What remuneration power does the court have when appointing a trust corporation?

Section 42 of the Trustee Act 1925 allows the court to authorise remuneration.

Which provision gives court-appointed trustees the same powers as original trustees?

Section 43 of the Trustee Act 1925.

What powers does a court-appointed trustee possess?

The same powers as an original trustee.

Who may be appointed if the court cannot find another suitable and willing trustee?

The Public Trustee may be appointed under the Public Trustee Act 1906.

Is the Public Trustee entitled to charge for acting?

The Public Trustee may charge for its services.

How may a trust instrument regulate removal of trustees?

It may contain express removal provisions or reserve a power of removal to the settlor or another person.

How does section 36 facilitate removal of an existing trustee?

The power to replace a trustee may operate by removing the existing trustee and appointing another.

Who may remove a trustee under the section 36 mechanism?

The person holding the corresponding power of appointment.

What precaution should beneficiaries take before removing one of only two trustees?

They should appoint a replacement first so that the trust is not left with only one trustee.

Does the court have statutory power to remove trustees?

The section 41 appointment jurisdiction extends to removal.

In what circumstances does section 41 particularly contemplate removal?

Bankruptcy, lack of capacity, company liquidation or dissolution.

Does the court also have an inherent power to remove trustees?

The court has a common-law or inherent jurisdiction to remove trustees where continued office is inappropriate.

What conduct may justify removal under the court’s inherent jurisdiction?

Dishonest conduct by a trustee may justify removal.

Can the Charity Commission remove charity trustees?

It has power to remove trustees of charitable trusts.

What is voluntary retirement by a trustee?

A trustee leaves office by complying with the formal requirements for retirement.

What document must a trustee execute to retire voluntarily?

A deed declaring the intention to retire.

How many trustees must remain after an individual trustee voluntarily retires?

At least two trustees or one trust corporation must remain.

What consent is required for voluntary retirement?

The co-trustees must consent in writing by deed.

What property step is required on a trustee’s retirement?

Any action necessary to vest the trust property in the remaining trustees must be completed.

What conditions must be satisfied for voluntary retirement?

A deed of retirement, at least two continuing trustees or a trust corporation, written consent by deed and proper vesting of the trust property.

Can beneficiaries compel a trustee to retire?

Beneficiaries with Saunders v Vautier rights may direct retirement.