Trust 3: Appointment

Question 1

What are the ways that trustees can be appointed after trust has been created?

Answer 1

Power can be exercised
- by the person nominated in trust instrument
- or in not provided, by the surviving or continuing trustees,
- or if no trustees, by the personal representative of the last trustee to die

Beneficiaries only:
- if all beneficiaries agree, they can use Saunders v Vautier Rights to change trustees of trust
- by directing the trustees to appoint new trustee
- must be done in writing
- cannot be done if trust instrument contains express power to appoint trustees

Question 2

When can power to appoint new trustees be exercised?

Answer 2

• on the death of a trustee
• if a trustee is abroad for over a year
• if an appointed trustee is a minor or otherwise lacks capacity to act
• if a trustee wishes to retire, refuses to act or is unfit to act

Question 3

Can beneficiaries have the power to appoint subsequent trustees?

Answer 3

Beneficiaries only:
- if all beneficiaries agree, they can use Saunders v Vautier Rights to change trustees of trust
- by directing the trustees to appoint new trustee
- must be done in writing
- cannot be done if trust instrument contains express power to appoint trustees

Question 4

Can the court appoint new trustees? If so what will it consider?

Answer 4

• if trust would be without trustee because there is no one authorised who is able and willing to make appointment, court has power to do this instead
• this can be done by Charity Commission in case of charitable trusts

Court will consider:
- the wishes of the settlor or testator (if such wishes are expressed/evidenced in trust instrument)
- court should not appoint a trustee where there is dispute between beneficiaries as to whether that person is appropriate
- consider whether the appointment will promote or impede the trust administration (take into account views of existing trustees if these are reasonable)

Question 5

What is a limit on the appointment of new trustees?

Answer 5

• cannot appoint additional trustees beyond 4 (all trusts)

Question 6

What are the formalities for appointing new trustees?

Answer 6

• appointment must be in writing
• need not be by deed
• But deed will be needed to vest legal title to land and chattels in new trustee

Question 7

When can a trustee retire? What should they do?

Answer 7

• Trustee can retire by deed where there are at least 2 trustees, or one trust corporation to act as trustees and the co-trustees and any person with a power to appoint trustee consents
• Retiring trustees must comply with statutory requirements or will remain in office
• Should also obtain formal discharge of liability from beneficiaries

Question 8

Who can compile a trustee to retire? And how?

Answer 8

Beneficiaries
- Beneficiaries with Sauders v Vautier Rights have power to compel a trustee to retire
- Direction must be made in writing and requires agreement of all beneficiaries
- Can only be done if after retirement there will remain at least 2 trustees or one trust corporation

Courts
- For a significant breach of trust