Discretionary Trust - property - exercise of powers


(philiprevans) #1

My question concerns the exercise of trustees’ powers under a discretionary trust to permit a beneficiary to occupy a residential property owned by a trust.

One view is that the trustees only have to exercise their powers once, eg to permit X to occupy the property rent free subject to keeping the property repaired and insured, until further notice.

Another view is that, to show that trustees are seen to be exercising their powers periodically, that such permission needs to be re-granted, say every year.

I would be grateful for members’ views on this issue.

Philip Evans
Graham & Rosen Solicitors


(Paul Saunders) #2

The trustees should regularly review the circumstances of the beneficiaries to decide if it is appropriate for the beneficiary in question to remain in occupation.

Some trustees favour granting a right of occupation for no more than a year at a time; others prefer to grant the right for an unlimited period, terminable upon, say, 1 month’s notice. There are also a number of variants between these two positions.

Overall, though, the trustees should at the very least, review the exercise of their discretion periodically, including verifying who is actually in occupation.

Paul Saunders