Discretionary Trusts- Adding to the pool of beneficiaries

Is it possible for trustees to add a beneficiary to the pool of beneficiaries? The trust deed is silent in respect of this.

Richard Allin
Brewer Harding and Rowe

Generally not, unless there is an express power.

There might be a power to transfer to other trusts of which other people may be beneficiaries, but if the trustees’ intention in making such a transfer is effectively to achieve something which was not the purpose of the trust (ie they plan to benefit people who are not beneficiaries of the first trust), then this is likely to be a “fraud on the power”.

A careful review of all of the terms and interests under the trust deed and the circumstances surrounding it might reveal an alternative. Even, perhaps, rectification, if it is worth it.

Paul Davidoff
New Quadrant Partners

This article may (or may not!) be of help:

“Adding beneficiaries, removing beneficiaries, and channelling benefit to non-beneficiaries”
Jonathan Hilliard, QC, Edward Sawyer

Author Notes
Trusts & Trustees , Volume 24, Issue 8, October 2018, Pages 778–785, https://doi.org/10.1093/tandt/tty120

26 September 2018

Malcolm Finney