EPA/Power to appoint new Trustees


(John Randel) #1

We are dealing with a standard discretionary trust created by Deed of Variation of a Will. The settlor (the original beneficiary under the Will) has the power to appoint new trustees during her lifetime. Following the death of her husband she has been the sole trustee for the last few years, but she now lacks capacity. She appointed her daughter as her attorney under an EPA, which was registered in 2014.

The daughter and her mother are both members of the discretionary class of beneficiaries, and there are currently no other members of the class, other than unnamed charities. The mother as settlor has the right to add beneficiaries to the class.

The power to appoint new trustees does not seem to be a fiduciary power, but I can find no authority as to whether this power can be exercised by an attorney under an EPA. The act states that an EPA authorises the attorney to do anything that an attorney can lawfully do by an attorney.

If the attorney can appoint new trustees, they would then propose to remove the mother as a trustee at the same time, on the grounds of her incapacity, under s36 of the Trustee Act 1925.

Can anyone help, as the alternative would seem to be an application to the Court.

John Randel
Consultant
Lee Bolton Monier-Williams


(Paul Saunders) #2

My understanding is that the power to appoint trustees is a fiduciary power. Although I cannot immediately identify the relevant case law, I believe this has been confirmed in a number of instances in recent years.

The question of whether an attorney under a registered EPA can exercise the settlor’s power of appointment has been answered both ways by counsel. Clearly, it is not a power exercisable by the settlor as trustee, which, in these circumstances, could not be exercised by an attorney – see the Trustee Delegation Act 1999.

Unless there is clear authority that an attorney can exercise the settlor’s power of appointment, I would favour a court application for the appointment and removal of the current trustee. This can also have the benefit of an order vesting the assets in the new trustees (see other recent posts on this issue).

Whatever route is adopted, in view of the fundamental rule that trustees cannot act to benefit themselves, I suggest that the trustees to be appointed are not also intended to benefit under the trust unless the trust instrument includes provision permitting trustees to benefit themselves.

Paul Saunders