I have been asked to comment upon a trust deed which is drafted in very simple terms. The purpose is to hold a property for the benefit of minors until they attain a specific age. The Trust deed gives the trustees power to insure the property. There are no overriding powers of appointment. The property held is subject to convenants. In the absence of express powers is it possible for the trustees to release the convenants or indeed sell the property?
Anna Stephenson
Swinburne Maddison LLP
It very much depends on the precise wording of the trust. Are you able to say what the covenants are?
Also, does the trust deed require any consents for the disposal of the trust’s assets?
Subject to that, it would be unusual for the trustees to be prevented from selling trust assets.
Paul Davidoff
Moon Beever
Its difficult to be categoric without seeing the trust deed, but in principle trustees should act in the best interest of their beneficiaries. You say the property is held “subject to convenants” (I think you mean covenants?) in which case I’m not clear how the trustees could “release” them. Surely its for the person with the benefit of the covenant to enter into a release. Could the trustees sell? Is the trust made after TOLATA came into effect? If so then s 6 gives trustees of a trust of land all the powers of a beneficial owner, So if TOLATA applies and if its in the best interest of the beneficiaries then yes the trustees can sell. Presumably they will hold the proceeds until the beneficiaries reach vesting age. There may be a CGT charge on sale.
Simon Leney
Cripps LLP