I have been asked to deal with a ‘property protection trust’ as the settlor has lost capacity and another trustee wishes to retire (firm who drew it up). Currently there are 4 trustees and the trust is discretionary, so there would be 2 continuing trustees (son and daughter) who are also attorneys under LPA for settlor (mum). The trust contains 1/2 house, mum owns other 1/2 outright and it needs to be sold to fund her care.
The trust states "The settlor has the power to remove any trustee and appoint new and additional trustees. After the death or loss of mental capacity of the settlor the trustees shall have the power to appoint new or additional trustees"
I am not sure if this is sufficient for the continuing trustees to retire the other 2 (one with consent - the other without capacity) without replacing them, or whether we could do a deed of appointment of the 1/2 share without retiring them, or whether we can just sell the property without reference to the trust - the title is just in the names of mum, son and daughter with a form A restriction - no mention of the trust at all.
My initial thought is that if the “property protection trust” is not doing what it claims [as suggested by your statement that the house must be sold] then perhaps you should initially consider who your client or clients are.
He/She/They may have a claim against the firm who initially advised on the scheme - depending on your instructions you may wish to take advice from your litigation department.
The problem is that mum owns half outright (only 1/2 is in the trust) and that is what local authority want to be made available for funding, also property is empty and family are frankly sick of it all (it has been going back and forth for months with other firm) and just want to sort their mum’s care out, I don’t think anyone is interested in litigating, they just want to know the best way to sell the property.
I don’t see why the trustees of land cannot sell the house - Son and Daughter each signing once for themselves, and again as attorneys for Mum would satisfy the “two signatures” rule.
The trust wording quoted would not seem to allow the remaining three trustees to “remove” the incapable trustee. Have not checked Trustee Act lately, but think this allowed removal of an incapable trustee - although court approval required if that person was also a beneficiary.
However the usual problem was to vest trust assets in the new/correct names, which should not be a problem in this case; so perhaps consider taking counsel’s advice on whether court approval is essential [perhaps on basis that approval will be given, so delay and expense of formal proceedings are not warranted]. Once Mum has been cleared [or assumed cleared] the remaining three trustees can execute a normal deed of retirement and appointment.
My understanding is that the children trustees alone cannot act in sale both as trustees and as attorneys for their mum’s half of the property i.e. they cannot wear both hats.
What is going to happen to half share of the property in trust? Does that pass to them? If so, consider / check self-dealing rule.
I think potentially an independent trustee may be required with a COP order to sell on behalf of mum.
It is unfortunate the HMLR title was not correctly updated as that would leave the professional trustee to sell the trust share and the children separately acting for mum as attorneys.