Removal of incapable trustee under S36(1) Trustee Act 1925

#1

Hi

I have a situation where one of three trustees is now incapable of acting. I have two continuing trustees. I want to use S36(1) to replace the incapable trustee but the power to appoint new trustees is vested in the settlor who is not a trustee and has now herself lost capacity. Do I have to apply to the court to remove the incapable trustee and appoint new trustees and if so which court? The incapable trustee has an attorney I believe under an LPA. What are my options?

Regards
Maya Ribbands
Rudlings Wakelam

(kim jarvis) #2

Hi Maya,

Under the S36(1) Trustee Act 1925 the power to appoint rests with the person nominated within the trust or if there is no such person the surviving or continuing trustees. So in your situation the remaining 2 trustees would have the power to appoint a replacement trustee.

If the incapable trustee has an interest in the trust then the continuing trustees would need to apply to the court under S41.

Regards
Kim Jarvis
Canada Life Limited

#3

Hi

Thanks for that - the incapable trustee does not have a beneficial interest in the trust but the settlor who is also appointor of new trustees in her lifetime does. I wonder if this causes any difficulties and whether the two capable trustees can just retire the incapable trustee and carry on acting on their own. Any thoughts?

Maya Ribbands
Rudlings Wakelam

(Carmen Cottingham) #4

Hi Maya,

Which type of trust is this? In a Will or inter vivos?

Carmen Cottingham
Cottingham Legal Wills and Probate Limited

#5

Hi

It is an inter vivos settlement dated October 2015.

Maya Ribbands
Rudlings Wakelam

(kim jarvis) #6

Hi Maya,

As the settlor had the power within the trust but is now incapable the 2 remaining trustees can use S36 to remove them. However, under S36 the incapable trustee can only be removed if a new trustee is appointed in their place so they will need to appoint a new trustee.

Regards,

Kim Jarvis
Canada Life Limited

#7

Hi Kim

Thanks for your reply. Very helpful.

Kind regards
Maya Ribbands
Rudlings Wakelam

(Julian Cohen) #8

Wait a minute – when a Settlement gives the power of appointment to the Settlor, it doesn’t thereby create her as trustee! So using s36 will not achieve her removal.

S36 says if there is no such person [ie no person who has the power to remove], or no such person able and willing to
act, then the … continuing trustees or trustee for the time being, or the personal representatives of the last surviving or continuing trustee
may, by writing, appoint one or more other persons…to be a trustee or trustees in the place of the trustee so …being unfit or incapable as aforesaid. The whole section makes
no mention of removing a person who has the power to remove, so you’re asking whether she’s some kind of quasi-trustee for the purpose of this section. I would have said not.

Julian Cohen

Simons Rodkin