Replacing a Trustee who has lost capacity

Trusts Discussion
1

Hi, Please could someone help settle a debate between myself and a colleague about whether we need Court of Protection approval to remove / replace a trustee of a life interest trust who has lost capacity? (She also has a beneficial interest as the life tenant of the trust).

The situation is this: Mr and Mrs X made mirror wills in 2010 leaving their respective shares of their property on life interest trusts, each other as life tenant with daughter as remainderman.
Mrs X subsequently lost capacity. Mr X died in 2020. (Daughter has a registered P&F LPA for Mrs X).
Trustees of the life interest trust established by Mr X’s will are Mrs X, daughter and son-in-law.
The trust wording contains the following clause:

“The Property Trustees shall mean my wife… and my daughter… and my son-in-law… and the power of appointing new Property Trustees shall be vested in them or the survivor of them”.

Daughter and son-in-law have now instructed me to obtain a Grant of Probate and get the property registered in the names of Mrs X and the Trustees. They also want to remove Mrs X as a Trustee as she has lost capacity.

I have looked carefully at section 36 of the Trustee Act 1925 and I think we can ‘replace’ Mrs X without having to get Court of Protection approval, as the Trustees have the express power of appointment under the trust instrument. I do not think that section 36(9) would be triggered, because even though Mrs X has a beneficial interest in the trust property, the daughter and son-in-law would be replacing her under section 36(1)(a) rather than section 36(1)(b). (ie they would be using their powers of appointment, rather than simply in their capacity as continuing trustees). I don’t think they can simply remove Mrs X, but if they are happy to replace her with, for example, their own grown-up daughter, I think we can get around the issue of COP approval. However, I don’t want to fall foul of the COP and would be grateful for any advice on this from someone who has experienced a similar situation.

Thanks in advance!

2

I expect COP approval will be needed. If the power of appointment of trustees is vested in the wife, the daughter and son-in-law then it could only be exercised by all three of them acting jointly, which clearly won’t be possible.

3

I suppose one could arrive at Katie’s view by considering the will speaks from death and as Mrs X was incapable by then she could not become a trustee, so need not be replaced - although one should of course read the whole will and not take any extract out of context.
However, does this not ignore the actual problem that the legal [as opposed to beneficial] title to the property is surely now vested in Mrs X herself as surviving trustee of land? Even if D & S-i-L prove Mr X’s will this merely puts them in the position of “beneficiary in trust” of part of the trust of land - with Mrs X herself as the other [personal] beneficiary. It is some years since I last dealt with powers of attorney but I seem to recall that attorneys usually had to obtain CoP authority.
Kevin Mullen