Right of Residence - Powers to Invest

I am a trustee of a Will trust where [property] has been left with a right for two minor children and their mother to occupy rent free until the youngest is 28 years old.

There is a provision that this will be subject to any reasonable requirements placed upon occupation by the trustees (and in this case were limited to paying bills, keeping it insured and in a reasonable state of cleanliness and repair).

The children and their mother have departed without notice, and the rights come to an end (although the trustees ‘may’ purchase an alternative property, we do not have to and as a result of the very soiled condition of the property we are able to terminate the rights of residence in any event).

My question relates to the property. The clause splits it four ways - one quarter to each of two minor children, one quarter each to two adult beneficiaries.

The adults don’t want the property sold, and would like it to be let. A tenant has been proposed. The two minor beneficiaries can’t consent, and their shares do not vest until age 28.

2nd Edition of STEP provisions apply

Am I able to let the property, paying the adult beneficiaries their share of income as of right, and retaining the minor beneficiaries’ income until the vesting date?

Many thanks

Damian Lines
Rubin Lewis O’Brien

Under TLATA 1996, the trustees are required to consult with the beneficiaries and give effect to the wishes of those with a majority interest, so far as it is consistent with the terms of the trust. I do not believe STEP 2 negates this duty. Accordingly, if the adult beneficiaries represent a majority interest, which may be the case if the minors’ interests accrue to them if they fail to attain age 28, it may be necessary to “remind” the adult beneficiaries of the downsides of property letting.

Are the adult beneficiaries aware of a landlord’s statutory obligations when letting property – it is not a case of just tidying up and giving over the front door key.

As the property has been left in a “very soiled” condition, have they also considered the cost of putting it into a tenantable condition (as opposed merely to cleaning up the mess)?

The February 2020 edition of Law Society’s PS Journal included an article of mine – Let it be – that might form the basis of a further discussion with the beneficiaries should the trustees prefer to sell rather than take on the potentially onerous burden of letting the property, especially if it is to be let privately.

Paul Saunders FCIB TEP

Independent Trust Consultant

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