I am dealing with a discretionary trust in which the trustees want to appoint out the trust fund. The power of appointment includes a requirement to obtain the written consent of the Settlor during his lifetime. The Settlor has lost capacity and does have an LPA in place.
Is it possible for the consent to be delegated to the attorney? If not, if consent can not be obtained, does this requirement lapse or will we require the consent of the court that it is not required?
Unfortunately the trust deed does not give any other assistance to get around this issue.
Any suggestions would be appreciated.
Lisa Marie Jones
Knights Professional Services Limited
In the absence of any indication that the settlor’s consent can be waived (or delegated) if they no longer have capacity to give the necessary consent, trustees are in a difficult position.
When I have discussed this in the past, the general consensus has been that it is better for the trust instrument to provide for the possibility the settlor (or other nominated party) may not have the mental and/or legal capacity to give their consent to a proposed trustee action. The underlying reason has been the lack of any clear guidance as to whether, or not, such a decision may be delegated and, if it can be delegated, by which type of instrument (e.g. LPA, general power or s.25 power). Much the same view has been expressed across a number of jurisdictions.
If the trust deed requires the consent of the settlor “during his lifetime”, then such requirement cannot be ignored, or the trustees will be acting in breach of trust may be liable to restore the trust fund where distributions are made without the requisite consent.
Unless it is proposed that the trust fund be fully wound up at this time, I wonder if instead of an application to the Court of Protection for the necessary consent to be given, it might be preferable to make an application under the Variation of Trusts Act 1958 for the condition to be varied by, perhaps, the appointment of a substitute “consent” and provision to cover the situation should any such appointee lack capacity to give consent at any time.
The trust deed does require the consent of the settlor “during his lifetime” and does not give any option to waive or delegate this function.
The trust is not being wound up entirely at this point, so I take your point on making an application to the Court of Protection to vary the condition rather than merely giving the consent.
Lisa Marie Jones
Knights Professional Services Limited
A VTA application needs to be made in the County Court, under the CPR Part 8 procedure, not in the Court of Protection. Looking again at my earlier response, I realise it was not clear this was outside of the CoP jurisdiction.
I encountered this 3 years ago and we obtained consent on behalf of the settlor from the Court of Protection. Section 18(1)(h) MCA 2005 extends the powers of s.16 to the exercise of any power (including a power to consent) vested in P whether beneficially or as trustee or otherwise). The application was made by the attorney: s.23(2) MCA 2005 permits the CoP to give directions with respect to decisions which the donee of an LPA has authority to make and which P lacks capacity to make or to give consent or authorisation to act which the donee would have to obtain from P if P had capacity to give. The OS was joined for P and they were took a sensible, pragmatic approach. In the end, it was decided to wind the trust up so only one application to the CoP was needed. If your trust is intended to be ongoing, it is worth considering a Variation of Trusts Act 1958 application (per Paul Saunders’ reply).