I should be grateful for some advice on the administration of a Trust.
There are three Trustees; two lay, and a Partner of my firm. One of the lay Trustees is frustrating the efficient administration of the Trust by refusing to agree, or even truly engage, with any of the decisions that need to be made.
The Trust instrument (a Will) permits the Trustees to act by majority, so individual decisions can be taken by the other two Trustees without the agreement of the other, but this is not an ideal to run the Trust going forward.
It has been proposed that we request the uncommunicative Trustee to retire. If he refuses to do so, it has been mooted that the majority clause could be used to effectively force him to retire. My view is that this would not be possible and that we would instead have to resort to a Court application, but I have not been able to find any definitive answer either way.
Any thoughts of the forum would be much appreciated.
Is it known why the trustee is uncooperative? I would be inclined to try and understand the basis of their refusal to engage, perhaps via the other trustee who may have contact with them through family members, etc. If you know why they are being as they are, it might be possible to remedy the situation without the need to “get heavy”.
Moving beyond that -
s.36(1) Trustee Act 1925 permits trustees to remove a trustee who refuses to act in the trust.
This would seem to be a more appropriate route to adopt.
My understanding of the power for trustees to act by a majority is that it intended to enable the better administration of the trust and, if intended to enable the removal of trustees, would need to state that expressly.
Once the power to act by a majority is flagged, it may let the genie out of the bottle and the non-professional trustees seek to use it in circumstances where the professional would be the dissenting trustee. This places the professional in an invidious position as they cannot then safely retire, nor go along with the proposed course of action (which, at the simplest, could be a breach of trust). I have always considered such clauses should provide that where there is a professional trustee, no decision can be made with which they are not in agreement.
Unless the issue can be remedied amicably, I agree that the uncommunicative trustee should be invited to retire and, if they fail to respond, or refuse, consideration be given to their removal under s.36 TA 1925. If they say they will fight that, but still refuse to act in the trust, it may be necessary to identify that there may be little option than to apply to court for their removal.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals