An Unwanted Trust

The client, recently deceased, settled a discretionary trust in their will for a specific amount of money. The client was single and had a long term partner and three children from previous marriages. There are grandchildren some of whom are minors. There are two trustees, one professional and one of the children. The beneficiaries of the trust are the long term partner, “my issue” and a cancer charity. There is a Letter of Wishes that guides the trustees to treat the long term partner as the income beneficiary during their lifetime and to appoint capital when appropriate, with a corresponding power. It is clear from the trust provisions that the cancer charity is a backstop provision to guard against their ever being no beneficiaries.
The position between the long term partner and other family members is somewhat difficult and there is a desire to not have to have the ongoing involvement a trust would require together with the possible requests for capital in the future. The desire is therefore to complete a Deed of Variation (DOV) to leave a capital sum to the long term partner in substitute for their interest in the trust. Of course the long term partner would need to take separate advice.
The question is as to if a DOV can be implemented given the other potential beneficiaries, these being “my issue” and the charity as a backstop. Reading the will it is apparent that “my issue” would not be restricted to the adult children but extend to the wider family some of whom are minors. Accepting this given that the rights of minors could be prejudiced and the potential interest of the charity I do not think a DOV could be contemplated.
Any thoughts or other considerations such as a future partition of the trust in which case I am unsure as to the rights of the charity.
Thanks in advance.

The trustees probably just need a Deed of Appointment, but it will depend on the precise wording of the Will. It is unlikely that a Deed of Variation will be possible.
Beneficiaries of a discretionary trust have no absolute right to any of the trust fund, only the right to be considered. If a particular beneficiary (B1) is given a sum of money from the trust, then that gift/distribution is not made “in return for” anything: it is simply the trustees exercising their discretion in a particular way. The trustees may then choose not to exercise their discretion for B1’s benefit again (but they will be free to do so or not to do so, when the time comes, unless B1 is also excluded from benefiting).
Trustees must consider the purpose of the trust and of any powers they propose to exercise - the letter of wishes and the wording of the Will may assist with this. They must also only consider all relevant matters and not any irrelevant matters. Relevant matters might include the cost of running the trust relative to its value or the relations between family members (but not always). It is then for the trustees to decide how to deal with the trust. This could include, for example:

  1. appoint that B1 receive the income from the trust for a period of time and then appoint all of the trust fund to other beneficiaries (say, B2, B3 and B4)
  2. appoint £x to B1 and the rest of the trust fund to B2, B3 and B4
  3. appoint £x to B1 and retain the rest of the trust fund with the intention of using it for the benefit of B2, B3 and B4 or their descendants (the trustees might even be able to exclude B1 from the trust at that point too).
    It is for the trustees to decide what is appropriate in the circumstances at each time that they come to exercise their discretion.

Paul Davidoff
New Quadrant


Thank you very much for your input which is massively helpful. Sometimes the obvious is in front of your face and it takes someone to point it out!

Thanks again, I appreciate your taking the time to reply.