Appointing out of a Discretionary Trust 2025

The Settlor transferred property into a Discretionary Trust, following advice from his Accountant to mitigate against IHT. The Settlor has now died.

The DT was reasonably straightforward: the Beneficiaries are “the children of the Settlor”. One of the children did a ‘deal’ with his sibling direct (by letter) and gave her a lump sum, on the understanding she would not seek any of the Trust Fund. The lump sum was less than 50% of the Trust Fund. The Trustee had no part in this.

The DT permits the Trustees to pay or apply the Trust Fund to any beneficiary.

The Professional Trustee has retired as a Solicitor and wishes to retire as a Trustee. This creates a whole range of issues:

  1. We need two new Trustees. The child who will receive the Trust Fund cannot be a Trustee alone, as he can’t give a valid receipt to himself when the Trust Fund is appointed out to him and also because of self-dealing.

  2. I don’t believe any professional Trustee would act in these circumstances. Am I being over cautious?

  3. I don’t believe the two children would be prepared to act as Trustees together. I suspect one doesn’t want the other to revisit their ‘lot’.

How should I proceed?