My client has a (discretionary) Asset Protection Trust set up by a firm who have recently gone into administration.
Two of the three trustees were solicitors from the firm. I am told one retired and one has been fined and is now non-practicing.
My client wishes to remove them both and replace them with two of her family members (son and daughter).
There is a power for my client as the settlor to appoint and remove trustees. They would prefer not to make contact with the solicitors now acting for the firm, partly as they have been told there is a cost involved in them signing the Deed of Retirement and Appointment.
I wonder if there is a method my client as the Settlor could use, utilising the power within the original trust deed, without seeking the retiring trustees consent?
It totally depends on the wording of the trust and whether the settlor only has power to remove a trustee in certain circumstances? I saw a lot of these types of trust at my old employer (Scottish firm of solicitors) but I can’t recall the actual wording and if there were any restrictions on when trustees could be removed.
Is it a Scottish or English trust? Under English law the settlor could potentially use S36 Trustee Act 1925. The struck of solicitor could potentially be unfit to act. If Scottish you will need to look at the Trusts (Scotland) Act 1921 where a trustee can only be removed by a Court in certain circumstances.
If it’s phrased as a power to remove a trustee then (subject of course to the usual caveats) I would expect it can be exercised without cause and in addition to the usual requirements of s.36.
[edited to add - I don’t believe there is a need for them to be parties, but you should attempt to give them notice]
It should (I believe, but more heavily caveated) also be accepted by the Land Registry if necessary. The response of other third parties such as banks may vary.
By coincidence I am currently advising on one of these. The facts sound remarkably similar and I wonder if it was not only drafted by the same firm but the same trustees are appointed.
Worryingly my clients say they never instructed solicitors and were not advised in relation to any of it but that they were simply given the engrossment deeds to sign by their IFA … an aside to the present question.
The applicable law to the trust I have is specified to be England and Wales.
The Removal of Trustees clause reads:
“The Settlor has power exercisable by Deed to remove any one or more of the Trustees as Trustee of this Settlement”.
My analysis is that that power can be exercised unilaterally and the professional trustees do not therefore need to be parties to the deed (convenient since, as in Michelle’s matter, one of the trustees has not only set out expected costs for executing a Deed of Retirement and Appointment and a TR1 but that they expect robust indemnities against all future claims to be signed). Like Andrew though I suggest the Trustees being removed are put on notice that it has been done.
As Andrew says I understand that HM Land Registry will accept the Deed of Removal such that they will be able to carry out a name removal on the title leaving the client free to deal with their own home. I am told by my conveyancing colleagues to expect a requisition from HMLR which basically amounts to “talk us through what’s going on here” but that after a response setting out that the settlor has the power under the settlement to remove those trustees, it is likely they will then carry out the name removal without much further bother.
The settlement incorporates STEP standard provisions 1st Ed though 12 (Trustees Liability) is excluded. However, the old s.30 (1) Trustee Act 1925 is essentially re-stated within the settlement deed. I see no reason for the client to offer the removed trustees anything over those statutory indemnities.
By way of update on this - in my case HMLR refused to remove the trustees from the title on the basis of the deed of removal of trustee of the “Family Trusts”. This is because the trustees were not described on the title as “trustees of the ___ Family Trust” and as such appeared on the title, on the face of it, in their own right.
Box 10 of the TR1 did though set out that the property was held by all four (husband and wife and the two trustees) on trust. The four therefore holding the property on bare trust for the trustees of the Family Trusts.
With that being the case HMLR accepted that the deeds of removal removed the professional trustees from the Family Trusts but did not deal with the legal estate (i.e. those named four still held the property on bare trust for the Family Trusts). For that reason it was ultimately necessary to request those trustees to sign a TR1 to transfer title to husband and wife.
Given the tight timescale my client was up against to sell their property they were left with no choice but to pay the costs requested by one trustee (in the region of ÂŁ360) and sign the discharge requested. The discharge related only to actions as trustee (of which there were none) and as such it would seem there is still recourse for the client for the bad advice etc.