I am preparing a Discretionary Trust whereby the Settlor wishes to appoint himself and another as Trustees. He would like to include provision for a replacement Trustee to be appointed in the event of his death, whether ot not the other Trustee survives him.
I’m aware the Trustee Act would allow a surviving trustee to appoint a new Trustee or express provision can be given in the Trust document for the appointment of a new Trustee to lie with a specific party (generally the settlor during their lifetime).
Would it be possible to include an automatic replacement trustee provision as noted above?
It is really very common to appoint substitute executors of a Will but strangely unusual to appoint an automatic replacement trustee of an inter vivos trust. The substitute executor is not normally a replacement of one who has accepted office but rather a substitute for one who has declined to accept. I have had the great misfortune to read more trust instruments than has been conducive to the preservation of my sanity but I do not recall a single one which has specifically named a replacement trustee as either a substitute or a successor trustee or even as a candidate for an additional trustee.
The statutory procedure in TA 1925 is largely satisfactory, although not entirely, but in a way is structurally just a default mechanism as s69(2) allows the settlor to write his own system of succession to the trusteeship.
Most settlors are content to nominate the person(s) who are able to appoint a new trustee under s36(1))a). The most elaborate succession machinery is often found in relation to Protectors which are rare except in non-resident/foreign law trusts.
I can see no objection legally why a settlor should not ordain as complex a system of succession to the trusteeship of an English law trust as is practically feasible. Each candidate who emerged from such a system and accepted office would be a duly appointed trustee. It would be implausible to suggest that a settlor could appoint another person under s36(1) but could not override that provision by him/herself doing so prospectively in the original trust instrument. Any candidate would have to be named or be identifiable with certainty and be in existence and eligible to accept office and act at the relevant time. Appointing another person to nominate if the system failed to come up with a candidate might be a backup. And s36 (1)(b) would constitute a final resort.
The trust precedents in Drafting Trusts and Will Trusts give the settlor power to appoint trustees during his life or by will, and there is a precedent clause included for the appointment of a new trustee by will. The advantage of this approach is that it gives the settlor the power to choose his replacement (or simply an additional trustee on his death), but at the same time allows him to change his mind about who that should be.
I don’t see why not. I think TA is a fall back provision to ensure there is always someone with a power to appoint trustees. As Jack says, it doesn’t seem to preclude other arrangements. You probably want to make the appointment revocable by the settlor until the time it takes effect and, of course, if the putative trustee doesn’t sign to accept the appointment, he or she would have the ability to disclaim.
For a while it was fashionable to include automatic retirement and appointment provisions in larger offshore trusts, with a “spare” trustee waiting in the wings in another jurisdiction in case of (inter alia) invasion or revolution in the original. While I’m not sure if any were ever triggered, I don’t believe any serious doubt was raised as to the efficacy of the provisions.