In many cases, when instructed on wills, the testator wishes to appoint family members as executors and trustees without any independent trustee. In this case, if the STEP standard provisions are incorporated, it is important to amend conflicts of interest provision 9 as the trustee would have problems in receiving any benefit, unless an independent trustee is appointed. In this case, if the testator does not want an independent trustee then, in my draft, I apply the STEP standard provisions but exclude para 9.1.2, 9.2 and the provisos to 9.4 ie 9.4.1 and 9.4.2 Provision 12 might also need changing.
I do wonder however how many family wills without an independent trustee are caught by this, particularly if 9.4.2 is no longer applicable and where there is no power in the standard provisions to amend them
Michael Jepson
M J Consultants
I think that this is a big problem and I am sure there are many trusts where the trustees benefit themselves without ever realising they shouldn’t.
However I have just had a Will land on my desk with a discretionary trust with widow and one son as trustee and no STEP provisions or indeed any express provisions about this. I am presuming that the common law fiduciary position prevails and that the widow and son cannot benefit themselves in any way from trust assets?
Caroline Brooks-Johnson
Inheritance Law
I used Mr Kessler’s version but, not surprisingly, the two relevant clauses are identical. I have amended them as suggested to allow other key persons to consent where no Independent Trustee is currently a trustee, to avoid having to appoint one. The main area concerns individuals originally appointed as trustees where the client may well envisage that relevant transactions involving them would be highly likely and desirable. This is not so obvious usually with successor trustees.
It is usually fundamental that original trustees at least should be able to benefit from the exercise of dispositive trustee powers. They are often the, or among the, main intended beneficiaries of these. If being a trustee is not to be a bar to benefiting from such powers, some thought needs to be given to the Appointment of New Trustees clause and any power to add a beneficiary to the original eligible class.
The self-dealing rule has a sound objective but care is needed that it does not adversely affect intended beneficiaries.
I only favour an original independent trustee if there is no suitable family candidate or a definite risk of conflict among beneficiaries. Family trustees can get their advice or professional assistance where they wish and need not go to the Supreme Court at the drop of a hat. I am not impressed by an engagement letter written from a firm to partners in it acting as original executors or by some professional trustees’ terms of retirement.
Jack Harper
Where members of the class of beneficiaries are the original trustees the rule is relaxed, enabling them to benefit themselves under the discretion granted to them, otherwise the settlor’s intention would be defeated from the outset.
I discussed this recently: https://www.lawskills.co.uk/articles/2017/07/beneficiary-trustees-solution-strangulation/
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I think non-contentious lawyers, and legislators, should say what they mean in terms. Rebuttable presumptions I leave to litigators and Chancery Counsel, available to all like the Ritz Hotel.
Jack Harper
Thank you. It’s a very useful article and one I wished I had seen before!
Caroline Brooks-Johnson
Inheritance Law
Paul’s article covers the position and problems very well but, referring back to the STEP provision, if incorporated, this only specifically permits a trustee beneficiary appointment if the trustees consist of or include ALL (not some or at least one of) of the originally appointed trustees. In the wills of a married couple, the survivor is usually appointed a trustee with a life interest so problems then arise on the death of the surviving spouse, as the trustees do not then consist of all the originally appointed trustees, so an independent trustee would then be needed;
And,even then, an independent trustee would be needed at all times for administrative powers
Michael Jepson