I have inherited a matter where H & W created a Discretionary Settlement in 2018. H & W were the settlors and appointed themselves the trustees of the settlement.
The asset in the settlement was their residence. The beneficiaries are themselves, their children (S & D) and remoter issue and spouses of children and remoter issue.
Both settlors have lost capacity and have registered LPAs appointing S & D as attorneys. The Settlement says “during the lifetime of the Settlors the power of appointing new trustees shall be vested in the Settlors of the survivors of them”.
Both settlors are in care and no longer have capacity, from my research I do not think that the LPAs allow the S & D to step into the role as trustees and I believe that they will need to make an application to the COP to replace their parents as trustees.
S & D wish to sell the property now their parents are in care. I do not know why the trust was put in place but I think the LA is likely to see the property as still beneficially belonging to H & W and considering this withing their assets. So I don’t need advice on this point just how we need to proceed so that the property can be sold.
How you proceed will depend on whether the settlors have a beneficial interest in the trust property. The attorneys will only have authority to act on behalf of the donors in their capacity as trustees if the donors have a beneficial interest. If the settlement is entirely discretionary (i.e. it does not provide that the settlors have a life interest that then goes into a discretionary trust, as is often seen in these circumstances) then I would agree that the attorneys cannot act in the trustee role. Section 1 of the Trustee Delegation Act 1999. If the settlors did retain a right to income then I consider that the LPA will allow the donors to act in their place as trustees.
You mention applying to COP. Under s.36 of the Trustee Act 1925 an application is required to the COP only if the trustee who is being discharged has a beneficial interest. The COP function is to manage the finances of incapacitated parties. If the settlors do not have a beneficial interest in the property this is not within the COP remit.
I do not consider that s.36 will be of any help to you as there are now no trustees able to act.
If this is entirely a discretionary trust I do not consider that TOLTA section 19 will assist which would have enabled the beneficiaries to make a direction that new trustees are appointed.
I consider that you will need to apply to the court to have new trustees appointed under section 41 of the Trustee Act.