Minimum numbers/ specified identity of trustees

I am dealing with a number of family trusts. In relation to each trust, within a previous deed of appointment/ retirement of trustees there is a declaration of intention by the settlor (or in the case of some of the trusts where the settlor has died, by the trustees at the time) that there should be a minimum of 3 or 4 trustees, and also specifying who those trustees should be (effectively that there should be at least one from each branch of the family). The relevant clauses are headed ‘Declaration of intention by [Settlor/ Trustees]’ and the wording is ‘There shall be a minimum of three/ four [depending upon the trust] trustees of the Settlement at all times, two of whom shall be…’

The family is splitting the trusts so that each trust will now benefit one branch or other of the family, so the minimum numbers of trustees, and the requirement that both branches of the family are represented as trustees, are both redundant.

My query is whether these ‘intentions’ are binding, either in relation to the number or identity of the the trustees, and if they are, what we can do to update the position? I did not think that anyone can be compelled to be a trustee, so if nothing else I do not think the requirement for certain individuals to act would be enforceable?

Thank you for your guidance.

Alison Elwess
Adie Pepperdine Ltd

I don’t see how the settlor can impose this requirement once the settlement has been established. He or she has no special power to add/vary provisions of the settlement (unless of course there is a provision to that effect!).

To that end, I’d say it is just an expression of intention and wish for the future. It should be a factor in future trustee decisions to appoint their replacements but is not binding and it sounds as though they have perfectly reasonable reasons for going in a different direction.

Andrew Goodman
Osborne Clarke LLP

Use of the word” shall” indicates the requirement is mandatory, and not merely a wish.

I believe it may be necessary to apply to court to vary the provision, otherwise any purported appointment, or retirement, of trustees may be invalid leading to more complications.

I suggest you should take guidance on the way forward from Chancery counsel.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

I’ve now seen Andrew’s post and realise that I had missed that the “intention” may have only been included in a later deed, not the original trust instrument.

The question, therefore, must be whether the trustees had were purporting to add this requirement (was it merely a repeat of what might have been in the original trust instrument) and, if so, do they have any power to do so? If, for example, the trustees have power to appoint new trustees upon such terms as they see fit, the imposition of the requirement might stand. However, if it is a valid limitation, can it be removed as easily as it was added? I suspect not.

I am still inclined to Chancery counsel providing guidance, especially as the situation is unusual and there could be (potential) disharmony within the family behind the need to separate out the trust interests.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

The ‘intention’ was indeed added in a later document, and was not included in the original settlement. (If the minimum number of trustees was in the original settlement, I don’t think there would be any doubt about its validity, although I would still query whether a stipulation as to the identity of trustees was enforceable - what if a nominated individual lacked the capacity/ inclination to take on the role of trustee?)

In each of the original settlements, the Settlor has power to appoint new trustees during their lifetime. However, there is nothing to elaborate on the Settlor’s power to appoint trustees, and in the absence of the Settlor the usual statutory powers apply to the appointment of trustees.

Beyond the typical power for the trustees to amend the administrative provisions, there is nothing in the original settlement giving anyone power to alter the original settlement. My feeling is that stipulations about the number and identity of the trustees goes beyond the merely administrative, and that therefore neither Settlor nor trustees had power to add such a requirement after the original creation of the settlement. Would you concur?

Thanks again for your input,