Removal of a Trustee

I am trustee for a Will trust along with the mother of the minor beneficiaries.

The minors at 18 and 16.

The mother has significant debts and money issues and is making requests for the Wills to varied so the 18 years old share passes to her and now this requests has been refused she is asking for capital to be advances to the 18 year old for cost of living so he can loan it to her and also asking when the income will starting being paid to her son so he can give it to her.

Do you think this is sufficient grounds for me to ask the court to remove her as a trustee.

Thank you for your help

Rachel Stafford

I doubt it. She can go on asking and you can go on refusing to exercise any power that requires unanimity. However, you have a duty too, which any beneficiary and the other trustee can force you to carry out.That is to actively consider whether, if it is in your power, to distribute income or capital to a beneficiary who is contingently entitled to it if you decide and whether it is proper to do so, recording your decision. You do not have to divulge your reasons if you record them in a separate document though the drafting should prudently assume you might be forced to, however unlikely. You must not exercise your discretion to distribute if there is a serious risk that the funds will not be spent on the children, which would be a “fraud on the power”, although it is permissible for their mother to enjoy an incidental benefit. You do not say exactly what rights to income and capital the children have. These may be vested or about to vest thus giving the children rights overriding your discretions but the reverse may also be tue.

In current times the family may be hard up (albeit exacerbated by the mother’s financial incontinence) and a judge might think that you should at least consider practical ways of helping the children. There might be expenses which you could meet directly, having sole charge of the process, even if that also benefits their mother by relieving her of them.

The idea that the trust could be varied to benefit her directly is preposterous and almost certainly unlawful outside of a VTA 1958 action, likely in any event to be unsuccessful.You need to consider the ages of the children and whether they become entitled to income after they attain 18 together with any accumulations, taking into account s31 TA 1925 unless excluded or varied. She will obviously not agree to your exercising your s32 power to defer the childrens’ right to income and preserving your discretion until say 25. Her refusal if self-serving might be grounds for removal and replacement. Similarly with the right to capital. You cannot stop them having it once it vests and they are over 18 unless the trust, as is the modern fashion, contains overriding powers. We cannot see the document on here and I have no mind-reading faculties despite my wife’s implicit firm convictions!

The younger child cannot give a valid receipt and a specific power to accept the mother’s instead almost certainly requires unanimity. You do not mention the quantum of income involved. You can insist on a receipt from the older child for any income you must pay to him and that you will only pay into an account in their sole name. I fear that there is not much you can do to prevent an onward gift to the mother unless family law affords a remedy, not my area I regret, but which probably requires her conduct to cross a line as borne out by the wider facts.

Jack Harper

The Will states the gift is to x and y upon attaining the age of 25

I have now received a further request for a capital to be release to the child so he can loan it to the mother to help with the cost of living crisis (all emailed are from the mother / trustee and not the child)

The cash has not be realized yet as it part of a house which is being sold and so we still need to take advice from an IFA. The value of the gift will be around ÂŁ100,000 for each child. the mother / trustee is already receiving around ÂŁ200,000 from the estate.

I think it is seriously dangerous for you to advance capital under s32 unless you hear directly from the children on their own. At their ages one could expect them in principle to understand the issues, though some undue influence seems both unavoidable and beyond investigation or proof. You can then judge whether it is proper to act. Will the children or either be at a disadvantage if you refuse.

If the request from the mother is as blatant as you indicate your risk of fraud on the power is a legal justification unless the disadvantage would be very serious. There seem also to be other funds available to the mother who apparently gives no reasons for needing a loan. In these circumstances you need to envisage yourself as a defendant to an action for breach of trust by the children, egged on by their future partners and even the mother, for wrongly distributing or rather for refusing to do so. I suggest the latter is preferable.

Jack Harper

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