I am acting for A in connection with his mother’s estate. His mother owned a half share in her home. She had a life interest in the other half under a trust in her late husband’s will and this comes to an end on her death.
The property is in the joint names of my client A and his sister B as trustees. B lives in Italy and lacks mental capacity. Her son has been appointed by the court in Italy to handle her affairs. I understand there is no equivalent of LPAs in Italy. She has a beneficial interest in the property as she is one of the remaindermen under the life interest trust.
B will need to be replaced as a trustee so that the property can be sold. There seems to be potentially 2 ways of doing this:
-We could try appointing a replacement trustee under s36(1) Trustee Act 1925 on the basis that B has been out of the country for 12 months. I think this would require a TR1 supported by a stat dec or statement of truth.
-We could apply under s36 (1) to replace B because she lacks capacity. However, as she has a beneficial interest in the trust, normally Court of Protection approval is required. Although she is outside the COP jurisdiction, I think the COP can make an order where there is property in the UK. However, I am not sure if s36(9) Trustee Act overrides anything previous in the section, ie you need COP approval because the trustee lacks capacity even if she is outside the country.
I am wondering whether anyone has come across this situation before and knows if COP approval is required.
I suggest that s.36(9) has no geographical limit so far as the trustee beneficiary is concerned, and so would apply.
Whilst the trustee beneficiary could have been removed at any time on the basis that she is outside of the country, I am inclined to the view that her loss of capacity would override that route.
I am too often surprised to find that trustees who are known to be losing capacity are not advised/encouraged to retire whilst they are still have the capacity to do so.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Many thanks Paul for your comments.
