If I use power under section 20 TLATA 1996 for beneficiaries to replace the trustee who lacks mental capacity, do I still need court of protection approval for the replacement if the trustee has IIP under the trust?
Whitehouse & Hassall (2nd Edition) @ 3.24 states “In the case of s.20, it is assumed that the person receiving a written direction in accordance with s.20(2) will make the appointment; for s.20 to have any force, the relevant authority must implicitly be conferred in s.20 itself, given that the person will have no authority under the Trustee Act 1925, s.36.”
There is no explicit reference within any of the text to s.36(9), although the general statement would appear to cover the position, but is it sufficient to provide the necessary level of comfort – probably not.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
In my view the key to this is in s20(1)(b). The person receiving the direction in subsection (2) seems intended by the statute to stand in the shoes of the non-existent person in (1)(b) and the ineluctable conclusion is that the directed person will have to use s36 just as the missing person would have had to.
Given the type of person within (2) there will at least not be the anguish and palaver of being sure that the relevant trustee is indeed incapable within s36(1).
The dilemma is that s39(9) seems to conflict with a direction to a person within s20(2)(a) or (b). There are 2 possibilities. The later Act is to be taken to have been passed by Parliament in full awareness of the earlier Act so the latter impliedly trumps the former in resolving any apparent conflict. Or that s20(2)(c) is the only alternative where s39(9) is in point.
This is not an academic point because actions of an invalidly appointed trustee are void not voidable and so open to challenge by anybody with standing I.e. suffering or liable to suffer a detriment. Risk of that is reduced if the beneficial interest of the replaced trustee is scrupulously accommodated to avoid any causative loss.
It is possible that a deputy will be unwilling to take the risk. A lay attorney with the conscience of a well-trained hippopotamus (an invaluable lay characteristic when irritating lawyers disagree or wimp out and nasty costs are in sight) might well be content look down the wrong end of the telescope to the cheapest conclusion.
In the absence of precedent (I am unaware of one but have not definitively researched this) even an opinion from one of my learned friends might not be definitive and he or she might be better instructed to seek directions from the Court. That anyway must the po-faced view of myself as an irritating lawyer in Pooh Bah mode. Rotten statutes (most egregiously of the tax variety) regularly expose the public to wholly unnecessary costs in clarifying points the framers of the law in question carelessly or recklessly left self-evidently (to everyone else) in a state of culpable ambiguity at the tender mercies of the judiciary.
Jack Harper
Practical Law says a COP application is required where s36(9) is involved. Not my bailiwick and no access to Heywood and Massey, 22-021
Jack Harper