Does section 36(9) of the Trustee Act 1925 apply to the removal of a surviving husband as trustee of a nil rate band discretionary Will trust, such that Court of Protection approval is required?
The trust includes the deceased’s 50% share of the main residence. The surviving husband owns the other 50% as a tenant in common and continues to occupy the property.
Section 36(9) appears to apply only where the trustee is entitled in possession to a beneficial interest in the trust property. In this case, the surviving husband is one of the class of beneficiaries of the discretionary trust but continues to occupy the property. Does his continued occupation of the property mean that section 36(9) is engaged, or is the provision limited to someone who has an actual beneficial interest in possession under the trust itself?
“Anonymous”, this is a professional forum not Facebook. Try giving your proper details if you want a proper reply. Are you a professional, or a lay person with a grudge against the husband in your post? Might also help if you say why you want him removed.
I think Sara has been too quick off the mark this time because your previous queries indicate your are a professional adviser.
I am not aware of a decision specifically on the meaning of IIP in s.36(9) but in other contexts it has been held on the highest authority that a discretionary object of a DT does not have anything that can be legally construed as an “interest”, in possession or otherwise.
The main cases are Gartside v IRC. Pearson v IRC (tax cases but decided on the property law issue and especially Lord Walker (whose drafting was on the verge of canonisation) in Schmidt v Rosewood Trust Ltd [2003] UKPC 26 at [40] “the object of a discretionary trust has no more of an assignable or transmissible interest than the object of a mere power”.
This is without prejudice to the need to show that he is “incapable of acting” per s.36(1).
He has two capacities: trustee of 50% and owner of 50%. His replacement as a trustee is unaffected by his other capacity, although if he is “incapable of acting” as a trustee he may well be unable to deal with his own part interest. That phrase is not defined in TA 1925 but almost certainly the Court would consider s.2 MCA 2005 to be relevant.
He may have an LPA attorney who can deal with his part interest but such an attorney cannot carry out his donor’s trustee duties under the DT: that is not possible under s.1(1) TDA 1999 as he does not have a “beneficial interest” in the trust property. That section allows the attorney to act under the co-ownership trust to which his personal beneficial interest is subject.
Note that both the TA and the TDA are subject to provisions in the trust instrument.