Settlor's power of appointment

If a Settlor of a trust (who is not a trustee) has a power of appointment of new trustees and is then declared bankrupt, assuming the trustee in bankruptcy is satisfied that the trust can remain, can the settlor still appoint a new trustee?

Paul Mounce
Graham & Rosen


“property” for Insolvency purposes includes any power exercisable by the bankrupt over or in respect of trust property unless it cannot be exercised for the benefit of the bankrupt (IA 86, section 283(4)) and the prior and underlying common law position was that powers were generally distinct from property.

If the settlor is not a beneficiary (ideally excluded) then it appears to be reasonably clear. I would still say yes, but with less certainty, if he is a beneficiary.

See also TMSF v Merrill - albeit that was a power of revocation (and a Turkish trustee in bankruptcy) so the Court found for the claimant and appointed a receiver over the power.

Andrew Goodman
Osborne Clarke LLP