Trustee Delegation Act 1999 – Additional Trustee Without Court of Protection?

Trusts Discussion
1

I would be grateful for views on an interesting point concerning the interaction between the Trustee Delegation Act 1999 and section 36 of the Trustee Act 1925.

Facts

  • Property held on trust under a will.
  • Two trustees- A&B. A is the life tenant under trust (50%) and holds remaining 50% interest in property.
  • Attorney (B) holds a registered LPA for A, who’s lost capacity and holds a 50% beneficial interest under a will trust in a property now under offer and is being sold to fund the A’s care.

Rather than applying to the Court of Protection under s.36(9) TA 1925 to replace the incapable trustee, my view is that the attorney can instead rely upon s.1(1) Trustee Delegation Act 1999 to exercise the donor’s trustee functions and appoint an additional trustee under s.36(6A)–(6D) TA 1925.

The incapable trustee, A would remain in office. The additional trustee would simply join in the sale so that there are two trustees able to receive the purchase monies and overreach the beneficial interests.

The point that has been raised with me is what happens after completion.

It has been suggested that once the land has been sold, the donor no longer has a beneficial interest in land but only in the trust fund/income, with the result that the attorney may no longer be able to exercise trustee functions under the 1999 Act, creating practical difficulties in opening and operating the trust bank account.

A possible solution is to appoint the additional trustee and open the trust bank account before completion, whilst the donor still has a beneficial interest in the land (or capital proceeds), so that the sale proceeds are paid directly into that account on completion.

My questions are:

  1. Do colleagues agree that s.36(6A) can be used in this way without engaging s.36(9), given that the incapable trustee is not being removed or replaced?
  2. Does opening the trust account before completion overcome the concern regarding the attorney’s authority after the sale?
  3. Has anyone successfully completed a sale on this basis, and if so, did HM Land Registry or the purchaser’s solicitors raise any issues?

Any authorities or practical experience would be greatly appreciated.