Property held by two trustees of a Will Trust. Usual Form A restriction on the title. One of the trustees dies. Property needs to be sold and so a second trustee is appointed (solicitor of our firm).
Funds are held in our client account. Beneficiaries of Will trust now want their money. Two questions please:
(a) does the appointment of second trustee (solicitor) for sale of the property extend to dealing with the funds
(b) can we pay to beneficiaries under the trust without the express consent of the lay trustee
Reason for question is that the the lay trustee has gone awol and there is history between lay trustee and other beneficiaries (he’s simply being as difficult as possible!).
We would like to pay out to beneficiaries if trustee powers allow (and there isn’t an issue about lay trustee not giving express consent).
Thank you!
There’s not really any “half-way house” either you are a trustee, or you’re not.
Unless the trust instrument provides otherwise, trustees must act unanimously.
On the basis of the above, my view is:
a) Yes, the second trustee is a full trustee and will need to be involved in dealing with the funds unless they can validly retire in the meantime
b) No, as trustees cannot act unilaterally.
It seems to me that if the lay trustee has gone “awol” the question arises as to whether there is still contact? Hey might be receiving letters, emails, etc. but refusing to reply. Are they entitled to any of the funds now available for distribution? If so, perhaps flagging to them that if they remain uncooperative without good reason, the second trustee may need to apply to court for authority to distribute (or for the appointment of a replacement trustee) and will ask the court to award costs against them (to be deducted from their entitlement?). This might encourage a positive response.
Alternative would be to seek counsel’s view on the possibility of invoking s.36 Trustee Act 1925 to replace them. I suggest counsel be involved as the trustee might object to the use of s.36.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals