I have been asked direct the following:
A will contains STEP provisions 1st edition. An Appointment in favour of a trustee does not include an independent trustee. Is this void or voidable based on the wording of STEP provision 9(3)?
This is a follow up to the same question I asked on TDF in 2016, as this person has the same issue.
The difficulty with the STEP provision is that it does not make it clear if the powers that “may be used to benefit a Trustee” if there is an independent trustee, cannot be used if there is not. If it was intended to be otherwise prohibitive, I would have expected James Kessler to have used clearer language to this effect.
Therefore the conclusion I came to, and Practical Law came to the same one when I put the question to them, was that the provision was only trying to deal with the conflict issue where there would otherwise be a breach of fiduciary duty, but if this was not followed, and there was in consequence a breach, the appointment would be voidable on the application of a beneficiary, rather than void.
Like Simon, my understanding is that in these circumstances the appointment is voidable on the application of a beneficiary.
The situation needs to be differentiated from that where, for example, the trust instrument directs that an appointment may only be made where there is a certain minimum number of trustees, or where an appointment may only be made by deed, where a failure to comply with such requirement renders the appointment void ab initio, rather than merely voidable.
Practical Law discusses the rules which may render the exercise of a power void. One of these rules is where there is a defect in the exercise of a power such as (mentioned in Pitt v Holt) the want of a requisite formality. PL goes on to provide an example of want of a requisite formality as being the settlor/testator imposing the precondition of requiring the trustees to obtain professional advice before the power is exercised. PL states that if such a precondition is imposed, any purported exercise of the power without fulfilling the precondition is void.
So is your interpretation of STEP provision 9(3) that it is NOT a precondition imposed by the settlor/testator (that the power can only be exercised with an independent trustee)?
Yes-I do not believe the language is such that you can call it a precondition to have an independent trustee.