Appointment of Trustees

Trustees

The person who is setting up a trust (testator/settlor) is free to select whoever he/she wishes to as a trustee.

  • Any human being can be a trustee except a minor.
  • Minor is someone under the age of 18 years.
  • Minor cannot be a trustee of Land as well.
  • A trust instrument will often indicate who has the power to appoint new trustees.
  • The court might have to identify the person with the powers to appoint new trustees.

Surviving or Continuing Trustees

  • If there is no express power in the trust instrument to appoint a new trustee the other trustees by law have the power to replace a trustee and appoint a new one.
  • If all trustees are dead, then their personal representative has the power to appoint new trustees.
  • Courts will not normally interfere with the choice of new/replacement trustees unless there is an issue of dishonesty and fraud in the appointment of new trustees.

Replacement of Trustees

A trustee can be replaced in the following cases. Law allows for the replacement of trustees without the involvement of court

  • Death of a trustee will call for a replacement.
  • Where a trustee is outside the United Kingdom for continuous 12 months.
  • Where an existing trustee has a desire to be discharged.
  • Where trustees refuse to act.
  • Unfit to act as a Trustee, for example, bankruptcy of a trustee.
  • Incapable of acting as trustee due to old age, mental disorder or illness.
  • Law also allows to appoint up to 4 additional Trustees.

Number of Trustees

  • Minimum one.
  • No maximum number of trustees except if it is trust of land.
  • Maximum 4 trustees are allowed if it is a trust of land.
  • If more than four trustees are nominated in a trust of a land only the first four will hold the legal title.
  • It is advisable to have at least two trustees. (as each trustee can oversee what the other trustee is doing with the trust property)
  • The Trustees must be unanimous about any decision that they take, for practicality reason it is advisable not to have a large number of trustees.

Appointment of Trustees by Beneficiaries

  • Beneficiaries are not generally allowed to appoint the trustees.
  • Beneficiaries are given powers to appoint trustees only where the trust property is a land
  • Beneficiaries can replace their trustees; however, all beneficiaries must agree to a replacement, must be of sound mind and of full age. (i.e. not minors)

Appointment of Trustees by courts

Courts can also appoint and replace trustees in appropriate cases and will consider following factors in doing so

  • The wishes of the person who has set up the trust. (testator/settlor)
  • Whether the trustees have served the interest of all the beneficiaries.
  • Whether trustees have impeded the execution of the trust.

Courts have the powers to remove the trustees to protect the interest of beneficiaries, however, removal of a trustee by the court is a rare occurrence as removing and replacing trustees is an expensive act for the trust and they will only do so to protect the welfare of the beneficiary or to preserve trust property.

Types of Trustees

Trust corporations

  • Advantage, no need to replace dead or retiring trustees.
  • Can work alone or with ordinary trustees, however, usually be a sole trustee.
  • Enough money to compensate for any breach of trust that may occur.
  • The disadvantage, trust corporation may charge a large fee for their services.

Public Trustees

  • Includes all the advantage of trust corporation.
  • Purpose, to provide for small value estate.
  • Public trustees cannot refuse to act just because the value of the property is small.
  • Part of Government and Government will pay for any losses suffered by trust due to the negligence of public trustees.

Custodian Trustees

  • Duty to keep the trust property and documents of title safe, while managing trustees carry out the daily running of the trust.
  • Ordinary trustees/ private individuals cannot be a custodian Trustee.
  • Only Trust corporations, the public custodian and official custodian for charities can be custodian Trustees.
  • Appointed where the trust property is extensively

Judicial Trustees

  • Appointed by courts, when the administration of the trust is broken down or where trust faces problems such as complex litigation.
  • Courts appoint a fit and proper person, normally, accountants, solicitors, or banks as judicial trustees.
  • A beneficiary, trustee, or settlor can apply to the court for the appointment of judicial trustees
  • The judicial trustee is paid and supervised by the court.
  • Courts may also appoint a trustee where there is no trustee or the trustee had died.

Right of Survivorship

  • It establishes that, where there are more than one trustees, if a trustee dies, the remaining trustees can continue with the trust.
  • If there is only one trustee and he/she dies, the court can appoint another trustee and will not allow a trust to fail for the want of a trustee.

Disclaimer (Trust)

  • The general principle is that no one can be compelled to accept the office or duties as trustee against their will.
  • Someone who has been appointed as a trustee and does not want the role, he/she should disclaim as soon as possible before he/she does anything connected to trust.
  • The trustee can disclaim, by drawing up a deed and stating that he/she does not want to act as a trustee.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.