Variation of Trust

Variation

A variation involves ending the current trust, changing its terms or even setting up a new trust.

Adult Beneficiaries

Where beneficiaries are all of the sound mind, over 18 years of age, all agree to and between them entitled to the whole of the trust fund, they may bring the trust to an end and dispose of the trust property as they wish.

Important

  • All beneficiaries have to agree. If only one beneficiary then this is not required
  • The Court has no power to override the wishes of the adult beneficiaries

Example

Simon declared a trust for the benefits of his three children 10 years ago when they all were minor. Now all three children are over 18 years of age, mentally fit and they all have agreed to end the trust and distribute the property among themselves.

They will be allowed to end the trust or even set up a new trust.

Variation by Court

Where property is held in trust the court may if it thinks fit, approve any arrangement varying the trusts or enlarging the powers of trustees on behalf of

  • Beneficiaries who are infants or lack capacity.
  • Persons who might become beneficiaries in the future…by meeting a specific description or by being a member of a specified class including unascertained persons.
  • Unborn beneficiaries.
  • Persons within the discretionary trust class under a protective trust.
  • Under the Matrimonial Causes Act 1973, section 24, the court may vary the trusts of divorcing couples.
  • Under Mental Capacity Act, the court may vary trusts for patients suffering from mental disorder.
  • The function of the court is to represent beneficiaries who cannot consent for themselves.
  • The court would only allow variation to a trust or approve a scheme which does not run counter to a legitimate objective of the settlor.
  • The variation must be for the benefit of all the possible beneficiaries.
  • The basis of court’s consent to the variation of a trust is based on the reasonableness of variation.
  • The court may also consider non-financial benefits on beneficiary such as moral and social benefits in determining or allowing the variation.

Examples

Example 1

Potential beneficiaries on future events – an example is my grandchild’s husband or wife.

Example 2

Grandchildren or great-grandchildren are quite frequently potential beneficiaries if their parent dies before them.

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.