In our latest blog series our specialist Trusts Team aim to cover some of the most common issues when navigating the administration of Trusts. We are starting things off on the topic of Trustees and the issues which arise when they lose mental capacity.

What are the issues?

The role of a trustee is personal to an individual and cannot be exercised by their attorney or deputy on their behalf.

All trustees should act unanimously so if one is unable to act this will cause issues in administering the Trust properly / making decisions about the Trust. 

What are the solutions?

Where the incapacitated trustee also has a beneficial entitlement under the Trust (i.e. is the life tenant of a life interest trust) they can only be removed and replaced by an order from the Court of Protection; a lengthy and expensive process.

Where the incapacitated trustee does not have any beneficial entitlement under the Trust (i.e. a discretionary beneficiary or not a beneficiary) they can be removed by the other trustees by deed BUT a replacement trustee does need to be appointed in their place.

Unless there is specific alternative provision in the Trust deed.

What can be done to avoid this?

If there are concerns about a trustee’s capacity they should retire as soon as possible whilst they are able to sign a Deed of Retirement (a GP’s opinion may be needed). 

How can we help? 

Porter Dodson’s Trusts Team can assist with the preparation of a Deed of Retirement if the trustee retains sufficient capacity to understand and sign a Deed, or the preparation of a Deed or Removal if the trustee lacks capacity and does not have any beneficial entitlement under the Trust. 

Our Court of Protection team can assist with the application to the Court of Protection where the incapacitated trustee has a beneficial entitlement under the Trust, for permission to replace the incapacitated trustee with a new trustee. 

Whatever your requirements, Porter Dodson are here to help.