Posted: Monday, 11 May 2020 @ 11:44
How Do You Go About Attacking the Conduct
of an Errant Trustee?
The trust instrument?
First focus on
the trust instrument.
instrument is the document which creates or sets out the terms of the trust. It
can be something as straightforward as a will which leaves assets to minor
children, a settlement deed or declaration of trust comprising many pages.
is, there is a pretty good chance that it will set out, or refer to / amend
legislation which sets out, the trustees’ powers and duties.
Focus on the legislation
also be removed without the court’s intervention by fellow trustees if one or
more of many conditions is met. These conditions are set out in s.36 Trustee
Act 1925 which provides:
“(1) Where a trustee, either original or
substituted, and whether appointed by a court or otherwise, is dead or remains
out of the United Kingdom for more than twelve months, or desires to be
discharged from all or any of the trusts or powers reposed in or conferred on
him, or refuses or is unfit to act therein, or is incapable of acting therein,
or is an infant, then, subject to the restrictions imposed by this Act on the
number of trustees,
(a) the person or persons nominated for the
purpose of appointing new trustees by the instrument, if any, creating the
or (b) if there is no such persons, or no such
person able and willing to act, then the surviving or continuing trustees or
trustee for the time being, or the personal representatives of the last
surviving or continuing trustee; may, by writing, appoint one or more other
persons (whether or not being the persons exercising the power) to be a trustee
or trustees in the place of the trustee so deceased, remaining out of the
United Kingdom, desiring to be discharged, refusing, or being unfit or being
incapable, or being an infant, as aforesaid.”
s.36 (9) Trustee Act 1925 which lays down that where a trustee who lacks
capacity is also a beneficiary of the trust then it is necessary to make an
application for that person’s removal to the Court of Protection; the court
which deals with matters of physical and mental welfare.
How to Prove That the Trustee Is Unfit?
This can be
very subjective and will be disputed. Being ‘unfit’ depends on the
circumstances of the case.
person who has been made bankrupt or convicted of a fraudulent offence will
most likely be deemed to be unfit to act as will a trustee guilty of a
significant breach of trust or of acting in a way which causes a conflict as
between their personal position and their duty to the beneficiaries, known as
their ‘fiduciary duty’.
Even if a
trustee is removed under s.36 Trustee Act 1925, it is entirely possible that
they could challenge such a decision by way of court action.
Further, as is
clear from s.36 Trustee Act 1925, this remedy is not automatically available to
beneficiaries unless they are also trustees or they have power to remove
trustees under the trust instrument.
If none of the
above remedies are available then, then focus on the court to remove a trustee.