Once a trust has been set up, either during lifetime or following the death of a testator, there are a number of ways that new trustees can be named or alternatively that trustees can be replaced. This article will cover the various different ways in which trustees can be appointed or replaced and who can exercise these powers.
Appointment under an Express Power
If a new trustee needs to be appointed, the trust document itself must to be consulted to ascertain whether the trust contains any express powers to appoint new trustees
Appointment by the Trustees
If the trust contains no express power to appoint new trustees, S36 of the Trustee Act 1925 (TA 1925) needs to be considered. S36(1) TA1925 allows for further trustees to be appointed to replace a trustee number of circumstances:
- Where a trustee has died
- Where a trustee remains outside of the UK for more than 12 months continuously
- Where a trustee desires to be discharged
- Where a trustee refuses to act
- Where a trustee is unfit to act
- Where a trustee is incapable of acting (for example due to loss of capacity)
This power is either exercised in writing by a person named by the trust document for the purpose of appointing new trustees, or if none are named then by the surviving/remaining trustees. If there are no surviving trustees then the personal representatives of the last surviving trustee can exercise this power.
Furthermore, S36(6) TA 1925 allows for either a person nominated by the trust deed, or the trustees themselves if none are named, to appoint further trustees in writing to act alongside the current trustees providing that the new appointment does not increase the number of trustees to more than four.
Appointment by the Beneficiaries
Where there is no person nominated by the trust deed to appoint new trustees and the beneficiaries under a trust are of full age and capacity, and are together absolutely entitled to the trust property, the beneficiaries may under S19 of the Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996) make a written direction to the trustees (or to the personal representatives of the last surviving trustee) to appoint the people named in the direction as trustees. This direction may also request a trustee retires.
Appointment by an Attorney
A trustee’s attorney under an Enduring Power of Attorney or Lasting Power of Attorney may in some circumstances appoint an additional trustee under the Trustee Delegation Act 1999. This power is primarily intended to allow a co-owner of land who is the sole attorney for the other co-owner to name further trustees where the two-trustee rule is frustrating the attorney from acting. For more information on this, see our previous article.
Appointment by the Courts
Under S41 TA 1925, the court may appoint new trustees to act. This may be where there is no existing trustee. If there are existing trustees, the new trustees will either act alongside the existing trustees or to replace the existing trustees. The court can exercise this power either when it is expedient for them to do so or where it is difficult or impractical for new trustees to be appointed outside of court. The court may exercise this power on application by either the beneficiaries or trustees of the trust.