TrustsWillsLegal Corner: Should a Spouse or Partner Be Sole Trustee of a Will Trust?

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At WillPack we get a large number of technical queries from our partners. This means the team is often looking into very varied and interesting areas of law. In this feature of the newsletter we will focus on some our more unique queries and pass that knowledge on to you!

Where a testator is considering who to name as a trustee of a will trust, they will often want their spouse or partner to act solely as trustee. There are certainly potential benefits to this where the testator wishes for the spouse or partner to remain in control, however there may be issues caused by this appointment. This week we will consider what issues may arise where the spouse or partner is named as sole trustee of a will trust.

Two Trustee Rule

If the trust contains land or property, the surviving spouse or partner could be named as sole trustee however the testator should be aware that, as this is a trust of land, two trustees would be required in the event of a sale. This would be particularly relevant for Protective Property Trusts and Right to Occupy Trusts where the trusts include powers to move.

If the survivor as sole trustee did wish to move property, they would be required to appoint a second trustee to act alongside them. They could do this by exercising their powers under S36 Trustee Act 1925. The survivor would be able to appoint anyone they wished under these powers. They may also need to incur further costs to create the relevant documents to appoint a second trustee.

Powers to Advance Capital

Where a trust includes powers to advance capital or other overriding powers, there may be concerns naming the spouse as sole trustee if they can also benefit from these powers. This could be a concern if the spouse is the life tenant of a Protective Property Trust or other life interest trust where a power to advance capital to the life tenant is included or if the spouse is a potential beneficiary of a discretionary trust.

If the spouse is sole trustee, they potentially could exercise their powers and distribute capital to themselves with no oversight. Allowing the spouse to be able to transfer all the capital to themselves may defeat the aims of a trust being used. For example, if the aims for a trust are to protect against sideways disinheritance, if the spouse remarries and is sole trustee they may be pressured by a new spouse to transfer to themselves so that the new spouse can access funds.

Spouse’s Death or Incapacity

If the spouse is sole trustee, on their death or mental incapacity this would leave the trust without a continuing trustee. A new trustee could be appointed in these circumstances. If the spouse as sole trustee has died, their personal representatives will be able to appoint new trustees under S36 Trustee Act 1925. If they have lost mental capacity, the beneficiaries of the trust under powers given to them by the Trusts of Land and Appointment of Trustees Act 1996 may be able to name a replacement or alternatively the courts could name a replacement. In either event, there would likely be further costs incurred to appoint the new trustee.

Chris Rattigan-Smith

Please note that we are only insured to provide advice to our partners. If you require any advice we would recommend contacting the Society of Will Writers on [email protected] or 01522 687888 who will be able to put you in contact with a will writer local to you.

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