Q&As

Does the restriction in section 36(9) of the Trustee Act 1925 (TA 1925) (requiring the Court of Protection’s approval before an incapacitated trustee is replaced under TA 1925, s 36(1)) apply to the replacement of a trustee of a discretionary trust who is also a potential beneficiary of the trust?

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Produced in partnership with Graham Stott of 3 Paper Buildings
Published on LexisPSL on 13/07/2021

The following Private Client Q&A produced in partnership with Graham Stott of 3 Paper Buildings provides comprehensive and up to date legal information covering:

  • Does the restriction in section 36(9) of the Trustee Act 1925 (TA 1925) (requiring the Court of Protection’s approval before an incapacitated trustee is replaced under TA 1925, s 36(1)) apply to the replacement of a trustee of a discretionary trust who is also a potential beneficiary of the trust?

Does the restriction in section 36(9) of the Trustee Act 1925 (TA 1925) (requiring the Court of Protection’s approval before an incapacitated trustee is replaced under TA 1925, s 36(1)) apply to the replacement of a trustee of a discretionary trust who is also a potential beneficiary of the trust?

It is important to realise that incapacity does not discharge a trustee from their appointment as a trustee, particularly if the person, prior to losing capacity, delegated their function under an enduring power of attorney or a lasting power of attorney.

An application to replace (not remove) a trustee under section 36(1) of the Trustee Act 1925 (TA 1925) is made by the continuing trustees or such person who has power to appoint trustees under the trust instrument. TA 1925, s 36(9) provides that a replacement trustee may not be appointed on the basis that the trustee to be replaced lacks capacity, without permission from the Court of Protection.

TA 1925, s 36(1) 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,

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