Changing trustees

By Tolley
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The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Changing trustees
  • Death of a trustee
  • Retirement of a trustee
  • Removal of a trustee
  • Indemnities
  • Declaration as to residence
  • Vesting of trust property
  • SDLT

This guidance note should be read in conjunction with the Appointment of trustees guidance note, which considers the office and appointment of trustees generally, as well as with the Trustee’s powers and duties guidance note.

This guidance note considers the instances where trustees might step down, or be removed or replaced.

Death of a trustee

When a trustee dies in office, the remaining trustees carry on unaffected. There is no need to record the trustee’s death in a deed; though if he is replaced, it should be noted as a recital in the deed affecting the new appointment.

It is important for the remaining trustees to store a copy of the deceased trustee’s death certificate with the trust deeds to show why he is no longer a trustee. This is particularly relevant in the event of a sale of trust property, and will be necessary to prove that the selling trustees have good title to the trust assets.

Retirement of a trustee

There will often be a clause in the trust instrument governing the retirement of trustees but if not, the statutory provisions in the Trustee Act 1925 will apply. Different clauses govern the retirement of trustees depending on whether the outgoing trustee is being replaced or not.

Retiring trustee being replaced

Where a new trustee will be appointed in place of an outgoing trustee who wishes to retire, Trustee Act 1925, s 36 will apply. A new trustee can be appointed by the persons nominated in the trust deed, or by the continuing trustees.

Retiring trustee without replacement

Where an outgoing trustee who wishes to retire is not being replaced, Trustee Act 1925, s 39 applies. This section allows retirement as long as:

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