The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
In some circumstances, it might be desirable to partition a trust, that is to break the trust by dividing up the assets between the beneficiaries. The term partition is usually applied to a division of assets between the life tenant and the remaindermen beneficiaries (thus bringing the trust to an end). It can also refer to splitting a trust into separate funds, which then operate independently under new trusts (and may have different beneficiaries and trustees).
Although there is some overlap between ‘partition’ and ‘resettlement’, the latter more often refers to a re-organisation within the trustees’ existing powers, whereas partition requires approval by the beneficiaries. See the Resettlements and variations guidance note.
Reasons for partition might include:
the expiry of the rationale for the trust
specific beneficiary needs
a desire to reduce trust administration costs, or
a breakdown in relations between the beneficiaries
Where the beneficiaries wish to bring the trust to an end by mutual agreement, whether or not the trustees agree, this can usually be achieved under the rule in Saunders v Vautier, provided certain criteria can be met.
Trustees of trusts of land can also bring about a similar outcome between co-owners of the entire beneficial interest in the property that is subject to the trust of land, provided they all consent. This is under the Trusts of Land and Appointment of Trustees Act 1996.
Whilst originally serving as authority for beneficiaries to stop accumulations of income, the case of Saunders v Vautier< has developed well beyond that. Mummery LJ confirmed in <
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