Chapter 6: Appointment, retirement and removal

• Original Trustees


  The trustees are usually appointed by the settlor in the trust instrument. If not, the court can appoint trustees. A trustee must have notice of the trust and expressly or impliedly accept the office of trustee. They are not obliged to accept the trust, and before acceptance, a trustee can disclaim or refuse appointment for any reason. However, a trustee cannot accept a trust in part and disclaim it in part.
• Number of Trustees


  • There is no minimum number of trustees, but if the trust property is land, at least two trustees or a trust corporation are required to give a valid receipt for capital money arising on sale of the land. The maximum number of trustees for a trust of land is four. There is no maximum for a trust of pure personalty.
• Subsequent Appointment


  Once the trust has been created, the settlor does not have power to appoint new trustees unless there is an express provision in the trust instrument giving the settlor such power. In the absence of special provisions in the trust instrument, the statutory rules on appointment, retirement, and removal of trustees apply.
• Additional Trustees


  Unless a trustee is a trust corporation, a person may be designated in the trust as having the power to appoint additional trustees; otherwise the existing trustees have this power. However, this power may not be used to increase the number of trustees to more than four, even if the trust property does not include land. An appointment by deed will operate to vest land and chattels in the new trustees.
• Additional Trustees


  • Tim and Tessa are trustees holding a large portfolio of shares on discretionary trusts for a defined group of beneficiaries. They wish to appoint Anna, an accountant, to share their duties. The trust instrument does not include any special administrative powers. Tim and Tessa may together appoint Anna as a third trustee.
• Replacement Trustees


  One or more new trustees may be appointed to replace a trustee who: Dies; Refuses to act; Remains outside the UK for a continuous period exceeding 12 months; Is unfit to act (for example, by committing a breach of trust or by being a bankrupt); Is incapable of acting (for example, by mental incapacity or infirmity); or Desires to be discharged.
• Who May Appoint Replacement Trustees

  The appointment of a replacement trustee must be made by: The person named in the trust instrument (if any); or if none, The surviving or continuing trustees; or if none, The personal representatives of the last surviving trustee; or if none, The court.
• Replacement Trustees


  • Tina and Tom are trustees, holding shares in various companies on trust for Tina's children and grandchildren. Tom wishes to retire. The trust instrument does not give any special powers to appoint trustees, Tina and Tom may together appoint one or more new trustees to replace Tom. Sam and Jane are trustees, holding land on trust for Ben, who is 10 years old. Jane dies, Sam may appoint one or more trustees to replace Jane, although he may not increase the number of trustees to more than four, since the trust includes land.
• Power of Beneficiaries


  Beneficiaries have no general powers to control the trustees unless a breach of trust has been committed. However, under certain circumstances the beneficiaries have the power to select trustees. The power applies where: There is no person nominated in the trust instrument to appoint new trustees; The beneficiaries under the trust are of full age and capacity, and taken together, they are absolutely entitled to the trust property; and The beneficiaries act unanimously.
• Power of Beneficiaries


  • Trustees are holding property on trust for Lucy for life with remainder to Robert. The trust instrument does not give any special powers to appoint trustees. Both Lucy and Robert are over 18 and of sound mind. Taken together, Lucy and Robert own the whole equitable interest. They may direct the existing trustees to retire and appoint new trustees of Lucy and Robert's choice.
• Trustees are holding property on trust for Len for life with remainder to Ruth, provided Ruth is living at Len's death. The trust instrument does not give any special powers to appoint trustees. Both Len and Ruth are over 18 and of sound mind. Taken together, Len and Ruth are not absolutely entitled to the trust property. Ruth's interest is contingent on her surviving Len. Therefore, power to select new trustees does not apply.
• Power of the Court


  The court has the express power to make an order appointing new trustees either in substitution for or in addition to existing trustees whenever it is expedient to do so, and it is found inexpedient, difficult, or impracticable to do so without the assistance of the court.
• Power of the Court

  • The two trustees of a discretionary trust cannot agree on the manner of distribution of the funds. Neither is prepared to resign. Either trustee or any adult member of the class of potential beneficiaries could apply to the court under this provision. The court could remove either or both trustees and appoint new trustees to replace them.
• Checklist of key rules concerning trustees

  • Appointment: Once trust created, Settlor has no power to appoint trustees unless that power is reserved in the trust instrument; The power to appoint usually rests with continuing/retiring trustees; Personal representatives of a deceased trustee have the power to appoint only when a sole trustee dies; Beneficiaries have no power to appoint trustee unless all are of full age and together absolutely entitled
• Retirement


  A trustee may retire from office without being replaced provided that: (1) they obtain the consent by deed of all their co-trustees and the person (if any) given power to appoint new trustees by the trust instrument; and (2) they leave in office at least two trustees or a trust corporation. Alternatively, a trustee wishing to retire may do so by procuring the appointment of a new trustee or trustees in their place on the basis that they "desire to be discharged".
• Removal


  A trustee may be removed from office without their consent: For the reasons listed above with respect to appointing replacement trustees (for example, incapacity, bankruptcy); By the beneficiaries in the circumstances described above; and By the court (for example, for a significant breach of trust).