Trusts are relatively common and the death of a trustee is by no means rare. As trusts can last for up to 125 years, there are numerous reasons why trustees may need to be appointed, retired or removed during the life of the trust, including the following:

• A trustee wishes to retire from the role;
• A trustee loses mental capacity;
• The settlor wishes to remove a trustee;
• The beneficiaries wish to remove a trustee;
• A corporate trustee has dissolved.

The trust deed itself may contain express powers of appointing, retiring and removing trustees. It is usual for the settlor of the trust to retain this power or for an independent person (called an appointor) to be given the power. 

Statutory powers of appointment also exists in Section 36 and Section 39 Trustee Act 1925. These exist alongside any express provisions in the trust deed and can be modified by the trust deed. 

Section 36 provides that where a trustee is dead, remains out of the United Kingdom for more than twelve months, desires to be discharged from the powers conferred upon him, is unfit, incapable of acting or is an infant, the following persons have the power to replace the trustee:

1. the person nominated in the trust deed; or
2. if there is no such person, the surviving or continuing trustees for the time being, or their personal representatives.

Section 39 applies where a trustee wishes to retire without being replaced. You could consequently have a situation where one trustee wishes to retire with replacement and one wishes to retire without replacement, resulting in both Section 36 and Section 39 having to be relied upon.

Incapacitated Trustees
If a trustee loses mental capacity, there may be express powers in the trust deed about the procedure for their removal or replacement.

If there is no such power, the surviving trustees may be able to replace them under section 36(1) because they are incapable of acting. However, if the incapacitated trustee has an interest in possession in the trust property, and co-trustees are seeking to remove him, they must seek permission from the Court of Protection.

There are other ways to remove a trustee who has lost capacity and much will depend on the specific facts and on the terms of the trust itself. Legal advice should be sought to ensure that any intended removal is executed in accordance with the terms of the trust, statute and the correct formalities to avoid it being ineffective. An ineffective removal of a trustee may result in the continuing trustees’ future decisions being invalid. 

This article was written by Eleanor McCabe, one of our specialist private client solicitors and you would be welcome to contact our team for further advice.