Q&A - Can a trustee be removed and replaced if they become incapacitated?

01/11/2014

Q: I am one of three trustees appointed to handle the financial affairs of our mutual godson when his parents died. All has gone smoothly so far but one of the trustees is getting on in years and I wonder what would happen if he were to lose mental capacity. Could we remove him as a trustee?

A: The short answer is yes, though how you removed the incapacitated trustee would depend on circumstances. Some trust deeds contain an express power for removal and replacement of a trustee, although this is rare and even if such power exists, careful attention would need to be paid to the specific terms of the power.

Alternatively you could use the power contained in Section 36 of the Trustees Act 1925 which is specifically for the removal and replacement of trustees who are incapable of acting. To utilise this power you would almost certainly need to get consent from the Court of Protection and you would need to prove to the court that your reason for requesting the removal and replacement of the incapacitated trustee was wholly valid. Whether a person has capacity in a particular matter depends on whether they are able to perform the specific role required of them, not on some general notion of their capacity as a whole.

In some cases trustees are not able to make use of the s36 power; there could be a dispute between the trustees over the removal and replacement, or incapacity is not proven because medical evidence cannot be obtained. If this happens and there is no express power in the trust deed you would have to apply to the court for removal and replacement under s41 TA 1925. Your first port of call, however, should be to seek legal advice from a solicitor.

Victoria Wilson

Victoria Wilson

Partner

A Partner and Part of our Probate, Wills, Trusts and Tax team in Oswestry