Vulnerable person trusts are established to protect and manage the assets of individuals who lack the mental capacity to do so themselves. These individuals may suffer from conditions such as dementia, Alzheimer’s disease, or severe learning disabilities. The trust provides a framework for managing their finances, property, and other assets in their best interests.
One of the key questions that often arises is whether a trustee has the power to modify the terms of a vulnerable person trust. This article will explore this issue in detail.
Please click here to find out more about our Wills, Trusts and Lasting Power of Attorney Services.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you deal with the legal implications of creating a Trust, get in touch with us today. We are also experienced in dealing with all aspects of Wills and Probate and we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
The Importance of Trust Terms
Vulnerable person trusts are typically created by a will or a deed. These documents outline the specific terms of the trust, including:
- The identity of the beneficiaries: This usually includes the vulnerable person themselves, as well as any other individuals who may benefit from the trust, such as family members or care providers.
- The identity of the trustees: These are the individuals responsible for managing the trust assets and making decisions in the best interests of the beneficiaries.
- The purpose of the trust: This may include providing for the beneficiary’s care, education, and general welfare.
- The powers and duties of the trustees: This outlines the scope of the trustees’ authority and their responsibilities in managing the trust.
The Principle of Sanctity of Trust Terms
Generally, the principle of sanctity of trust terms holds that trustees must adhere to the terms of the trust as set out by the settlor (the person who created the trust). This principle ensures that the settlor’s intentions are respected and that the trust operates in accordance with their wishes.
Circumstances Where Modification May Be Possible
Despite the principle of sanctity of trust terms, there are certain circumstances where a trustee may be able to modify the terms of a vulnerable person trust. These include:
- Implied Powers:
– Trustees may have implied powers to take actions that are necessary or expedient for the proper administration of the trust.
– For example, if the trust provides for the beneficiary’s education, the trustees may have the implied power to choose the most suitable educational institution, even if the trust instrument does not specify a particular school.
- Variation of Trusts Act 1958:
– This Act provides a statutory framework for modifying the terms of certain trusts, including those for minors and beneficiaries with disabilities.
– The Act allows the court to vary the terms of a trust if it is satisfied that it is in the best interests of the beneficiary to do so.
– This power is typically exercised in situations where the original terms of the trust are no longer suitable or appropriate due to unforeseen circumstances, such as a change in the beneficiary’s needs or circumstances.
- Court Orders:
– In some cases, the court may order a modification of the trust terms.
– For example, if the trustees are in dispute about how to administer the trust, the court may intervene and make a determination as to the appropriate course of action.
- Consent of Beneficiaries:
– If the beneficiary has the mental capacity to understand the proposed modifications, their consent may be necessary for any changes to be made.
Factors Considered by the Court
When considering whether to modify the terms of a vulnerable person trust, the court will carefully consider the following factors:
- The best interests of the beneficiary: This is the paramount consideration. The court will assess whether the proposed modifications are truly in the best interests of the beneficiary, taking into account their current needs, circumstances, and future prospects.
- The settlor’s intentions: The court will strive to uphold the settlor’s intentions as far as possible, while also ensuring that the trust serves the best interests of the beneficiary.
- The nature of the proposed modifications: The court will carefully scrutinise the proposed changes to ensure that they are reasonable, necessary, and proportionate.
- The views of the beneficiary (if capable): If the beneficiary has the mental capacity to understand the proposed modifications, their views will be given significant weight.
Examples of Modifications
Some examples of modifications that may be permitted include:
- Changing the investment strategy: If the original investment strategy is no longer appropriate, the trustees may be able to modify it to better suit the beneficiary’s needs and risk tolerance.
- Adjusting the distribution of income and capital: The trust may be amended to provide for increased or decreased distributions to the beneficiary, depending on their changing needs.
- Making provision for unforeseen expenses: The trust may be modified to allow for the payment of unforeseen expenses, such as medical treatment or care costs.
- Changing the beneficiary’s residence: If the beneficiary’s needs change, the trust may be modified to allow for a change in their place of residence.
How we can help
We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Wills and Probate Solicitors
It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Comments are closed.
