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Preserve it and save: how conditional exemption can protect your heritage... and your wallet
Charles Richardson
When a trust is established, the person creating the trust (known as the "settlor") typically appoints trustees to become the legal owners of the assets within the trust, which they manage for the benefit of others (known as the “beneficiaries”). For example, after a person's death, a trustee may distribute capital and income from the deceased’s assets held in a Will trust to the beneficiaries named in the deceased's Will.
To act as a trustee, an individual must have the capacity to understand their role and responsibilities.
If an individual's capacity is in question, the same two-stage capacity test (described in Blog 1) is applied. The capacity assessment should examine the individual’s understanding of their duties as a trustee, their ability to solve any potential issues they may face in the role, and their general knowledge of financial management.
What happens if an individual lacks capacity to act as a trustee?
If an individual is set to be appointed as a trustee but is found to lack the capacity to do so, they will not be able to take on or perform the duties of a trustee.
If an individual has already been appointed as a trustee but later loses their capacity, it is usually possible to remove and replace them. However, this process can be complex, and the power to remove the trustee may come from the trust document itself, the Trustee Act 1925, or through an application to the Court of Protection.
In cases where the individual who lacks capacity has a Deputy appointed to manage their property and affairs, the Deputy may apply to the Court of Protection under Section 36 of the Trustee Act 1925 to act on their behalf as a trustee.
How we can help
We have extensive experience in making applications to the Court of Protection and assisting with the management of trusteeships. If you need support with these matters, please don’t hesitate to contact us. Our team can guide you through the process and help ensure that the right decisions are made for those who lack capacity to act as trustees.
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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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