Varying Trusts

What is the rule in Saunders v Vautier?

If all of the potential beneficiaries of a trust are of full age and capacity, and are absolutely entitled to the trust property, they are able to bring the trust to an end and share out the assets in whatever proportions they decide, or resettle the assets on agreed terms [Saunders v Vautier 1841].

How does Section 57 Trustee Act 1925 operate?

Section 57 of the Trustee Act 1925 deals with the court’s power to authorise dealings with trust property:

“Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, if any, as the court may think fit and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.”

The purpose of Section 57 is to ensure that the trust property is managed as efficiently as possible and authorise specific dealings with the trust property that cannot otherwise be carried out due to insufficient power to do so.

The authority sought must be in the best interest of the trust as a whole and the power is limited to the “management or administration” of the trust only.

How does Section 64 Settled Land Act 1925 operate?

Section 64 of the Settled Land Act 1925 provides a general power for the tenant for life to effect any transaction under an order of the court:

“Any transaction affecting or concerning the settled land, or any part thereof, or any other land (not being a transaction otherwise authorised by this Act, or by the settlement) which in the opinion of the court would be for the benefit of the settled land, or any part thereof, or the persons interested under the settlement, may, under an order of the court, be effected by a tenant for life, if it is one which could have been validly effected by an absolute owner.”

This power is not limited to managerial or administrative actions.

What is the Variation of Trusts Act 1958?

The Variation of Trust Act 1985 empowers the court if “it thinks fit” approve on behalf of certain categories of person any arrangement varying or revoking all or any of the trusts provided that the carrying out of the arrangement would be for the benefit of that person.

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