How can we remove a Trustee of our Charitable Trust who has lost capacity?

One of the founding trustees of a Charitable Trust started to develop dementia.  The other Trustees had noticed at meetings that she would lose concentration and become confused very easily.  On the suggestion of her family, she had an assessment of her mental capacity carried out, which came back confirming she had lost capacity to manage her own affairs.

She unfortunately had not set up Enduring Powers of Attorney during her lifetime, so her family had to go through the process of obtaining a Court Order for one of them to be appointed as her Property Manager.

The remaining Trustees took legal advice about what this meant for them.

The new Trusts Act 2019 makes it compulsory for a Trustee who has ‘lost the capacity to perform the functions of a Trustee’ to be removed.  Having an order appointing a manager over your affairs, like the above, fits into this category.

Many Charitable Trust deeds will have a similar provision in them governing Trustee removal, however some will be silent on this.  If there is a provision in the Trust Deed then this provision will need to be followed.

If a Trustee loses capacity, they must now be removed by a person with the power of appointment and removal in the Trust deed. Sometimes this will be the initial settlor of the Charitable Trust.

If nobody has been granted the power to appoint or remove Trustees, then:

1. The remaining Trustees may remove the incapacitated Trustee;
2. If there are no remaining Trustees and nobody has been given the power of appointment and removal, then any of the following people may remove the incapacitated Trustee:

• A property manager appointed under the Protection of Personal Rights Act to act as the manager of the Trustee’s property;
• A person holding an Enduring Power of Attorney over the property of a Trustee who is mentally incapable; or
• The liquidator of a corporate Trustee that is in liquidation

It is important to ensure that you check if this affects any requirements in your Trust deed regarding a minimum number of Trustees and that you replace the Trustee if this is the case.

It is also vital that you update the Trustee details with the Registrar of Charitable Trusts, and Charities Services (if you are a registered charity) when the change of Trustee has been completed.

It is important to know how a Trustee can

 be removed under the new Trusts Act, and who has the right to remove a Trustee, so this can be done correctly. To ensure this is done correctly, it is wise to seek advice from an experienced professional in this area.