A couple had set up a trust when they first started their business, many decades ago, to protect their assets from creditors of the business.  Now that they were retired, they were wondering if they still needed their trust, especially in light of the new Trusts Act 2019.

After taking legal advice, they decided to keep the trust, but wanted to vary the trust's terms to remove some of the beneficiaries they had named in it when they set it up.  They also wanted to change a provision that detailed the minimum number of trustees of the trust.

They weren’t sure how to go about changing any part of the trust so sought further legal advice.

Most trust deeds have a specific power in them allowing the trustees to vary their contents or change beneficiaries.  However not all deeds have this power.

Power to vary in the Deed

If your deed provides a power to vary, or a power to change the beneficiaries, the trust can generally be varied by the trustees (and sometimes the Settlor) signing a deed of variation. 

However even if there is a general power to vary, you need to be careful as some deeds record that certain clauses in the deed cannot be amended. 

No power to vary in the Deed

If your deed does not include a power to vary, then you will need to apply to the Court to request a variation, under the Trusts Act.  The Court will consider the reasons for the variation and they will either allow it or they will not. 

If they do allow it, you can then proceed with the variation, referring to the Order that has been made by the Court.  Court applications are costly and can take some time, so this will need to be weighed up against the importance of the variation.

Be careful when varying

Variations of trust can be straight forward, but in some cases they are more complicated and involve a Court application.  Each deed needs to be carefully considered before proceeding.

If you vary a trust deed without the power to do so, you open the trust up to claims by disgruntled beneficiaries and to claims against the trustees for acting outside their powers. 

Because of the technical issues around powers to vary, and the potentially serious consequences of getting it wrong, if you are considering varying your trust you should invest a reasonable amount in taking legal advice from a lawyer experienced in the law of trusts.