Court removes Trustee suffering from dementia...

A recent Court of Appeal case involved a husband and wife who had settled Trusts. 

The Trusts had at least one other co-Trustee, other than the husband and wife. Over time the wife developed dementia and became wholly unable to act as a Trustee for the Trusts.

The husband was removed as a Trustee previously by the High Court due to acting deficiently in his role as a Trustee.  He opposed his removal as Trustee by the High Court and took the case to the Court of Appeal.

The Court of Appeal decided he should be removed because:

• There were disputes between the Trustees that had led to legal expenses and significant costs on the Trust;
• The need to involve lawyers was inappropriate and unsustainable for the future management of the Trust;
• There was no prospect of the Trustees being able to work together on an ongoing basis due to their relationship deficiencies and the diagnosis of the wife’s dementia condition;
• Future disputes were certain and there would be significant disruption and costs that would substantially reduce the Trust assets;
• The husband did not believe in the concept of a Trust and regarded the assets as his and his wife’s, and thought he could do with them as he liked.

The husband was not well placed to be able to consider the management of Trust assets and the exercise of discretion, and was no longer capable of giving fair and impartial consideration to the two beneficiaries; and

The husband had fallen out with both his co-Trustees, his lawyer and medical professionals, and he was hostile to his co-Trustees and two of the beneficiaries. 

As mentioned before, the wife who was a Trustee had succumbed to dementia.  The husband did not have the power to solely remove and appoint Trustees and that power was instead vested in both him and his wife jointly by each of the Trust Deeds. 

Because she could not make a decision due to her dementia, he had applied to the Court to have her removed on the grounds that she was incapable, and that the husband’s attempt to remove her under the Trustee Act had been held to be invalid.  So long as his wife was alive, she remained the person who was required by the Trust Deed to participate in a decision to remove herself as a Trustee.

The other Trustees could not remove her either as they did not hold the role of an Appointer.

With the husband unable to legally remove the wife as a Trustee, and with the husband Trustee’s poor decision making and lost impartiality, this had caused a real problem for the Trust.

It is very important that when you are forming a Trust, or when you are reviewing your Trust deed, to ensure that there are Powers of Attorney made by each Trustee at the outset of forming the Trust, to enable the Attorney to appoint a successor in the instance that they are unable, unwilling or incapable of making decisions pertaining to a Trust for the benefit of the beneficiaries. 

With dementia becoming a growing issue with an aging population, it is important that before people’s incapacity they have these Powers of Attorney in place to enable Trusts to continue to operate as intended.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Shaun Cousins