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Settlor; settlors, Trusts

Settlors can have little sway when beneficiaries are of age

It is a fundamental proposition of trust law that a valid trust requires that the settlor has a clear intention to create a trust.  However, regardless of how clear those intentions or the terms of the trust are, a trust can later be varied even if in defiance of the settlor’s stated intentions.

Where a variation is required, irrespective of whether the deed contains any power of variation, the court can approve a variation where the adult beneficiaries all consent and the court is satisfied that minor or unborn beneficiaries, on whose behalf the court can consent, would have approved the variation if the beneficiary had the capacity to do so and was fully advised. 

When deciding the matter the court’s reference point is not to what the settlor does or would want, whether or not this is expressed in the deed, but whether the proposed variation is in the best interests of the beneficiaries’ the court is consenting on behalf of.

This can be a sobering thought for settlors and another reminder that when a trust is settled the settlor has lost absolute control of the trust’s assets.

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