Variation of trust

kazzasingh's version from 2018-05-01 10:50


Question Answer
Re Downshire SE [1953]‘A court will not re-write a trust’
The ‘dead hand’ justification for variationProfessor Harris refers to the court’s general ‘fidelity’ to the settlor’s intentions (Variation of Trusts (1975))
Section 31 of the Trustee Act 1925MAINTENANCE --> provides that trustees may ‘at their sole discretion’ apply the whole or any part of the income from trust assets for ‘the maintenance, education or benefit’ of an infant beneficiary. An ‘infant’ is any person under the age of 18.
Section 32 of the Trustee Act 1925ADVANCEMENT --> provides that trustees may apply ‘capital money’ for the advancement or benefit of a beneficiary, regardless of whether the beneficiary is an infant or an adult.
Re Pauling’s Settlement TrustsADVANCEMENT

Modes of varying trusts

Question Answer
Saunders v Vautier (1841)Where persons hold the entirety of the beneficial interest under a trust, they can direct the trustees as to how to deal with the trust property.
Trustee Act 1925 s. 57(1)“Where in the management or administration of any property vested in trustees...the costs of any transaction, are to be paid or borne as between capital and income…”
Variation of Trusts Act 1958The court is never obliged to vary a trust under the Act. In the words of s. 1, the ‘court may if it thinks fit by order approve . . . any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts’

Consents given by the court

Question Answer
Persons under legal disability (s. 1(1)(a))
Persons with mere expectations (s. 1(1)(b))Re Suffert’s Settlement [1960] --> Do the cousins fall within this exception to s. 1(1)(b)?
Mere expectationsRe Moncrieff’s ST [1962] --> Would the four infant grandchildren have been ‘next-of-kin’ if Mrs Parkin had died on the date of the application to the court?
s. 1(1)(b)Knocker v Youle [1986]
The unborn (s. 1(1)(c))Bathurst v Bathurst [2016]
Protective trusts (s. 1(1)(d))

Benefit requirement

Question Answer
The benefit requirementWhere the court provides the consent of any person under s. 1(1)(a), (b) or (c) it may not approve the arrangement varying the trusts unless the carrying out thereof would be for the benefit of that person.
Re Duke of Norfolk’s WT (1966)Financial benefits --> the beneficiaries saved £550,000 in taxes because of the variation
Re Holt’s Settlement [1969]Social and moral benefits --> Megarry J held that benefit is ‘not confined to financial benefit, but may extend to social or moral benefit’.
Re Weston’s Settlements [1969]Social and moral benefits --> The benefits of stability, coupled with the perceived benefits of an English upbringing, were deemed to be more important in this case than the financial proceeds of a tax avoidance scheme.
Re T’s Settlement [1963]Benefit by deferral
Wright v Gater [2011]Benefit by deferral
Re Tinker’s Settlement [1960]Benefit of financial harmony
Re Remnant’s ST [1970]Benefit of financial harmony
Re Cohen’s Will Trusts [1959]Risks of detriment