You may not remember that many years ago a trust was created by your grandparents and Aunty Pearl was appointed as one of the trustees. With the passing of time the trust has been forgotten. Family members have been born and died and times have changed. But not Aunty Pearl. Everyone is delighted that she is still going strong in her care home having been diagnosed with dementia five years ago. Until they remember the trust........
Assets now need to be distributed from the trust and the trust needs to be closed but Aunty Pearl for all her greatness cannot remember her children let along the responsibility of trustee that she holds. Does this mean that nothing can happen or can the other trustee sort everything out without Aunty Pearl?
The reality is nothing can happen whilst Aunty Pearl lacks capacity to make decisions. All trustees have to act together and one cannot make a decision or act independently of the other. So what are the solutions to this enormous problem? Worry not, a solution is to hand.....
Trusts are not only formal documents which are specifically created to house assets but they can arise naturally with ownership of property.
Where there is a formally constituted trust with trust documents an application would need to be made to the High Court for the appointment of a new trustee under the Trustee Act 1925. This will allow Aunty Pearl to be removed and for assets to be transferred to the trustee who is capable and the new trustee. The Court will ask for evidence to support the application such as evidence of the capacity issues, a draft deed of appointment and details of the trust. It is a bit of a faff but you get there in the end!
Where a trust arises naturally for example if Aunty Pearl were to own a house jointly with her husband, an alternative course of action has to be taken. If Aunty Pearl has not made an enduring or lasting power of attorney and no deputy has been appointed her husband will have to apply to the Court of Protection under the Trustee At 1925 for the appointment of a new trustee. Hubby will also have to ask the Court of Protection for a deputyship order to manage Aunty Pearl's financial affairs and to seek permission to enable the purchase of a new property. Bearing in mind hubby is probably the same age as Aunty Pearl he ought to have someone appointed to act with him as deputy, just in case.
These procedures are not particularly straightforward and the easiest thing to do is remember when you have a trust, who is appointed as a trustee and take precautionary steps to prevent this problem arising. Drafting a deed of appointment of trustee is easy when everyone has capacity and a lot less time consuming and costly.
As always Argo is always here if you need any help.