In circumstances where you have been appointed as an attorney for someone under an EPA or an LPA, or appointed as a deputy by the Court of Protection you might think that you have authority to act in all matters for that person. However, it is not unusual for an application to the Court of Protection to be necessary, where a new trustee needs to be appointed to replace the donor or patient to allow a trust to continue to be administered.
When is this likely to be needed?
This can be in relation to a property trust, a will trust, a trust that the patient/donor created during their lifetime or a trust created by someone else where the patient/donor has been appointed as a trustee.
Trustees must usually act unanimously in making all decisions in relation to a trust. Therefore, if a trustee loses mental capacity, it will be necessary for the other trustees to consider the next steps carefully.
If the incapable person is a trustee of a trust in which they have no entitlement to benefit from any of the trust assets, for example a discretionary trust, then the other trustees can simply replace the incapable person with a new trustee. This is usually be dealt with formally by a deed but is relatively straight forward with some legal advice.
However, matters are not as simple where the incapable trustee also has an interest in a trust.
Types of applications
The type of application and who can make it will depend on many factors including whether the incapable trustee has made an EPA or an LPA, the type of trust, whether the incapable trustee also has an entitlement to some or all of the trust assets and if the incapable trustee is the sole trustee or if there are other capable trustees still able to act.
Example
The most common type of trust that requires this sort of application is a trust involving a property.
Where two people (for example a husband and wife) own a property in their joint names as tenants in common in equal shares, they are holding the beneficial interest in the property on trust for each other.
If, one party dies, appointing their surviving spouse as an executor and trustee, and leaving their ‘share’ of the property into an immediate post death interest trust (IPDI but often referred to as a life interest trust), it is usually the surviving spouse who will be entitled to live in the property for their lifetime. If the surviving spouse were to lose mental capacity and they have not prepared an EPA or an LPA, it will be necessary for an application to be made to the Court of Protection to enable the the property to be sold.
A separate application would usually run alongside this for a deputy to be appointed to deal with the surviving spouse’s assets, including a half share of the sale proceeds.
The remaining half share would need to be held for the trustees of the IPDI trust, and again, an application would need to be submitted to the Court for a new trustee to be appointed to replace the incapable. This is because the incapable person has an entitlement to benefit from the trust’s assets.
What next?
If you need more information about making a Trustee application to the Court of Protection or you need assistance to determine whether such an application is required, please contact a member of the Private Client team on 0121 746 3300 where we will be pleased to help you.
Find out more about the team
