When a fellow trustee develops dementia and loses decision-making capacity, it is both legally and psychologically problematic. What happens, for example, if you want or need to sell the family home owned by the trust but one of the trustees is no longer able to act? The Trusts Act 2019 came into effect on February 1, 2021. It tries to simplify the procedure, among other things.
What Happens If A Trustee Becomes Incapacitated?
Section 104 of the Act now requires the removal of a trustee if they lose their competence to undertake trustee responsibilities. The person having the authority to remove trustees must give notice and advise the trustee of their removal. The removal shall take place 20 working days after the notice is received. Where there is a property manager or trustee company overseeing the trustee’s property, immediate removal may occur. If your trust deed specifies an alternative way of removal, you may use that method instead of the process outlined in Section 104 of the Act.
What Happens When The Individual With The Authority To Appoint And Remove Trustees Loses Capacity?
A typical issue is when the trustee who has lost capacity is also the person designated in the trust deed with the ability to appoint and remove trustees. Section 92 of the Trusts Act empowers the following individuals to dismiss a trustee:
- The person nominated in the terms of the trust as having the power to remove trustees:
- If there is no person authorised under paragraph (a) or the person is unable or unwilling to act, the remaining trustees:
- If there is no person authorised under paragraph (a) or (b) or the person or persons are unable or unwilling to act, any of the following persons acting in relation to the trustee being removed that may be relevant:
- A property manager appointed under the Protection of Personal and Property Rights Act 1988 to act as manager of the trustee’s property:
- A person holding an enduring power of attorney over the property of a trustee who is mentally incapable:
- The liquidator of a corporate trustee that is in liquidation.
Court proceedings are required if all other options have been explored and the trustee who loses ability does not have an enduring power of attorney or property manager under the Protection of Personal Property Rights Act 1988.
Contact our legal team here at Hayman Lawyers right away if you have any queries or concerns regarding your trust. It’s also crucial to keep your wills and estate planning documents up to date.
