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Buachaill, Barrister
Category: Law
Satisfied Customers: 10527
Experience:  Barrister 17 years experience
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What are the standard provisions of the Society of the Trust

Customer Question

What are the standard provisions of the Society of the Trust and Estate Practitioners and paragraph 5?
And what is section 11 Trusts of Land and Appointment of Trustees Act 1996?
Submitted: 1 year ago.
Category: Law
Expert:  Buachaill replied 1 year ago.
1. Firstly, section 11 of the TRusts of Land and Appointment of Trustees Act, 1996, essentially provides that the trustees of any trust which comprises land must ascertain the wishes of the beneficiaries of that trust and what they want done with the land before exercising any discretion given by the trust. Furthermore in dealing with the trust land the trustees should seek to give effect to the wishes of the beneficiaries. This is a major alteration of the usual rule that trustees should act in accordance what they themselves believe is best. It effectively gives paramount importance to the wishes of beneficiaries whenever there is a trust of land.2. The Society of Trust and Estate Practitioners (STEP) is a private organisational body of persons practising in the area of Trusts and Estates. It provides both guidance to members and lays down professional standards. For your own situation, they provide standard terms upon which trusts are set up and wills drafted. The paragraph 5 you refer to comes from one of these Standard Terms upon which lawyers who are a member set up and draft trusts or wills or will trusts. It allows people who have a drafted trust to know what provisions apply to them as they have been standardised and are published by STEP for the benefit of lawyers and society.
Customer: replied 1 year ago.
I have been given a Trust document with paragraph 5 (ref above) removed. Is there a likely to be a detriment as a result of the removal and what specifically does the paragraph refer to?
Many thanks.
Expert:  Buachaill replied 1 year ago.
3. What type of trust is it? Is it a will trust or a trust created by a living settlor? Is it a trust of land? What version of the STEP trust document does it refer to? This is necessary in order to identify what is being referred to. Then I can tell you what is in it. There are more than one type of STEP trust precedent. So I need to be able to identify what precedent of a trust is being referred to.
Customer: replied 1 year ago.
An irrevocable family Trust.
Its been created by a Trust specialist
on behalf of a living settlor. The key component is property with the freehold.
It (STEP) is the 1st edition with the paragraph 5 referenced - trust for sale.
Expert:  Buachaill replied 1 year ago.
4. The STEP Standard paragraph 5 in the trust you are dealing with simply states that the Trustees hold the lands on trust for sale. This means that the trustees can sell the land or freehold property at any time and there is no restraint upon their power of sale of the freehold property which is the subject of the trust. This set-up must be contrasted with provisions whereby the trustees would be obliged to roll up rents and invest in further land. In your trust the freehold property is freely saleable at any time. However, if it incorporates section 11 as previously mentioned, it means that the beneficiaries of the trust must be consulted and their wishes determined before the freehold property is sold.
5. As a general aside, these clauses which you reference in your trust are the norm for trusts of property in England & Wales.
Customer: replied 1 year ago.
Thank you very much for your complete answer.
One last question, should the settlor later become mentally impaired eg dementia, would the requirement to consult the beneficiary still apply?
In this instant the beneficiary is also the settlor.
Expert:  Buachaill replied 1 year ago.
5. You are getting confused here. The settlor is not the same as the trustees. Once the settlor, who is the person who set up and created the trust from his assets, passes his assets over to the trustees, then his role ceases. The assets are then owned by the trustees and it is only the trustees who can deal with the assets. The only duty to consult rests upon the trustees. The settlor has no role. Whilst the settlor can be consulted as a beneficiary, his views are not binding. Similarly, even if the settlor as a beneficiary gets dementia, the onus is still on the trustees to deal with the assets and they can do what they want with them so long as they comply with the terms of the trust, because the discretion is vested in the trustees. The beneficiaries only get to be consulted. The beneficiaries views are not binding, even if it is preferable that they be followed.
Customer: replied 1 year ago.
Ah I see. Actually in this case the Settlor is one of the Trustees which I presume is allowable?
But I do understand your point that it is the Trustees who undertake the responsibilities for decisions for the Trust.
Expert:  Buachaill replied 1 year ago.
6. This is doubly confusing. A settlor cannot be a beneficiary and a trustee. You are confused about this point in some way. If the settlor is a trustee and gets dementia, then he simply gets replaced as trustee and the other trustees then run the trust. There must be a minimum of two trustees for a trust to operate.
Customer: replied 1 year ago.
Yes, it does sound rather confusing.
The Trust was set up by an external party for my mother (named as the Settlor). She is also named as one of the (initial) Trustees. The purpose of the Trust is to ensure she is looked after during her maturing years. The other Trustee is myself.
Is this not possible?
Expert:  Buachaill replied 1 year ago.
7. Your mother should not be one of the trustees if she is intended to benefit from the trust. So she should be replaced as otherwise she will be assessed for Income Tax on any benefits she receives. You should get someone else to act as trustee. Consulting her as beneficiary is sufficient to get her wishes taken into account.
Customer: replied 1 year ago.
Thank you very much for your help,
especially for my primary questions.
I shall investigate further the tri-part relationship with regards ***** ***** mum.
Best wishes,
Expert:  Buachaill replied 1 year ago.
8. Please RATE the Answer. This is how your Expert gets paid by the website. Otherwise there is no incentive to do any further Question.
Buachaill and other Law Specialists are ready to help you
Customer: replied 1 year ago.
SorryCustomer trying to rate but system not letting me. Will try again tomorrow.
Expert:  Buachaill replied 1 year ago.
9. Well, the system now shows that you have rated me positively. So thanks very much!

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