Last week, we touched on the fact that many trust deeds do not have any power to vary in them.
There are similarly many trusts that do have a power to vary, but that power to vary is not as comprehensive as may otherwise be assumed.
Two recent examples that we have seen are summarised below.
The first example (which was highlighted in quite a high profile case last year) turns on whether a power to vary extends to all aspects of the trust instrument. In particular, some powers to vary are restricted to either:
1. The formal provisions that actually establish the terms of the trust.
2. Alternatively, the power to vary might be restricted to the actual powers that the trustee has to run the trust.
Care should always therefore be taken to understand exactly how comprehensive the power to vary is.
Similarly, some powers to vary are subject to specific prohibitions. For example, a power might extend to all parts of a trust other than the rules regulating the appointor provision.
In these types of situations, it is generally impossible (unless court approval is obtained to vary the relevant clause), even if the affected party (for example the appointor) were to consent to the variation.
Ultimately (and generally in complete contrast to superannuation trust deed variations), there is always the need to very carefully review the exact basis on which any purported variation to a family trust is to be implemented before making a change.
Until next week.
