The concept of a mere power as compared to a trust power under a family trust can be relatively complex.
In basic terms, a mere power relates to the more administrative and mechanical aspects of the trust. It is discretionary in nature which a trustee can choose whether they exercise. In contrast trust powers go to the very heart of the trust instrument and the trustee is required to exercise.
Often, the distinction between a mere power and a trust power is of no particular practical importance, however last week we had a situation where a purported variation to a trust deed was being challenged by a disgruntled beneficiary.
One of their lines of argument related to the trustee not having the power to make the offending variation because they were acting outside the scope of the variation power.
In particular, it was being argued that the variation power only permitted changes to the mere power (i.e. in relation to administrative issues) and not in relation to more substantive terms of the trust.
Arguably the leading case in this area is Re Gulbenkian's Settlements (1970) AC 580. As usual, please let me know if you would like a copy of the decision.
The key quote commenting on the difference between a ‘mere power’ and a ‘trust power’ is as follows:
‘The basic difference between a mere power and a trust power is that in the first case, trustees owe no duty to exercise it and the relevant fund or income falls to be dealt with in accordance with the trusts in default of the exercise, whereas in the second case the trustee must exercise a power and in default the court will.’
** For the trainspotters, ‘We got the power’ is a song by Gorillaz from 2017.