King of the mountain** - Principal's or Appointor’s appointing themselves as trustees

The position according to case law is that the powers of a principal or appointor style role of a trust are fiduciary powers that must be exercised for the benefit of the beneficiaries.

Arguably the leading case in relation to the general prohibition is In re Skeats' Settlement (1889) 42 Ch D 552.

In this case it was relevantly held that:

1. the ordinary power of appointing new trustees imposes upon the person who has the power of appointment the duty of selecting honest and good persons who can be trusted with the very difficult, onerous, and often delicate duties which trustees have to perform;
2. there is a duty to select to the best of the appointor's ability the best people;
3. there is a universal rule that a person should not be a judge in their own case; in other words a person should not decide that they are the best possible person, and say that they ought to be the trustee.

Subject therefore to the trust deed of a trust, a principal or appointor cannot use their powers to appoint themselves as trustee.

As set out in previous posts many modern trust deeds contain an exception to this rule.

The general prohibition is also removed by legislation in some states.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Kate Bush song ‘King of the mountain’.

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Cloudbusting** - Incapacity and invalid wills – a 101 reminder

Last week, we had to look at a relatively interesting question concerning a series of wills that had been made by someone who died recently.

Due to evidence on the death certificate, the validity of the most recently will has been called into question because of a lack of capacity (namely, long term dementia).

There are a number of things that may happen from here, however in very broad terms, if the most recent will is held to be invalid, then the will made immediately before the most recent will is the one likely to be submitted to probate.

If that immediately preceding will is also shown to be invalid because of a lack of capacity, then the court is required to keep going back through previously made wills until they find one that does not fail on the basis of the incapacity issues.

The above approach assumes of course that the previous wills can be accessed, and the court can ultimately satisfy itself that a valid will was made at a time when capacity was not in doubt.

If the court is unable to satisfy itself, the default position is that the intestacy rules apply.

** for the trainspotters, the title here is riffed from the Kate Bush song ‘Cloudbusting’