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It is well established that the beneficiaries can end the trust by calling for a transfer of trust property to themselves if all the beneficiaries under the trust who could possibly become entitled are: 1) identified; 2) 18+ and of sound mind; and 3) in agreement with the proposed course of action. This is an application of the rule established in Saunders v Vautier.

I am interested in knowing how the trustees distribute the assets in a case like this. Sometimes, that will be easy, but in other cases, it appears less straightforward.

Consider:

“ ... I give £300,000 to my trustees to hold for my husband for life, remainder to any of my three children who attain the age of 25 if more than one in equal shares ... if all of my children die then ... ”

Assume all the children are above the age of 18 and one is above the age of 25. Also, assume that the settlor is unable to have any more children and so the total class of beneficiaries cannot expand.

  1. If the husband is alive, and all the beneficiaries agree to end the trust. How do the trustees distribute the funds? The trust will come to an end but only the husband would be entitled to anything at the moment.

  2. Now assume the husband has also died. If all three children agree to end the trust, how do the trustees distribute the funds? Only one is 25 and the others are below this requirement, but the trust is ending so is it divided equally?

FD_bfa
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2 Answers2

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I don't believe the rule in Saunders v Vautier applies here.

Firstly, if the settlor is still alive and capable of producing children then the class of beneficiaries remains open. The settlor could still produce further children. We must wait until the settlor dies or becomes incapable of producing children before we can say with certainty who the beneficiaries are.

Secondly, to trigger the rule in Saunders v Vautier, all beneficiaries have to be collectively absolutely entitled to the trust fund. The children who are under 25 are not absolutely entitled. Their entitlement is conditional on them reaching 25, which may or may not happen.

JBentley
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Following "the proposed course of action"

When the beneficiaries agreed to end the trust, they would have provided the trustees with the "proposed course of action" which would, no doubt, include how the assets are to be distributed.

Dale M
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