Challenges to trustee’ exercise of discretion

Challenges to trustee’ exercise of discretion

Author: John Smart (2002)

John Smart considers two recent cases in whack deeds of appointment with
unfavourable tax consequences have been held void by the Court
(taken from Issue No 18  –  January 2002)

Introduction

The aim of this article is to consider some of the recent developments in the law relating to challenges to the exercise of dispositive powers1 vested in trustees. For present purposes it will be assumed that there is no doubt about the proper construction of the power, so that I am not considering challenges made by beneficiaries on the basis that the trustees have misunderstood the terms of a particular power. What, though, if the trustees have failed to consider the fiscal consequences? Can the Court (in effect) be asked to allow the ripping up of a deed of appointment? On one view this is precisely what has been done in two recently reported decisions at first instance. This  sounds too good to be true. Readers may recall that,

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The Trust Quarterly Review is published in partnership with STEP, it discusses matters of interest to trustees and executors with a focus on the particular interests of trust corporations in mind

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