Contents

Summary of recommendations

Chapter 10 – Revocation and variation

Revocation and variation by beneficiaries

R29 The new Trusts Act should:
(1) State the common law rule (known as the rule in Saunders v Vautier) which provides that:
(a) where they are in agreement, legally capable adult beneficiaries who hold the entire beneficial interest in the trust property may act together to revoke a trust and require the trustees to distribute the trust property as they direct; and  
(b) a legally capable adult beneficiary of a fixed share of trust property may, where the beneficiary has an absolute vested interest in that share, request the trustees to transfer that share to him or her. The trustees may only refuse to do so where the property is not in a form, or cannot be changed into such a form, that allows the beneficiary’s share to be transferred to the beneficiary without detrimentally affecting the interests of other beneficiaries.
(2) Clarify that where they are in agreement, and with the agreement of the trustees, legally capable adult beneficiaries who hold the entire beneficial interest in the trust property may act together to confer new powers upon trustees or deviate from, or vary, the terms of the trust.
(3) Clarify that legally capable adult beneficiaries who hold the entire beneficial interest in the trust property may consent to a resettlement of a trust, as well as a variation or revocation.

Revocation and variation by the courtTop

R30 The new Trusts Act should provide that:
(1) The court may:
(a) approve any revocation, variation or resettlement of a trust or any change to the scope or nature of the powers of the trustees to manage or administer the trusts on behalf of the following beneficiaries:
(i) persons under the age of 18 years;  
(ii) incapacitated persons;  
(iii) persons who may become entitled at a future date or on the happening of a future event or once they become a member of a certain class; and
(iv) future persons; and
(b) waive the requirement for the consent of any other person and approve any revocation, variation or resettlement of a trust or any change to the scope or nature of the powers of the trustees to manage or administer the trusts.
(2) When considering whether to approve or waive the requirement for consent to a revocation, variation or resettlement of a trust or any change to the scope or nature of the powers of the trustees under (1) the court must take into account the following factors:
(a) the nature of any person’s interest and the effect any proposed varying arrangement may have on that interest;
(b) the benefit or detriment to any person that may result from the court approving any proposed varying arrangement;
(c) the benefit or detriment to any person that may result from the court declining to approve any proposed varying arrangement; and  
(d) the intentions of the settlor to the extent these can be ascertained.
(3) The court must not make an order under (1) of the proposed provision if its effect would be to reduce or remove any fixed indefeasible interest or interest that has vested absolutely in a beneficiary.
(4) Any order of approval or waiver that is made by the court under (1) should be binding on all persons on whose behalf it is made (including any person who is the subject of an order of waiver) and the trusts should take effect as rearranged.

Extension of trustees’ powers by the courtTop

R31 The new Trusts Act should provide that:
(1) The court may make amendments to the non-distributive administrative provisions of the terms of any trust where it considers this necessary to enable the trustees to efficiently manage trust property.
(2) Under (1) the court may amend the terms of a trust to enlarge or extend the scope of the powers available to the trustees for administering or managing trust property.
(3) The court may not make amendments to the terms of a trust that alter or otherwise change the beneficial interests under the trust under this recommendation.