What to do when a trustee loses mental capacity to carry out trustee functions

The issue of a trustee losing capacity has become more prominent in recent years, especially with the rise in Dementia and Alzheimer’s.  More than often, trustees will act jointly in their role as trustees when administering and dealing with a trust.  When a trustee has lost capacity, action needs to be taken to remove and replace them with someone who does have capacity to carry out the trustee functions.

As a starting point, consideration should be given to the issue of capacity.  For example, a trustee may have lost mental capacity to carry out their duties as trustee and to administer the trust however they may have capacity to retire as trustee.

There are various options available as to how to remove a trustee who lacks capacity; however the route that is taken is dependent upon individual circumstances and requires a thorough understanding of the trust and the specific trustee responsibilities and powers.

The factors we would consider when making an application to remove a trustee who lacks capacity are listed below:

1. Whether an appropriate capacity assessment by a qualified mental capacity assessor is required;

2. Whether there is an enduring power of attorney (EPA) or a lasting power of attorney (LPA) to act on behalf of the individual who lacks capacity.  The date the document was registered at the Court of Protection is an important factor here, as this will dictate which legislation is applicable as to the extent of the attorney’s authority to act on behalf of the trustee;

3. Whether the trustee can be removed under the Trustee Act 1925 by appointing a substitute trustee, with or without a Court application;

4. Whether it is necessary in the circumstances to ask the High Court to remove and replace the trustee under the Trustee Act 1925;

5. Whether the Court of Protection can be asked to exercise the trustee’s power to appoint a new trustee pursuant to the Mental Capacity Act 2005; and

6. Whether the beneficiaries authorise an appointment under the Trusts of Land and Appointment of Trustees Act 1996.

For more information contact Melanie Christodoulou 01227 763939.