Enduring Powers of Attorney and Removal of Trustees

The issue of incapacitated trustees continues to arise. It is not uncommon for many trustees not to retire when they can still elect to do so, so that the remaining trustees are faced with problems removing an incapacitated trustee and transferring the trust property.

It is generally accepted that the attorney under the Enduring Power of Attorney (EPA) cannot exercise the donor’s trust powers. However, it is less well understood whether the attorney can retire a trustee or exercise that trustee’s personal powers of appointment to remove an incapacitated trustee.

In the recent cases of Marshall Family Trust and Godfrey v McCormick the High Court has confirmed that an EPA does not give the attorney the power to carry out any trustee duties and does not allow the attorney to exercise any powers of appointment and removal.

In light of this, it is important that trustees turn their minds to their aging co-trustees and act pre-emptively in this respect. This invites discussions and thinking about when trustees should retire and who will be the trustees when they do. While these can be difficult discussions, they are an important aspect of long-term trust management.

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