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How Do I Terminate a Family Trust? RE: the Saunders v Vautier Ruling

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How Do I Terminate a Family Trust? RE: the Saunders v Vautier Ruling

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TwointhebushTwointhebush Forumite
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Recently an inheritance was placed in my family trust - I'm the only beneficiary. I believe it's a Discretionary Trust - there are trustees. I understand that it may be possible to terminate the trust and all the money be paid to me directly, according to the Saunders v Vautier ruling?
If this is the case, what would I need to do to get the ball rolling? Can I simply instruct the trustees to do so, or should I find a suitable solicitor?
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  • LilElvisLilElvis Forumite
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    You're going to need to speak to a solicitor as nobody could possibly advise without seeing the relevant trust documents. There may be tax implications too.
  • Keep_pedallingKeep_pedalling Forumite
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    As it is a discretionary trust you have no absolute right to the assets, so unless the trustees are willing to wind it up by distributing all the assets to you, your only option is the legal system which could be both expensive and unsuccessful.

  • edited 1 April at 8:03AM
    TwointhebushTwointhebush Forumite
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    edited 1 April at 8:03AM
    a----------------
  • pphillipspphillips Forumite
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    Recently an inheritance was placed in my family trust - I'm the only beneficiary. I believe it's a Discretionary Trust - there are trustees. I understand that it may be possible to terminate the trust and all the money be paid to me directly, according to the Saunders v Vautier ruling?
    If this is the case, what would I need to do to get the ball rolling? Can I simply instruct the trustees to do so, or should I find a suitable solicitor?
    If you are the only possible beneficiary, you can simply instruct the trustees to dissolve the trust.
  • pphillipspphillips Forumite
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    As it is a discretionary trust you have no absolute right to the assets, so unless the trustees are willing to wind it up by distributing all the assets to you, your only option is the legal system which could be both expensive and unsuccessful.

    Sorry but that's incorrect, the Saunders v Vautier ruling includes discretionary trusts.
  • Keep_pedallingKeep_pedalling Forumite
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    pphillips said:
    As it is a discretionary trust you have no absolute right to the assets, so unless the trustees are willing to wind it up by distributing all the assets to you, your only option is the legal system which could be both expensive and unsuccessful.

    Sorry but that's incorrect, the Saunders v Vautier ruling includes discretionary trusts.
    I do not think it is that clear cut. 
    From Wikipedia
    it has also been held that the rule in Saunders v Vautier also applies to discretionary trusts as well as fixed trusts.[4] However, some caution is in order, as that decision was made at a time when the law was understood to require that a valid discretionary trust need to be able to draw up a complete list of the beneficiaries of the trust in order to be valid; subsequent to the decision of the House of Lords in McPhail v Doulton [1971] AC 424, this is no longer the appropriate test,[5] and accordingly it may be that not all discretionary trusts are capable of being terminated by the beneficiaries under the rule.


  • edited 31 March at 1:17PM
    pphillipspphillips Forumite
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    edited 31 March at 1:17PM
    pphillips said:
    As it is a discretionary trust you have no absolute right to the assets, so unless the trustees are willing to wind it up by distributing all the assets to you, your only option is the legal system which could be both expensive and unsuccessful.

    Sorry but that's incorrect, the Saunders v Vautier ruling includes discretionary trusts.
    I do not think it is that clear cut. 
    From Wikipedia
    it has also been held that the rule in Saunders v Vautier also applies to discretionary trusts as well as fixed trusts.[4] However, some caution is in order, as that decision was made at a time when the law was understood to require that a valid discretionary trust need to be able to draw up a complete list of the beneficiaries of the trust in order to be valid; subsequent to the decision of the House of Lords in McPhail v Doulton [1971] AC 424, this is no longer the appropriate test,[5] and accordingly it may be that not all discretionary trusts are capable of being terminated by the beneficiaries under the rule.


    It is that clear cut if the OP is correct that they are the only possible beneficiary, which will depend on the wording of the clauses in the trust instrument.
    The McPhail v Doulton case replaced the "complete list" test with the "is or is not" test when deciding whether the trust sufficiently identifies the beneficiaries. This test is about the validity of trusts because a trust will normally be void if the beneficiaries are too uncertain.
  • edited 1 April at 8:03AM
    TwointhebushTwointhebush Forumite
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    edited 1 April at 8:03AM
    Is the answer then to obtain the paperwork from the solicitors, to see how it is worded? Is that straightforward, does the solicitor have to hand over the paperwork if I request it, formally or not?
  • pphillipspphillips Forumite
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    Is the answer then to obtain the paperwork from the solicitors, to see how it is worded? Is that straightforward, does the solicitor have to hand over the paperwork if I request it, formally or not?
    Or as I already said you could instruct the trustees to dissolve the trust and see how they respond.
  • Voyager2002Voyager2002 Forumite
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    Perhaps you need to enquire why the money is in trust rather than paid to you directly. The most obvious explanation is tax: be aware that if (at your insistence) the trustees pay everything to you and terminate the trust, you might face a large and unnecessary tax bill.

    Far better to negotiate with the trustees to enable you to obtain enough money to do what you want to do rather than forcing their hands.
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