Key points

• once a trust is fully constituted the trustees are under a duty to carry out its terms;

• the court has some jurisdiction to vary a trust under its inherent jurisdiction;

• the court’s jurisdiction to vary is limited and only applies to a case of emergency or compromise;

• a number of statutory provisions give limited power to vary the terms of a trust to the trustees;

• the rule in Saunders v. Vautier gives the beneficiaries power to terminate the trust prematurely;

• the right of the beneficiaries to terminate the trust depends on whether they are all of age, in agreement and together are fully entitled to the property;

• the Variation of Trusts Act 1958 gives the court wide powers to vary a trust but only where a benefit is derived;

• the powers of the court to vary under the Variation of Trusts Act extends to unborn and minor beneficiaries; and

• a variation will not be approved if it is deemed to be a complete resettlement of the trust property.

Introduction

Once a trust is fully constituted the terms are binding on the trustees and the provisions of the trust must be carried out as set out by the settlor. If a trustee does not carry out the terms as set out in the trust instrument, he/she would be vulnerable to an action for breach of trust. However there has always been some limited scope to vary the terms of a trust usually in the event of an unforeseen event arising.

1. The court holds inherent jurisdiction to vary the terms of a trust in certain circumstances but this jurisdiction is limited.

2. There were several statutory provisions to vary a trust even before the Variation of Trusts Act 1958 was introduced.

3. Although strictly not usually a variation the beneficiaries could always combine together and bring the trust to an end under the rule in Saunders v. Vautier (1841) 4 Beav 115.