Deed of Appointment of a Trustee

What is a Deed of Appointment (and Retirement) of a Trustee?

A deed of appointment (and retirement) of a trustee is a legal document that is used to either:

• Appoint a new trustee to an existing trust; or
• Replace a retiring trustee in a trust with a new trustee.

The template deed is drafted so that it can be used to either appoint a new trustee, or to both retire a trustee and appoint a new trustee in their place.

The deed acts to both appoint the new trustee and to establish the rights and responsibilities of the incoming trustee.

If you only need to retire a trustee and not appoint a new one, then see our Deed of Retirement of a Trustee.

However, please note that the deed of appointment is not itself a trust deed and so it will not create a trust on its own. For that a trust deed needs to be put in place. Our guide to setting up a bare trust covers this in more detail.

This deed of appointment (and retirement) of a new trustee is commonly used in several contexts. For example where it is necessary to replace a trustee that is retiring, or has passed away.

An alternative situation may be where the administration of the trust will benefit from appointing a new trustee with specific skills and experience.

Whatever your circumstances, appointing a new trustee, or retiring an existing trustee and appointing a replacement, is made simple with our Trustee Deed of Appointment template.

Drafted by David, a practising solicitor, and co-founder here at Legalo, our template deed provides a low cost and reliable solution for appointing (and if needed retiring) trustees.

When is a Deed of Appointment (and Retirement) Needed?

You should use a deed of appointment to make any change to the trusteeship of an existing trust.

Our Deed of Appointment for a New Trustee can be used to both appoint a new trustee, or to appoint and retire an existing trustee, as may be required.

The precedent deed is simple to edit and includes full guidance notes to take you through the edits needed to complete the template.

If you find yourselves with any questions when completing the deed, you can call or email us. We will guide you through any questions that you may have that relate to completing the deed.

In the UK, the appointment and removal of trustees is governed by section 36 of The Trustee Act 1925. This section of the Trustee Act allows for the appointment of a new trustee in situations where:

• A trustee is dead.
• A trustee remains outside of the UK for more than 12 months.
• A trustee decides to retire.
• A trustee refuses to act and needs to be replaced
• A trustee is unfit to act (e.g. due to misconduct or incapacity).
• A trustee is incapable of acting (e.eg, due to physical or mental incapacity)

Strictly speaking, the Trustee Act 1925 doesn’t require that a Deed of appointment is used when appointing or retiring a trustee. It simply requires under section 36(1) that the appointment or removal must be ‘in writing’.

It has, however, become common practice to use a deed to record the appointment and the retirement of a trustee.

The Trustee Act does not limit the new appointment of a trustee to the scenarios covered in the Act. let’s take a look at some of the more common scenarios where our precedent deed template may be used.

Retirement of a Trustee

A trustee is not required to hold their position for life. They have a choice as to whether to remain a trustee. As people age, or their circumstances change, it is not uncommon for a trustee to retire from their trustee position.

Depending on the terms of the Trust the retiring trustee may need to consent to their removal. Our deed template creates a deed of retirement and appointment of trustee because it makes provision for the retirement of an existing trustee as well as the appointment of a new trustee..

Death or Incapacity of a Trustee

If a trustee dies, or is in some way incapacitated it may be necessary to record the removal of the trustee and appoint a new trustee in their place. The trust deed itself will set out the minimum number of trustees that the trust must have.

If the minimum number is still met after the death of a trustee it is not necessary to appoint a replacement trustee. However, it may be that the remaining trustees prefer to preserve the previous number of trustees and to appoint a new replacement trustee.

In this scenario you will edit our template deed so that you crate a deed for the retirement of the trustee that you are removing and the appointment of the new trustee.

Appointment of Additional Trustees

It is common to use a deed of appointment to add an additional trustee in order to spread the administrative responsibilities across an extra person.

Depending on the nature of the trust, and the assets held within the trust it may be necessary to bring in additional, or new, expertise and experience.

Our Deed of Appointment can be used in such a situation. The precedent template is easily edited to remove reference to a retiring trustee so that it only operates as a deed of  appointment of a new trustee.

Misconduct or Breach of Duty

In rare cases, a trustee may have breached their fiduciary duties in some way, or have been involved in misconduct of some form.

In such circumstances the other trustees are likely to require that the trustee in question resigns from their appointment and a new trustee is appointed in their place.

So in this situation it will be necessary to both retire the existing trustee and appoint their replacement trustee with the deed of appointment.

Appointing and Removing a Trustee – Legal Requirements

When appointing a new trustee, either with or without the removal of an existing trustee, it is, of course, critical that you do so in a way that ensures that the new appointment is valid.

In doing so, certain legal requirements and formalities must be met.

Compliance with the Trust Deed

The trust deed is likely to contain provisions covering the appointment of a new trustee and the retirement of an existing trustee.

Since the trust deed governs the operation of the trust its provisions must be adhered to, otherwise the appointment may not be valid.

If you are appointing a new trustee make sure that you have read the trust document and that the appointment of the trustee is being carried out in accordance with the requirements of the trust deed.

Execution by All Relevant Parties

The deed of appointment must be signed by all relevant parties. This will be the existing trustees, the new trustee, and any retiring trustees.

The deed must also be witnessed to be valid. The witnesses must be present at the time that each party signs the deed. The witnesses must also be independent individuals who are not themselves parties to the trust.

So, execution of the deed of appointment (and retirement) must be carefully considered but it is relatively straightforward. The Government provides detailed guidance on the execution of deeds if you require further guidance.

Registration of The Change in Trustees

If the trust holds land or property then the appointment, and, or removal of a trustee needs to be registered at the Land Registry. This is done by completing and filing From TR1 at the Land Registry. The Government guidance on filing Form TR1 can be read here.

Technically this creates a transfer of the land into the names of the new trustees.

If this is relevant to your situation then you may be concerned that a transfer of the land will give rise to a requirement to pay stamp duty. HMRC has confirmed that no stamp duty is payable where there is no consideration paid on a change of trustees. See the HMRC Stamp Duty Land Tax Manual for further information on this.

Professional Drafting

Whilst not a legal requirement, you should make sure that your Deed of Appointment (and retirement if relevant) has been professionally prepared. You can do this by either:

1. Engaging a solicitor where you can expect to pay between £750 and £1250 plus VAT; or
2. Purchasing and completing our professionally drafted Deed of Appointment and Retirement template. It costs just £50 and provides you peace of mind and great value for money.

Keep in mind too, that unlike many providers of legal document templates our templates have been drafted by practicing UK solicitors who own and operate Legalo.

We offer a free customer support helpline to guide you through any questions you may have on this deed.

Our helpline is available during usual business hours, to guide you through any question that you may have when completing the precedent template.

Appointing A Suitable Trustee

When Appointing a new trustee, either as an additional trustee, or to replace a retiring trustee it is important to consider the role of the trustee.

The main duty of a trustee is to manage the assets that have been put into the trust. They do this for the benefit of the trust’s beneficiaries. The duties that a trustee owes to the trust, and to the beneficiaries of the trust, are known as ‘fiduciary duties’.

The fiduciary duties of a trustee were historically derived from the common law. This means judge made law. However, the Trustee Act 2000 was introduced to provide statutory guidance on several key responsibilities. These include:

• Duty of Care. Section 1 of the Trustee Act 2000 sets out the statutory duty of care for trustees. It requires that they must exercise at least a reasonable level of skill and care in their function as a trustee.
• Powers of Investment. Sections 3 to 5 of The Trustees Act 2000 grants broad powers to make investments on behalf of the trust. It also requires that they take reasonable precautions such as diversification of investment and taking specialist advice where appropriate.
• Duty to review investments. Section 4 of the Trustees Act makes it a requirement that the trustees periodically review the investments that are being utilised. This is to make sure that they remain relevant and appropriate.

Depending on the nature of the assets held in the trust the role of the trustees may extend beyond basic trust administration. Care should therefore be given to the skill set and experience of a new trustee when appointing them.

Steps to Appoint (and Retire) a Trustee

I set out below the six key steps that you should follow when appointing a new trustee.

Step 1: Review the Trust Deed

The Trust Deed may set out a specific process for appointing a new trustee, and where relevant retiring an existing trustee. You should read the Trus deed to establish what process is to be followed if any. If the Trust Deed does not contain any specific requirements then you can move onto step 2.

Step 2: Obtain Consent

Unless the Trust Deed, for example a deed of bare trust provides otherwise the existing trustees will need to agree to the new trustee’s appointment. They do this by executing the deed of appointment.

If a trustee will be retiring and replaced with the new incoming trustee then their consent is also required. This deed of retirement and appointment of a new trustee template makes provision for this.

Step 3: Draft the Deed of Appointment (and Retirement)

As we explain above a deed of appointment of trustee should be put in place. This has the effect of formalising the appointment and also of recording the consent of the relevant parties.

Step 4: Execute the Deed

Once drafted the deed of appointment (and retirement) will need to be signed in the presence of an independent witness. This exercise is called ‘executing’ the deed.

Deeds can be signed electronically but the person that acts as the witness must be physically present in the presence of each signatorey to observe them signing. More than one witness can be used if needed.

Step 5: Register the Deed (if Required)

In most instances the deed of appointment will not need to be registered. However, as we explain above if the trust holds property then the change in trustees will need to be registered with the Land Registry.

Step 6: Notify Interested Parties

Following the appointment of the new trustee all relevant parties should be notified. This will include the beneficiaries of the trust. If the trust holds money in a bank account then the bank should be informed.

The Structure of a Deed of Appointment (and Retirement) of a Trustee

Deeds of appointment of a new trustee, and deeds that cover the retirement of an existing trustee and the appointment of a new replacement generally follow a traditional format.

Several essential elements must be included in the deed to make sure that it is legally valid. Other elements help to make sure that the document provides clarity and ensures that the appointment, and where relevant retirement, process is smooth.

Parties Involved

The deed of appointment (and Retirement) must set out the parties involved. This will be the current trustees, the new trustees and the retiring trustee. The deed must also make provision for each of these parties to sign the completed deed.

Background/Recitals

It is common, although not legally required, for the Deed of Appointment (and Retirement) to include a section that explains the background to the matter and it will make reference to the original trust. That trust may be a trust established by a trust deed or a trust established by the terms of a will.

Interpretation of the Deed

Whilst not a legal requirement, deeds that are more comprehensive will include a section that sets out rules to support in the interpretation of words and clauses contained in the deed.

Our template deed of appointment and retirement includes a section covering interpretation. This section can be useful in the unlikely event that there is any future disagreement over the terms of the deed.

Operative provisions

This section of the deed sets out the terms of the actual appointment of the new trustee, and where relevant the retirement of a trustee being removed.

In the next section of this guide to our Deed of Appointment and Retirement template I’ll take you through a summary of the clauses in our Deed of Appointment and Retirement of trustee template.

Clauses in Our Deed of Appointment and Retirement

Below, we have set out the main features of our template deed of appointment and retirement, so you can see what it comprises. You can also view a preview of the document by clicking the ‘preview’ button at the top of this page.

Included with the precedent template is a comprehensive guide that takes you through each step in editing and completing your deed.

In the parties clauses you will list the continuing trustees, the new trustee and, if there is a retiring trustee, that person also.

The background clauses set out what this deed is about and what trust or will has set it up.

Clause 1 of the Deed

This clause sets out some basic rules regarding the interpretation of the deed.

Clause 2 of the Deed

Clause 2 is the main clause in the deed of appointment of a trustee. It states that the continuing trustees are appointing the new trustee and the retiring trustee is retiring. There is a statutory power under the Trustee Act 1925 for trusts to appoint new trustees.

The will or trust deed, as applicable, may also specify a similar power for the trust. In clause 2.1, if there is no trustee who is retiring, then delete all the words in square brackets which refer to the retiring trustee and their retiring.

Clause 3 of the Deed

Clause 3 is about the law and jurisdiction. If any party is based abroad, you may wish to:

• change the jurisdiction clause to reflect this; and/or
• make it non-exclusive.

Where the trust is based in the UK, the jurisdiction should be exclusively that of England (covering England and Wales), Scotland or Northern Ireland as applicable (change it if need be if it is not England or Wales).

Schedules to the Deed of Appointment

In the schedules, you will list the background documents relevant to the trust and the principal assets of the trust.

Finally, the guide explains how you validly sign the deed of appointment of a trustee, using a witness.

FAQs on the Deed of Appointment (and Retirement)

Below, we have answered the most popular questions on the Internet on this topic.

Do I need a deed of appointment for a new trustee?

If you want to appoint a new or extra trustee or a replacement for a trustee who has died, retired or been removed, then you need to do so by a deed of appointment. If you simply have a situation of a trustee who has died (and you don’t want to appoint a replacement), then they cease to be a trustee automatically at that point. So there would be no need for a deed or retirement of the dead trustee.

Who signs a deed appointing a trustee?

The existing trustees sign a deed of appointment of a new trustee. Usually you need at least 2 trustees for this. If there are no trustees because the last one died, then the personal representatives of the last trustee should sign.

Does a deed of appointment also cover retirement of a trustee?

A deed of appointment can also cover the retirement of an existing trustee. In this instance it is generally referred to as a ‘deed of retirement and appointment of a new trustee’.

Our deed of appointment template can be easily edit to suit either scenario.

Can a trustee be removed without their consent?

Yes, a trustee can be removed without their consent in certain circumstances. These are due to their incapacity or in cases of misconduct.

Can a sole trustee be appointed?

Yes, provided that:

• the deed of trust states that the trust may operate with just one trustee; and
• the trust does not own any land or buildings in the UK (otherwise you will need at least 2 trustees).

It is more common that a trust deed will require that the minimum number of trustees is at least two.

Can a beneficiary be appointed as a trustee?

Yes, a beneficiary can be appointed as a trustee. However, this is generally discouraged due to the possibility of a conflict of interest arising.

How much does a deed of appointment cost?

The cost of a deed of appointment of a new trustee depends on whether you:

• engage a solicitor; or
• prepare the deed yourself.

Based on our own experience and customer feedback, we estimate that a firm of solicitors would charge you between  £750 and £1,200 plus VAT for a deed of appointment of trustees.

You can make significant savings by using a template deed of appointment from Legalo. Our template deed is priced at just £50. All of our templates come with significant savings on using a high street firm of solicitors.

What happens to a discretionary trust when the trustee dies?

The position on what happens to a discretionary trust when a trustee dies depends on whether there are surviving trustees, then they can appoint a new trustee by a deed of appointment of a trustee.

If there are no remaining trustees, normally the Personal Representatives of the last surviving Trustee can appoint new Trustees. You should also check the trust deed to see if it has other rules.

Can a deed of appointment be retrospective?

A deed of appointment of a trustee can only be retrospective in particular circumstances. You should seek legal advice. It is nearly always better not to try an make any legal document retrospective. You must never back-date anything having a possible impact on tax, as this would be seen as tax fraud by HMRC.

What happens to land held in the name of a deceased trustee?

When a trust holds land in the name of a deceased trustee, the land should be transferred to the new set of trustees. So you should contact the Land Registry (in the case of land situated in England and Wales) to check what you need to do to transfer the land out of the names of the old trustees to the new set of trustees.

This will probably include:

• your producing a death certificate to the Land Registry;
• forms ID1 for all parties not using a solicitor;
• a form TR1; and
• a form AP1.

All those forms can be downloaded for free from the Land Registry website. There should be no Stamp Duty charge for such a transfer as it is exempt.