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TRUSTS


A sensitive issue W


What procedures should a trustee follow when the mental health of a settlor is called into question? Mourant Ozannes’ Morven McMillan unravels the dilemma


E LIVE IN a society with an ageing and more prosperous population than ever before: in 2006,


approximately one in six people in the UK were aged 65 or over. Some approach old age physically and mentally frail, and occasionally fall prey to the unscrupulous. Such problems are not confined to the elderly. Alcohol, drug dependency and prescribed medication can affect the balance of the minds of young and old alike and leave them vulnerable too. The recent Mourant Ozannes trusts symposium in Jersey looked at issues in


20 businesslife.co April/May 2011


relation to mental capacity, discussing problems which face trustees when a settlor begins to show what might be signs of deterioration in his or her mental health. Given the understandable sensitivities involved, a trustee can be put in an unenviable position – trying to ensure that the administration of the trust continues smoothly while the family struggle to come to terms with the potentially devastating consequences of mental illness. The trustee should first consider the


evidence of incapacity. In the case study we looked at in our symposium, the trustee had only two pieces of evidence: a letter from the settlor’s family describing recent instances in


which the settlor had behaved in a manner that, according to them, was completely out of character; and a series of letters of wishes, the most recent written in a significantly different manner to those written before. Bear in mind that a trustee is unlikely to be


qualified to judge whether behaviour of that nature is simply eccentricity or the signs of something more serious. As Lord Cranworth eloquently put it in Boyse v Rossborough ([1857] 6 HLC 2): “There is no possibility of mistaking midnight for noon, but at what precise moment twilight becomes darkness is hard to determine.” Trustees should check the terms of the trust deed – are powers reserved to the


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