Terminating Trust: A Review of the Saunders v Vautier Case

Lawyer talking to both parties about trustA trust is essentially a legally acknowledged relationship between a trustee and a beneficiary, where the former holds a property for the benefit of the latter. It could come in several forms, with some involving special rules like superannuation funds, and others crafted by law—in contrast with being made by the parties involved—such as constructive trusts.

Some people may consider this arrangement as a gift, but other beneficiaries choose to make changes in the terms or terminate any accumulation altogether due to factors like changes in tax laws and investment opportunities or an error in the set-up of the trust, among others.

The Rule of Law on Trust Modification and Termination

The written document that establishes a trust states the specific terms for all parties involved, as well as their legal rights. In some cases, beneficiaries will not be entitled to obtain their full share until a particular date. However, a trust should not last for more than 80 years, as stated in ‘Rule against Perpetuities’ written in Queensland’s property law.

A beneficiary may also choose to acquire his share prior to the specified date or terminate any accumulation. According to the Saunders v Vautier rule, regardless of what the arrangement determines, a beneficiary could request for modification or termination of a trust if the following conditions are true:

  • The beneficiary has an indefeasible, absolute vested interest in the property under trust
  • The beneficiary is ‘sui juris’ or in full capacity—around 18 years old and free from any legal disabilities
  • In the case where multiple beneficiaries are involved, all must unanimously consent to the trust’s modification or termination
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There could be different reasons for wanting to change the terms of a trust, but in the absence of a judicial ruling, there is no guarantee that the request will be granted. Listing the help of a legal professional, particularly one who is experienced in property law, can help you navigate your way through the process more efficiently.

You should know the rights and responsibilities of all parties involved in a trust agreement. This is necessary to ensure a mutually beneficial relationship. Trustees must initially take into account the many possible scenarios that might affect the grounds of the agreement in the future to assist the other party in maximising the unique ‘gift’ given to them.