Massively Discretionary Trusts

(2019) 25 Trusts & Trustees 397

also published as ch. 5 in R.C. Nolan, K.F.K. Law, and T.H. Wu, eds., Trusts and Modern Wealth Management (Cambridge: Cambridge University Press, 2018) 130

[2017] Current Legal Problems 17

33 Pages Posted: 16 Mar 2017 Last revised: 17 Apr 2019

See all articles by Lionel Smith

Lionel Smith

Downing Professor of the Laws of England

Date Written: March 14, 2017

Abstract

Trust drafting practices have changed dramatically in recent decades. A range of considerations has led to an increase in the dispositive discretions held by trustees. In some cases, the trustees’ dispositive discretions effectively govern the whole trust structure, leading to what the author calls a ‘massively discretionary trust’. These trusts create a series of legal risks. These include the possibility that the trust property is held on resulting trust from the moment of the trust’s constitution and the possibility that the beneficiaries can collapse the trust and take the trust property. Some drafting techniques may be based on a misunderstanding of the law; some may invite litigation; and the governing legal principles, as understood by some drafters, may be subject to revision and refinement by the courts. This paper will examine some of these possibilities using concrete examples.

Keywords: Trusts, Discretionary Trusts, Trustees' Duties, Non-Charitable Purpose Trusts, Saunders v. Vautier, Information

JEL Classification: K00, K10, K11, K19, K30, K40

Suggested Citation

Smith, Lionel, Massively Discretionary Trusts (March 14, 2017). (2019) 25 Trusts & Trustees 397, also published as ch. 5 in R.C. Nolan, K.F.K. Law, and T.H. Wu, eds., Trusts and Modern Wealth Management (Cambridge: Cambridge University Press, 2018) 130, [2017] Current Legal Problems 17, Available at SSRN: https://ssrn.com/abstract=2932933

Lionel Smith (Contact Author)

Downing Professor of the Laws of England ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

HOME PAGE: http://www.law.cam.ac.uk/people/academic/d-smith/83102

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