Graham Virgo: The Power of Appointment is a very important power of trustees.
What this power relates to is the power to make an appointment of trust property
to the beneficiaries, or objects of the trust.
It’s therefore a really important power.
But it raises some very important questions.
For example, you need to consider what exactly the trustee must do
if they have a powerful of appointment.
And the answer to that will depend on the nature of the power.
Sometimes the trustee must exercise that power
and failure to do so will constitute breach of trust.
Other times, there is no duty to exercise the power,
but there is a duty to consider the exercise of the power.
And when you have considered what the nature of the power is,
you then need to consider, what will happen if that power is not properly exercised?
For example, it may not be exercised at all,
either because the trustee must exercise it and fails to do so,
or it is a power where they only have to consider
the exercise of the power and failed to do even that.
And you need to work out what the consequences
of failing to exercise the power are.
But equally, there may be times when the power is exercised,
but it's exercised improperly.
For example, an appointment may be made to an object or to a beneficiary,
but they should not have received that trust property in those circumstances.
What should happen then?
Well that raises issues relating to breach of trust
and the trustee may be liable, personally, for breach of trust.
But also, there may be proprietary consequences.
If, for example, the property's transferred to somebody
who should not have received it,
perhaps they are not even a beneficiary or an object at all.
It's necessary to consider whether it's possible for the trust
to recover that property, for it to be returned to the trust,
and then for the trustee to exercise the power properly,
by appointing to the people who should have received the property in the first place.
These are the sorts of questions you need to consider
when you are examining powers of appointment.