6th October 2025

Sales of property with an unwell Trustee – Part 1

When a property is held under a life interest trust it usually means one person (the life tenant) has the right to live in or benefit from the property during their lifetime. After they die, the property passes to other people (the remaindermen). Often, the life tenant is also named as one of the trustees responsible for managing the property. Some legal and practical difficulties may however arise if the life tenant is a trustee and their mental capacity begins to fail.

Once a trustee loses capacity dealing with the property can become blocked. Firstly, trustees must make decisions about the property, for example whether to sell, repair, or raise a mortgage, so if a trustee loses mental capacity they can no longer legally make those decisions which will cause delays. Secondly, if the trust deed requires all trustees to act together, the whole trust can grind to a halt, meaning nothing can be done with the property until the trustee issue is resolved.

Where family members are both beneficiaries and trustees disagreements about the timing of sales or care funding can be made worse if one trustee cannot participate. Furthermore, if a sale or remortgage is needed it cannot proceed without all trustees signing. A trustee lacking capacity makes this impossible until the court appoints someone else. Removing or replacing a mentally incapable trustee is not straightforward once capacity is lost and it may require an application to the Court of Protection, which is slow, expensive, and stressful.

The proactive solution is for the life tenant/trustee to step down or adjust the trustee structure while they still have capacity ensuring the trust continues smoothly and avoids costly, time-consuming court involvement. Court processes add legal fees and long waiting times and this can be especially difficult if funds from a sale are urgently needed, i.e. for care fees. In fact if a sale is at a pre-exchange of contracts stage, if there are any court proceedings that have not yet concluded, a potential buyer is likely to be warned off by that very fact and may well switch their attention to buying a different property, leaving the would-be seller without a potential buyer.

Part one written by Helen Batt, for further information please contact Helen 01892 502 376 or hbatt@bussmurton.co.uk.

Next week part two will be released by Edward Walter a Partner in our Private Client department.

 

Helen Batt

Helen Batt
Partner