Gray and Co, lawyers, abogados, international legal services, Panama City

Beth Anne Gray J., LL.B. (Hons.)

P.O. Box 832-0816 - World Trade Centre - Panama City - Republic of Panama

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The rule in Saunders v. Vautier (1841) 4 Beav. 115.

A father died in 1832 leaving stock in trust for the benefit of his nephew. The will also set out that the trust property would devolve to the nephew when he reached 25 years old. At the time, in England, the age of majority was 21 and when the nephew reached that age, because he was the sole beneficiary of the trust, he asked the court to terminate the trust and have all the property transferred over to him. The court agreed and this has become known as the "rule in Saunders v. Vautier."

Restated today, beneficiaries of a trust may end the trust and call in the property from the trustee if

  1. all beneficiaries are sui juris (ie. under no legal incapacity such as being under-age or with a mental incapacity);
  2. if the beneficiaries are unanimous and constitute the only persons entitled to the trust property.

In circumstances where a gift is made to a person that is not to receive it until that person attains an age greater than the age of majority and there is no gift over (i.e. there is not a residual beneficiary in the event that this person were to die before reaching that age), that person may call for the gift on attaining the age of majority. Accordingly the clause must be drafted to avoid the operation of the rule in Saunders v. Vautier. Thus, if a testatrix wishes a beneficiary to take at say 25 years, there must be a gift over to another person in the event that that person does not attain 25 years in order to avoid the rule and to comply with the will maker's intention.

So widespread is the practise now that court authority is not even needed; trustees are willing to hand over the property if the conditions of the rule apply without any petition to the court. This is also sometimes referred to as the "doctrine of acceleration."

For more information see also: 

bullet http://www.bht.com/news/content/cst_article.htm
bullet http://www.lawreformcommission.sk.ca/trusts.html
bullet http://www.bcli.org/pages/projects/trustee/consultation8/TrustSettleVar.pdf

 

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