I move amendment No. 36:
In page 26, before section 23, to insert the following new section:
"PART 5
VARIATION OF TRUSTS
23.—In this Part—
"appropriate person", in relation to a relevant trust, means—
(a) a trustee of, or a beneficiary under, the trust, or
(b) any other person that the court, to which the application concerned under section 24** is made, considers appropriate;
"arrangement", in relation to a relevant trust, means an arrangement—
(a) varying, revoking or resettling the trust, or
(b) varying, enlarging, adding to or restricting the powers of the trustees under the trust to manage or administer the property the subject of the trust;
"relevant person", in relation to a relevant trust, means—
(a) a person who has a vested or contingent interest under the trust but who is incapable of assenting to an arrangement by reason of lack of capacity (whether by reason of minority or absence of mental capacity),
(b) an unborn person,
(c) a person whose identity, existence or whereabouts cannot be established by taking reasonable measures, or
(d) a person who has a contingent interest under the trust but who does not fall within paragraph (a);
"relevant trust"—
(a) subject to paragraph (b), means a trust arising, whether before, on or after the commencement of this section, under a will, settlement or other disposition,
(b) does not include—
(i) a trust created for a charitable purpose within the meaning of the Charities Acts 1961 and 1973,
(ii) an occupational pension scheme within the meaning of the Pensions Act 1990 established under a trust,
(iii) a trust created by a British statute,
(iv) a trust created by a Saorstát Éireann statute, or
(v) a trust created by an Act of the Oireachtas, whether passed before, on or after the commencement of this section.".
This is one of my most significant amendments because for the first time it makes specific statutory provision in Irish law for the variation of trusts. The enactment of such a provision has been recommended by the Law Reform Commission in its reports on the rule against perpetuities and cognate rules and the variation of trusts. In both reports the commission recommended that the abolition of the rules in question which will be repealed by section 16 of the Bill be accompanied by the enactment of statutory provisions to permit the variation of trusts. That is the purpose of the new Part.
With limited exceptions, current law prohibits variation of trusts. Against this background of limited flexibility, the Law Reform Commission recommended a more flexible approach to meet legitimate needs where practical difficulties were concerned. Difficulties may arise where certain trustee powers are left out of the trust instrument but are found to be necessary when the trust takes effect, for instance, the power to sell land or other assets or to continue running a business and some investment powers outside the limits set in the Trustee Act 1893 such as the power to delegate. Another problem that arises is the failure to identify trustees in a trust instrument adequately.
According to the Law Reform Commission, experience shows that there are many trusts that have not been well drafted. For example, it may have been necessary to settle will trusts in a hurry without foreseeing the practical problems that could arise. Other factors that may give rise to the need to vary a trust are related to a change in family circumstances not foreseen by the settler. For example, a beneficiary who becomes frail and incapacitated may require specialist care or settled accommodation rather than continuing to reside in what is the family home. To deal with this situation and avoid undue interference with the settler's intentions, the new power provides that any variation shall be conditional on the court being satisfied that it is for the benefit of the beneficiary who cannot or will not consent for himself or herself.
The first new section contains the required definitions, while the second establishes a new court jurisdiction. The application to the court must be made by the appropriate person for the benefit of the relevant person. The other beneficiaries of the trust must agree to the proposed variation in writing. However, where another beneficiary is incapable of consenting or cannot be located, the court can provide for the variation, as long as it is in the person's interests. These provisions do not affect charitable trusts in any way. Moreover, in order to avoid misuse of the provisions, a court may not approve an application in any case in which the Revenue Commissioners have satisfied it that the application is substantially motivated by a desire to avoid or reduce a tax liability.
