Variation of Trusts Act 1958

It is a general rule that the terms of a settlement, or will trust, cannot be altered except with the agreement of the beneficiaries concerned. The divorce courts do, of course, have jurisdiction to vary ‘marriage settlements’, possibly in a way that the beneficiaries will strongly object to. Halfway through the last century it was felt that it should be possible for those who were happily married or who had, at any rate, not felt it necessary to invoke the jurisdiction of the divorce courts, to obtain the assistance of the court, when necessary in rearranging trusts. Consequently, the Variation of Trusts Act 1958 was enacted, empowering the court to consent to arrangements on behalf of beneficiaries unable to consent, by reason of infancy or other incapacity, or on behalf of unborn or unascertained beneficiaries. It is well known that the Act requires the court to withhold consent unless the arrangement will benefit the person on whose behalf the court is to consent. Case law since 1958 has confirmed that ‘benefit’ means financial benefit which can, and very often does, include the saving of tax. It has been suggested that the court might be asked to assist in a great many trust re-organisations before 6 April 2008, necessitated by the IHT change made by the 2006 Finance Act. There may be some interest in a fairly straightforward application in which the judge noted the effects of the 2006 changes ( Ridgeway v Ridgeway [2007] EWHC 2666 (ch)).