08 February 2019
Foo Soon Yien
The rule in Saunders v Vautier permits a beneficiary to terminate a trust if the beneficiary is of adult age, of sound mind and compels the trustees to transfer the legal estate to the beneficiary, thereby terminating the trust. This may be problematic as a testator may wish for the beneficiary’s share in his estate to be held on trust until a beneficiary attains an age, beyond majority. If the will is inadequately drafted, it may fail to achieve the testator’s true intention.
A was a beneficiary while B and C were appointed as executors and trustees of a will. According to the terms of the will, A was entitled to a monthly instalment of monies under the will. Due to personal reasons, A wanted to end the trust to obtain the remaining benefit of her inheritance in full and had written to B and C conveying her wish on the same. B and C refused as they wish to honour the testator’s wish and as a result, parties took the matter to court for adjudication.
In Trusts, Trustees and Equitable Remedies Texts and Materials, citing the rule in Saunders v Vautier (1841) Ch 82 (“Saunders”), it states that:
“If there is only one beneficiary under a trust who is sui juris...[she] can bring the trust to an end irrespective of the wishes of the trustees or of the creator of the trust.”
The High Court in Re Symphonia Co Ltd & others  SGHC 261 accepted this position and stated that:
“It is trite that the beneficiaries of the trust, if together entitled to the whole beneficial interest, can if sui juris put an end to the trust and direct the trustees to hand over the trust property as they direct.”
Similarly, the High Court in Cheong Soh Chin and others v Eng Chiet Shoong and others  SGHC 173 upheld this proposition and held that:
“Under the rule in Saunders v Vautier (1841) Ch 82, persons who are together entitled to the entire beneficial interest in trust property and who are of adult age and under no disability have a right to require the trustee to transfer the legal estate in that trust property to them and thereby terminate the trust. The defendants are therefore obliged unconditionally to transfer all the shares...to the plaintiffs or as the plaintiffs direct.”.
However, it was stated in Saunders v Vautier  EWHC Ch J82 that:
“... it was immaterial whether the occasion of it was an immediate gift of the produce of the funds to the legatee, or a gift of a fund to a trustee to improve for his benefit. In either case, it was the separation of the fund that destroyed the contingent nature of the bequest, and raised a presumption that an immediate and absolute gift was intended, unless that presumption were rebutted by a gift over in the event of the legatee dying under the prescribed age. That principle was recognised and it would be found to be the principle of all those cases in which a gift of this kind had been held to confer a vested interest.”
Essentially, the court in Saunders held that where a will provides that monies are to be held on trust until the beneficiary attains a certain age, and that the monies are to be paid to another beneficiary in the event the first beneficiary meets his demise prior to reaching the requisite age, the first beneficiary will not be able to terminate the trust by applying the rule in Saunders as there is a ‘gift over’ and the subsequent beneficiary’s interest will have to be considered.
If a testator does not wish for the trust to be terminated by his or her beneficiaries prior to them attaining a certain age, the testator should include a ‘gift over’ provision so as to prevent the beneficiaries from extinguishing the trust by utilising the rule in Saunders.
Foo Soon Yien
Senior Director, BR Law Corporation
Post date. Edit this to change the date post was posted. Does not show up on published site. 8/2/2019
Subscribe to our Newsletter
Subscribe to our quarterly newsetter to keep up to date with a wealth of insights from the BR Law, BR Family Assets and BR Corporate services team.
The posts found in this Law Blog are not legal advice, nor are they given for the purpose of providing legal advice.
You should contact your lawyer for legal advice if you need legal assistance.