Modern families - Issues that may arise for trustees

Natasha Holme, associate, Mishcon de Reya, 07/10/2021

A "traditional family" has historically been thought to comprise a married cis-gender heterosexual couple and their biological children, born without assisted conception. Nowadays, there are increasingly more "modern families". Namely, those including:

- LGBTQI+ individuals;

- children born through surrogacy, IVF, and/or to unmarried parents;

- fostered or adopted children;

- co-habiting individuals; and

- multi-faith families.

The creation of trusts is a well-established form of estate planning for those seeking to settle wealth outside of their estate and provide for future generations. As trusts governed by the laws of England and Wales can exist for over a century, it is unsurprising that societal attitudes may change significantly over a trust's lifetime. So, what problems might modern families pose for trustees?



The types of modern families referred to above can cause uncertainty about who falls within the class of beneficiaries, particularly as trust deeds may define beneficiaries using ambiguous terms.


The use of the term "spouse" is exclusive of unmarried cohabiting couples, civil partners, and couples who are married in certain faiths by nuptials (such as the Nikah ceremony under Islamic law), which do not meet the requirements of the Marriage Acts to be legally recognised in England and Wales.


At common law, in dispositions of property, "child" is interpreted to mean "legitimate child", generally denoting those born or conceived in wedlock; excluding adopted, illegitimate and legitimated children.

Legislation has been enacted to remove some of the discriminatory effects of the common law. Section 3 of the Human Rights Act 1998 (the HRA 1998) improved the rights of these excluded children in the context of dispositions made after the HRA 1998 came into force. However, these enhanced rights are subject to contrary intention. A settlor could for instance still expressly exclude any such children.

Gendered beneficiaries 

Prior to the Gender Recognition Act 2004 (the GRA 2004), someone's gender was determined by reference to their biological sex at birth. Under the GRA 2004, gender change is recognised. Generally, if someone obtains a gender recognition certificate, their newly acquired gender is applicable for all purposes. However, this general rule does not apply to trusts created prior to 4 April 2005.

The GRA 2004 can affect entitlements under trust instruments if gendered terms are used to describe beneficiaries. If trust assets are to be distributed to the settlor's male descendants who are alive at the distribution date, and the settlor had a child who was assigned a female gender at birth but legally changes their gender to male under the GRA 2004 prior to the distribution date, they would be regarded as a beneficiary of the trust at the date of distribution.

It remains unclear how the GRA 2004 affects vested and contingent interests. For instance, if the trustees must pay the settlor's eldest daughter an income after a certain date for her lifetime, and that child undergoes a gender transition after that date, it is uncertain whether the vested interest means they should continue receiving the income for their lifetime. Similarly, there is uncertainty about whether beneficiaries nominated based on their gender who will benefit once they attain a certain age will be affected if they change their gender prior to meeting the age contingency.

Trustee considerations

Ascertaining the beneficiaries of the trust is a fundamental aspect of trustees' duties. Trustees will be in breach of trust, and accountable to the actual beneficiaries, for any loss to the trust resulting from distributions made to non-beneficiaries. The issues identified above are examples of where trustees may be uncertain about whether a given individual is a beneficiary.

Any action taken by trustees must be for the benefit of the beneficiaries of the trust as a whole. The benefit need not be purely financial and could be social or moral in nature. There are circumstances where adding beneficiaries to the trust or varying the terms of the trust would be for the benefit of the beneficiaries. For instance, there could be a benefit for illegitimate children to be added to the beneficial class on the basis that it: (1) would have been what the settlor wanted if they were alive; (2) brings the trust into the modern age; and (3) would benefit the existing beneficiaries if they had any illegitimate children themselves.

The trust deed may contain powers for trustees to add beneficiaries to the trust. This would be the simplest way to benefit someone who falls outside the class of beneficiaries. Alternatively, trustees could seek to vary the terms of the trust, either by agreement between beneficiaries of full age with capacity, or by an arrangement approved by the Court under the Variation of Trusts Act 1958.

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