In mental capacity assessments, we’re used to navigating complex decisions such as selling property, gifting assets, appointing attorneys. But one pair of decisions is frequently misunderstood: acting as a trustee vs retiring as a trustee.
On paper. they might sound like two sides of the same coin, but legally and cognitively, they’re entirely different—and that distinction matters more than many realise.
Acting as a Trustee vs Retiring: Why They’re Not the Same
Acting as a trustee means taking on active, ongoing responsibilities: managing trust assets, understanding fiduciary duties, communicating with beneficiaries, and making big-picture financial decisions. This requires consistent cognitive engagement and is considered a macro decision (one that’s complex and layered).
By contrast, retiring as a trustee is a one-time decision. It doesn’t involve active decision-making or asset management. It simply requires the person to understand they are stepping down and handing over their role. In capacity terms, it’s like deciding to get off a train, you don’t need to know how to drive it.
Why This Matters for Capacity Assessments
Under the Functional First Model of assessing mental capacity, these two decisions require separate assessments because they involve different levels of reasoning.
Acting as a trustee = complex, ongoing cognitive demand
Retiring as a trustee = straightforward, one-time understanding
The Trustee Act 1925 is clear:
Section 36: A trustee can be replaced if they are “incapable of acting.”
Section 39: A trustee can retire, but only if they have capacity and if the legal conditions are met.
Importantly, you cannot delegate trustee responsibilities, even with a Lasting Power of Attorney (LPA). If someone lacks the capacity to act and to retire, we’re into court territory, what we call an “exo decision,” like a section 41 application.
When Do You Need One Capacity Assessment? When Do You Need Two?
Here’s a quick reference guide:
Why Getting It Right Is Critical
This isn’t just a legal technicality. Incorrect or blanket assumptions about capacity can lead to mismanagement of trusts, legal confusion, or forcing the Court of Protection to mop up what could’ve been handled with a nuanced assessment. The decision to act as a trustee is far more cognitively demanding than the decision to retire—and assessing them as one and the same does a disservice to the individual and the legal process.
At Nellie Supports, we advocate for clear, decision-specific assessments, because capacity is not all-or-nothing, and neither are the decisions trustees must face. If you’re unsure whether your client needs one assessment or two, or if you’re navigating complex trustee capacity questions, speak to our expert team today on 0333 987 5118 or email nellie@nelliesupports.com
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