What is the rule in Saunders v Vautier and how does it affect my trust?

Back in the 1800s, Richard Wright (the settlor) in his Will to leave his company shares be held in trust by John Saunders and Thomas Saunders (the trustees) to accumulate the dividends until Daniel Wright Vautier (the trust beneficiary) reaches the age of 25, upon which the trustees shall transfer the capital and dividends to him.

However, Vautier having attained the age of 21 and of sound mind, sought a transfer of the entire trust fund to himself. In short, Vautier subsequently was able to transfer the entire trust fund to himself as the Court propounded the principle that a sole beneficiary, or the absolute consent of all beneficiaries to a trust, enables the beneficiary to terminate or transfer their beneficial interest under a trust even though contrary to the intentions of settlor (subsequently also known as the rule in Saunders v Vautier).

To prevent the trust beneficiary from using the principle to draw the trust fund early at 21 (if the payout is meant to be at a later age), especially in cases where the trust is only meant to benefit a single trust beneficiary, what most settlors do is to include a “gift over” in the trust. This means that if the beneficiary dies, his/her share shall be distributed to another person(s)/organization(s).

Specific to our platform, if there is only ONE trust beneficiary, this would refer to having a separate person(s)/organization(s) as the remainder beneficiary if you do not wish for the trust beneficiary to be able to terminate or transfer his/her beneficial interest at age 21.

Example: