Settlors of a trust drew up a deed of trust which stipulated that following their demise their house would be transferred to a public trust with the Hebrew University of Jerusalem as beneficiary and all in accordance with the trust deed. The deed of trust stipulates the number of trustees who will manage the trust, the identity of the first trustees, as well as provisions for the appointment of alternative trustees if any of the presiding trustees is unable to fulfill its duties. However, after the settlors’ demise, it was revealed that all the trustees listed in the deed of trust had also perished and the beneficiary decided to appoint itself as the sole trustee.
The Court held that the appointment of the beneficiary as a trustee is invalid as it contradicts the purpose of the trust and the intent of the settlors. While in a non-public trust it is forbidden to appoint a beneficiary as a trustee as long as this is not permitted in the deed of trust, in a public trust such permission is not required. When the deed of trust includes explicit instructions regarding the number of trustees and the manner of their appointment, it is not possible to take advantage of the absence of the trustees in order to act contrary to the intent of the settlors as inferred by the provisions of the deed of trust. Here, the deed of trust explicitly established a separation between the beneficiary and the trustees and also granted the authority to appoint substitute trustees, exclusively to existing trustees and not to the beneficiary. Therefore, even though this is a public trust, the appointment of the beneficiary as a trustee, and all the more so, as the sole trustee of the trust, contradicts the settlors’ intentions and is therefore invalid.