Saunders v Vautier: Relevance in Modern Testamentary Trusts
What does Saunders v Vautier, a British case from the 19th century, have to do with anything in 2026?
In 2026, Saunders v Vautier remains highly relevant, specifically in how it interacts with testamentary trusts. However, clients and lawyers alike frequently overlook this case. Even if it was discussed in your university succession law class, you probably don’t remember it.
Prefer to listen instead? Check out Episode #13 of The Art of Estate Planning Podcast, where Tara and Carrie unpack the surprising impact of Saunders v Vautier on estate planning and testamentary trusts.
Facts of the Case
Saunders v Vautier is a British case that has been applied in Australia. Vautier was the nephew of the deceased testator. The case involved a very simple will -- the kind many people draft today.
Under the will, the nephew was entitled to receive income from shares in the East India Company until the age of 25. However, when Vautier reached the age of majority (which was 21 at the time), he demanded the full gift of the shares, claiming he was absolutely entitled to them.
Rather than receiving only the income while the capital was held until he turned 25, he argued that he was an adult, had an absolute entitlement to the shares, and could take ownership of them immediately. He was successful, and the gift was paid to him early.
Relevance to Australia
The rule in Saunders v Vautier was adopted in Australia by the High Court in 2005 in the case of CPT Custodian Pty Ltd v Commissioner of State Revenue. The High Court essentially affirmed that under this rule, an adult beneficiary (or a group of adult beneficiaries acting together) who has an absolute, vested, and indefeasible interest in the capital and income of a property may at any time require the transfer of that property to them, thereby terminating the accumulation.
What does that mean? Even if you have a basic will that says, "I give X amount to this person upon reaching the age of 25", once they turn 18, they can call on the executor or trustee to demand full payment of the gift immediately, provided they are absolutely entitled (which they usually are, subject to specific drafting).
Many willmakers fail to appreciate how the rule in Saunders v Vautier can undermine their estate planning objectives, and that their direction to hold the gift until a future age is often worthless.
We’ve all heard stories where young adults have received full control of their inheritance and wasted it on frivolous spending. Unfortunately, despite a willmaker’s best intentions, there is not much that can be done under a basic will to prevent this outcome once a beneficiary turns 18.
Relevance to Testamentary Trusts
What is the simplest drafting strategy an estate planning lawyer can adopt to minimise the impact of the rule in Saunders v Vautier? It’s simple – use a testamentary discretionary trust.
The rule does not apply to assets in a testamentary discretionary trust. When you are drafting a will for a testator who wants to benefit minors (whether they are grandchildren, children, nieces, or nephews) this is a vital consideration. With a testamentary trust, you don't have to worry about the rule in Saunders v Vautier undermining the willmaker’s intentions and exposing the inheritance to a beneficiary’s financial immaturity.
Just because the money is in a trust does not mean the minor beneficiaries and young adults won't benefit. In fact, one of the key features of a testamentary trust is that you can separate the financial control over the inheritance from the right to benefit from the inheritance.
Under a properly drafted trust deed (see my checklist for a gold standard testamentary trust deed), the trustees should have the power to release capital as an interim distribution or, preferably, as an interest-free secured loan. The trustees can make income distributions to pay for education, accommodation, travel, medical expenses, or even a gap year. However, because the control is held by financially mature adults, the capital can be preserved until the beneficiaries are ready to take over responsible financial management.
Read more about the strategies for transferring control of a testamentary trust to beneficiaries.
The Takeaway
Don't overlook how Saunders v Vautier might apply to your estate planning recommendations and potentially undermine their effectiveness. When conveying the benefits of testamentary trusts to young couples, remember: if they pass away prematurely, the trust protects the kids from their own financial immaturity and ensures the inheritance goes a lot further.
Deepen your understanding of testamentary trusts with our comprehensive online course "Testamentary Trusts: The Essential Guide for Australian Lawyers".
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