Rule in Howe v Earl of Dartmouth UK: Trustee Duty to Convert and Apportion
Updated 31 May 2026 · 8 min read · Trust Law & Estate Administration
The old equitable rule in Howe v Earl of Dartmouth (1802) required trustees to convert wasting and hazardous assets and apportion receipts fairly between life tenants and remaindermen. The Trusts (Capital and Income) Act 2013 abolished this duty for new trusts — but older trusts and estates may still be subject to it.
The Old Rule and Its Purpose
When a testator left the residue of their estate “to A for life, remainder to B” — a life interest with a remainder — the interests of A and B could easily conflict. A (the life tenant) was entitled to income from the trust during their life. B (the remainderman) was entitled to the capital on A’s death. Without judicial intervention:
- A wasting asset (one that depreciated over time, like a short leasehold) would give A high income while consuming the capital that B would eventually receive.
- A reversionary asset (one that produced no income until it fell into possession) would give A nothing while building up a capital windfall for B.
The rule in Howe v Earl of Dartmouth required trustees to convert wasting, hazardous, and reversionary assets into authorised permanent investments, and to apportion receipts between income (for the life tenant) and capital (for the remainderman) to produce a fair outcome. It was an equitable gloss on the testator’s direction, implied by law where the trust document was silent.
The Three Categories of Asset
| Category | Definition | Problem for Beneficiaries |
|---|---|---|
| Wasting | Short leasehold, expiring copyright, consumable goods | Life tenant takes income; capital depleted for remainderman |
| Hazardous | Victorian ‘unauthorised’ investments, speculative stocks | Risk of capital loss affects both; not a permanent investment |
| Reversionary | Deferred fund, future interest, expectancy | Produces no income while life tenant alive; lump sum to remainderman |
Abolition by the Trusts (Capital and Income) Act 2013
The Trusts (Capital and Income) Act 2013 abolished the rule in Howe v Earl of Dartmouth (and the related rules in Re Earl of Chesterfield’s Trusts and Allhusen v Whittell) for all trusts and estates arising on or after 1 October 2013. Trustees of modern trusts and estates have no duty to convert under the old equitable rule — they exercise their TA 2000 investment powers as prudent investors, balancing capital and income needs without the Victorian conversion obligation.
For trusts and estates created or arising before 1 October 2013, the old equitable rules still apply — unless the trust deed excluded apportionment (as most well-drafted modern trusts did). Trustees of pre-2013 trusts with life interests should check whether the duty to convert applies, particularly where the trust fund contains any assets that could be classified as wasting or reversionary.
The Rule in Allhusen v Whittell
Allhusen v Whittell (1867) is a related apportionment rule for residuary estates during administration: it required the income arising during the administration period to be allocated between the life tenant and the remainderman based on the capital and income elements of the administration. Also abolished by the 2013 Act for post-2013 estates — but still relevant for very old estates still being administered under pre-2013 rules.
FAQs
What was the rule in Howe v Earl of Dartmouth?
The rule in Howe v Earl of Dartmouth (1802) 7 Ves 137 is an old equitable rule that required trustees of a residuary estate (a residuary bequest to a life tenant with remainder over) to: (1) Convert wasting assets (assets that would naturally depreciate or expire, such as leasehold property with a short unexpired term, copyright interests, or consumable commodities) into authorised investments, so that the life tenant's receipts of income and the remainderman's ultimate capital entitlement were fairly balanced. (2) Apportion the income and capital receipts from certain assets between the life tenant and the remainderman equitably during the administration period. The underlying principle was that, where a testator left the residue of their estate on trust for a life tenant and then to remaindermen, the trustees were obliged to strike a fair balance: they should not allow the life tenant to consume assets that would properly be treated as capital for the remainderman, and conversely should not deprive the life tenant of income to which they were reasonably entitled. Without conversion and apportionment, a life tenant might take too much (by receiving the income from wasting assets that would leave nothing for the remainderman) or too little (by being denied income from reversionary interests that produced no income until realisation).
What is the Trusts (Capital and Income) Act 2013 and how did it change the rule?
The Trusts (Capital and Income) Act 2013 substantially reformed the law of apportionment in England and Wales, effective from 1 October 2013. For trusts and estates arising on or after 1 October 2013 (broadly, trusts created after this date and estates of persons who died after this date), the Act: (1) Abolished the rule in Howe v Earl of Dartmouth — trustees of new trusts and new estates no longer have a duty to convert wasting/hazardous/reversionary assets under the equitable rule. (2) Abolished the rule in Re Earl of Chesterfield's Trusts (1883) — the old rule for reversionary interests. (3) Abolished the rule in Allhusen v Whittell (1867) — the old rule requiring apportionment of estate income between the residuary estate and specific legacies. (4) Preserved the statutory apportionment rule for pre-2013 trusts — the Apportionment Act 1870 still applies to trusts created before 1 October 2013, though it can be excluded by the trust deed. For trusts and estates arising before 1 October 2013, the old equitable rules continue to apply unless expressly excluded.
What are wasting, hazardous, and reversionary assets in this context?
In the context of Howe v Earl of Dartmouth: (1) Wasting assets — assets that will naturally diminish in value over time or expire, such as a short leasehold, an annuity that will terminate, consumable goods, copyrights approaching expiry, or a business interest that will wind down. Because these assets will ultimately be worth nothing to the remainderman, the equitable rule required conversion into authorised permanent investments that would preserve capital. (2) Hazardous assets — investments considered speculative or unsafe under the old law, such as shares in trading companies. In Victorian trust law, these were not 'authorised investments' for permanent trusts and had to be sold. (3) Reversionary assets — assets that do not produce income until they fall into possession (e.g., a future interest under another trust, a deferred annuity, a fund held for another life tenant whose interest has not yet ended). The life tenant received no income from these assets while they were reversionary — the rule required apportionment of the ultimate realisation to give the life tenant a fair yield for the period during which they received nothing.
Which trusts still have to apply the old apportionment rules?
The rules abolished by the Trusts (Capital and Income) Act 2013 apply to trusts and estates arising on or after 1 October 2013. For trusts and estates arising before that date — i.e., trusts created before 1 October 2013, and estates of persons who died before 1 October 2013 — the old equitable apportionment rules potentially still apply, unless: (a) the trust deed expressly excluded the rules (this was common practice in modern well-drafted trusts, which typically included an apportionment exclusion clause); or (b) all the beneficiaries with the relevant interests consent to disapplying them. In practice, the old rules rarely cause difficulty today because: (1) Most trusts created in recent decades include an apportionment exclusion clause. (2) The Trustee Act 2000 broadly updated investment powers and the standard of the prudent investor, reducing the need for strict conversion of 'hazardous' assets. (3) The 2013 Act applies to all new trusts and estates. But trustees of a Victorian family trust or a very old will trust should check whether the old equitable rules apply — they can still impose obligations and liabilities if the trust deed does not exclude them.
How is the duty to convert distinguished from the Trustee Act 2000 investment powers?
The duty to convert under Howe v Earl of Dartmouth is an equitable obligation to sell specific categories of asset (wasting, hazardous, reversionary) in the interests of balance between the life tenant and remainderman. The Trustee Act 2000 investment powers (ss.3–7) give trustees a general power of investment equivalent to that of an absolute owner, subject to the standard investment criteria (diversification, suitability) and the duty to take investment advice. The two regimes were historically in tension: the TA 2000 investment power does not override the equitable duty to convert under the old rules; a trustee who retained wasting or hazardous assets under their wide TA 2000 investment powers could still technically breach the Howe v Dartmouth duty if the trust predates the 2013 Act and the deed does not exclude apportionment. Since the Trusts (Capital and Income) Act 2013, this tension is resolved for new trusts: there is no duty to convert, and the TA 2000 investment powers operate without the constraint of Howe v Dartmouth. Trustees of old trusts should obtain specific legal advice if the trust fund contains wasting or hazardous assets to establish whether the old duty to convert still applies.
What is the rule in Allhusen v Whittell and has it been abolished?
The rule in Allhusen v Whittell (1867) LR 4 Eq 295 is a related equitable apportionment rule that addresses the allocation of estate expenses and income between a residuary life tenant and the remainderman during the administration period. Under the old rule, the residuary legatee (life tenant) received income arising during the administration of an estate, but the expenses of administration (debts, legacies, inheritance tax) were treated as capital charges — the life tenant bore the income element attributable to the period of administration, with the remainderman bearing the capital reduction. This produced complex calculations whenever an estate had significant income during the administration period. The Trusts (Capital and Income) Act 2013 abolished the rule in Allhusen v Whittell for estates of persons dying on or after 1 October 2013. For older estates still being administered (or trusts created before that date), the old rule may still technically apply unless the will or trust deed excluded apportionment. In practice, most modern administration claims are for simple debt/legacy/tax deductions without the complexities of the old Allhusen v Whittell apportionment.
Modernise Your Estate Planning
Old life interest trusts may still be subject to Victorian apportionment rules. A new will creating a modern trust with an apportionment exclusion clause avoids these complications for your beneficiaries. WillSafe’s DIY will kit for England and Wales helps you put a legally valid will in place today.
Start Your Will ›