Question: John Elsinore died nine years ago. Under his will, his 500 shares in Elsinore Brewery were settled in the Elsinore Family Trust for his widow Gertrude for life, with the remainder to be divided equally between their children, Pam and Rosie. Claude and Henry were appointed as trustees. Gertrude was given a power to appoint the capital to any of her children as she might see fit in her lifetime.

Six years ago, Pam created a valid charitable trust (called the "Mouse Trust") for the protection of small rodents. Bob and Doug were appointed as trustees and the trust deed contained a covenant that Pam would transfer any Elsinore Brewery shares to which she became absolutely entitled to Bob and Doug to be added to the Mouse Trust.

Three years ago, Gertrude wrote to Claude and Henry saying that she wanted to exercise her power of appointment to transfer 100 Elsinore shares to Pam. Nothing further was done about this.

Last year, Henry retired as trustee of the Elsinore Family Trust and Doug was appointed as his replacement.

Gertrude died recently. Pam and Rosie want to terminate the trust so that each receives 250 Elsinore Brewery shares. Claude and Doug seek your advice. They are happy to transfer 200 shares to Rosie, but believe that 300 shares now belong to the Mouse Trust because of (a) Gertrude's intention to appoint 100 shares to Pam and (b) Pam's covenant with Bob and Doug. Advise Claude and Doug.

With regard to Pam's covenant with Bob and Doug, how can I sort this out?