Appointing a trustee

The Facts

Ben wants to put in place a Will with a discretionary trust in favour of his three children Fran, Dan, and Stan. He has no wife or partner, them having predeceased, and so he needs to choose his trustees.

Ben doesn’t take too long to think about what to do. He trusts his children. He knows they’ll “do the right thing”, and so he appoints Fran and Dan as they are the oldest.

Ben doesn’t get legal advice about whether he needs a discretionary trust in his Will, nor does he get advice about who to appoint as Trustees. He saw a Solicitor a long time ago when his children where young and has replicated the original Will prepared, just updating it to remove his Wife. He wants his children to inherit everything equally and believes his Will does this. He accompanies his Will with a letter of wishes (again an updated copy from the previous one prepared) expressing this wish.

Fast forward a couple of years. Ben has now passed away and his two eldest children have taken control of his estate. They’ve done everything expected of them as executors and trustees. They’ve obtained the Grant of Probate. They’ve called in the estate assets. They’ve paid all the debts and taxes.

They have found the letter of wishes prepared by Ben, but have decided to disregard it. Instead, they have shared the estate equally between themselves.

Stan gets nothing.

The Issue

Understandably Stan is upset by this turn of events. Despite living further afield, he has always loved his parents and has done all he could for his father. He recalls his family all getting along and so does not understand why his siblings would have chosen to do what they have done.

In contrast, Fran and Dan have no sympathy for Stan. They argue that they have shouldered the burden of care for their father in his final years and that they deserve the money. They also say that Stan is financially sound due to him having “married rich”.

As regularly happens, the children were not aware of their siblings’ true financial circumstances, and despite being trustees took no steps to establish whether their beliefs about Stan’s financial circumstances were correct.

The trustees therefore made the decision to allow themselves to inherit without proper consideration of all of the beneficiaries’ needs and without any regard for their father’s wishes.

What happened?

In this scenario, the circumstances are such as to allow a number of options to Stan.

As it turns out, Stan did not “marry rich” and instead his father had been financially supporting him regularly over the years. Stan was therefore able to bring a claim under the Inheritance (Provision for Family & Dependants) Act 1975.

Stan was equally able to consider an application to recall the assets back into the trust and to replace Fran and Dan as trustees. This being on the basis that they were in breach of their fiduciary duties in the steps they took.

What could have been done to prevent this issue arising

A number of things could have been done to prevent this issue ever arising. Ben should have obtained legal advice on the suitability of his Will. Had he done so he would likely have been advised that a trust was no longer necessary. Instead, his Will could have simply left his estate equally to his three children. This would remove the role of trustee altogether (provided all children are over 18 years, as was the case here).

If he did still need or want a trust, then he could have appointed different trustees. These could have been a neutral third party or a professional (such as a Solicitor or Accountant). Professional trustees have a higher standard that they must apply to the role, and in both scenarios the trustee appointed would not have a financial interest in the estate funds.

While the above may not always be the case, if something untoward has occurred, it is vital that advice is obtained promptly. Time will always be of the essence in cases such as this, especially if funds have been removed from the trust. Getting the correct advice quickly could be the difference between you being able to do something, and you being left without a penny.

The above is a hypothetical scenario prepared to show an example of the types of cases that can arise. The persons referred to are not based on any person(s) living or dead. Any resemblance to any person(s) claim or position is entirely unintended. The above does not resemble legal advice. If you or your family are in a similar situation, it is vital that you obtain legal advice from a specialist solicitor promptly.