I acted for the beneficiary of a trust who was concerned that trust assets to which he was entitled had been maladministered.
Our client’s grandfather had passed away leaving a will, which split the residuary estate equally with each 50% share being placed in a separate trust as follows:
- 50% of the residue was to be invested, with income payable to the deceased’s daughter and upon her death the proceeds were to pass to our client;
- the other 50% of the residue was to be invested with income payable to our client and upon completion of his university studies the proceeds were to be released to him in full.
I was instructed as three years after the deceased passing away and probate being extracted, our client had not received confirmation that the will trust in his favour had been created and additionally had not received any payment of income as was his entitlement.
Our client (who had completed his university studies) had sought to communicate directly with the trustees in respect of the income and capital sums due to him, but had not received a satisfactory response.
I engaged in correspondence with the trustees reminding them of their duties to:
- Act in accordance with the trust document and the general law;
- Act fairly towards the beneficiaries;
- Provide information and accounts to the beneficiaries upon request;
- Take reasonable care in making investments;
- Obtain proper advice where required;
- Not profit from the trust;
- To protect estate assets;
- Keep full and proper accounts.
I confirmed that the reluctance of the trustees to communicate with our client, to provide the documentation requested and failure to apply the income of the trust for our client’s benefit raised serious concerns that there may have been maladministration of the trust.
- Evidence that the will trust had been created and the funds properly invested;
- A complete set of bank statements in respect of the trust fund;
- Full trust accounts from the date of death to date;
- Copies of the IHT forms lodged when the grant of probate was extracted;
- Confirmation as to the amount of income generated by the trust, together with confirmation that this sum and the capital sum were to be paid to my client within the next 14 days.
Additionally the trustees were reminded that if the trust had been mismanaged then they would be personally liable for any loss suffered by my client and that he would pursue them in their personal capacities for the sums due to him. They were encouraged to seek independent legal advice.
Happily the trustees did obtain independent legal advice and I was pleased to receive confirmation that an interest earning trustee account had been opened regarding our client’s share of the residuary estate.
The trustees additionally confirmed satisfaction of the estate liabilities, realisation of the estate assets and provided an account, together with bank statements confirming that the funds were held in trust on our client’s behalf. They further confirmed that the revenue had been informed of the existence of the trust in accordance with the trustees’ obligations.
Disappointingly the trustees were slow to confirm agreement to releasing the capital sum to my client and there were a number of points which had not been addressed by them. Accordingly I threatened that unless a full response was received within the next seven days then my client had no alternative other than to issue proceedings for breach of trust and that he would seek to recover costs from the trustees in their personal capacity.
Shortly after receiving this communication the trustees agreed to close the account in which our client’s trust fund was held and released the balance due to him.
This case is an example of how formal communications with dilatory trustees can result in prompting them to comply with their duties and avoid the need for protracted and expensive litigation. If you believe that you may have a trust dispute then please contact us for a no obligation initial conversation. We would be happy to hear from you and to assist you in resolving the issues that you face.