2020-02-16
Legal Articles

Trust management – the payment of trustees

Home / Knowledge base / Trust management – the payment of trustees

Posted by Mitra Mann on 08 December 2014

Mitra Mann - Probate Disputes Lawyer
Mitra Mann Senior Associate

Administering a trust can be a complex and time consuming process. This is particularly true for lay trustees who may not appreciate the extent of the responsibility which comes with the role.

Consideration should be given (prior to accepting the position) as to whether the trustee will be entitled to remuneration for their services. In this respect the approach taken towards professional trustees differs from that taken to a lay trustee. 

Professional trustees

The Trustee Act 2000 allows express charging clauses to be incorporated into a trust document, where the trustee is a trust corporation or is acting in a professional capacity. This is unless the trust instrument makes inconsistent provision. 

Where an express charging clause operates, the trustee is entitled to receive reasonable payment out of trust funds even if the service could have been provided by a lay trustee.

If there is no provision as to entitlement of fees in the trust deed, then a trustee who is a trust corporation (but not a trustee of a charitable trust) may receive reasonable remuneration from the trust. Additionally, a trustee acting in a professional capacity (but who is not a trust corporation, a trustee of a charitable trust or a sole trustee) is also entitled to fees as long as each other trustee provides their agreement in writing. 

Lay trustees

The general position is that a lay trustee (i.e. someone who accepts the role on a non-professional basis) is not entitled to remuneration. This approach has been highlighted in the recent case of: Brudenell-Bruce -v- Moore and Others [2014] EWHC 3679 (Ch)

The Brudenell-Bruce Case

A lay trustee agreed to act gratuitously on the basis that the beneficiary suggested that the role would be largely symbolic and would not involve much time or effort. It transpired that the task was particularly onerous and time consuming. Matters became further complication as the relationship between the beneficiary and trustee broke down. 

The beneficiary brought an action against the trustee for breach of trust. One of the grounds of the claim was that the trustee should repay the remuneration he had taken, because he had initially agreed to work for free. 

The High Court Judge found that the lay trustee should repay the sums that he had taken as salary. It was reiterated that the general position was that lay trustees should act gratuitously. 

Although the Court does have jurisdiction to authorise (or increase) trustee payment, this would usually only be where such a decision is in the interests of the good administration of the trust or where the service provided by the trustee was wholly outside what had been originally envisaged. This was not found to be case on this occasion. 

The Judge also found that the breakdown of the relationship between the trustee and the beneficiary was hampering the good administration of the trust. It was irrelevant that the beneficiary was chiefly responsible for that breakdown or even that there was evidence that the beneficiary had purposely provoked the trustee with a view to ultimately obtaining his removal. 

Summary

The moral of this case is that a lay trustee should carefully consider what the appointment may involve before agreeing to assist in the administration of a trust. 

About the author

Mitra Mann

Senior Associate

Mitra is a specialist in both, contentious probate and contentious court of protection work.

Mitra Mann

Mitra is a specialist in both, contentious probate and contentious court of protection work.

Recent articles

30 July 2020 Rethinking the landlord / tenant relationship

We have been following the travails of the high street for over 12 months where changing shopping habits, business rates and rent increases have been contributing to a growing strain on many landlord / tenant relationships. The Covid-19 pandemic has not only turned a bad situation critical for many retailers and hospitality venues but has also turned the spotlight on the wider commercial sector too. Almost all businesses operating across the country have suffered financially to a greater or lesser extent as result of the economic downturn precipitated by the imposition of lockdown in March.

Read article
30 July 2020 Bankrupts fail in claim to have interests in land revested in them

The claim by Mr and Mrs Brake (Brake v Swift), heard in the High Court in May, to have a cottage and adjacent land revested in them under Section 283A of the Insolvency Act 1986, was set against a background of convoluted litigation extending over a number of years, described by Matthews HHJ as ‘complex’. The claimants had been made bankrupt in 2015 and the matter before the Court concentrated on whether or not the property concerned was, indeed, the claimants’ principal residence at the time of the bankruptcy.

Read article
29 July 2020 Remote witnessing of wills – a sign of the times

The law governing how a will is witnessed dates back to 1837 and for good reason. The requirement for two people (neither of whom can inherit from the will they are witnessing) to be physically present at the signing of a will is designed to, among other things, prevent fraud and the exercise of undue influence. That is, until the Covid-19 pandemic struck.

Read article
Contact
How can we help?
01926 732512
CALL BACK