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Trustees’ duties clarified by the court

Two recent court cases serve as a warning to trustees that they must properly account to their beneficiaries and that they must do so for many years.

In the first case the beneficiaries were charities including the RNLI.  The trustee had persistently failed to provide accounting information to the beneficiaries of a trust created in a will.

While the trustees had provided some estate accounts in 2007 they failed to provide further information when requested in 2014 and 2015.  As a result the charities went to court asking for the accounts to be made available.

The court considered whether the beneficiaries were entitled to information about the income, expenditure and distributions of and from the trust fund, as well as information about the accounts of the trust estate.  The court decided that:

  • Trustees had to be ready to account to their beneficiaries for what they had done with the trust assets
  • Every beneficiary was entitled to see the accounts and to see the documents which justified that accounting (although they were entitled only to information about their interest and not to information about other interests.)

The court ordered all the information relating to capital be provided and as a sting in the tail ordered the executors to pay the charities’ costs for taking the matter to court.

The second case concerned a trust set up in 1960.  Again the beneficiaries took the matter to court asking that the trustee provided full accounts of his dealings with the assets of the two trusts.

One of the issues the Court needed to decide was whether, given the age of the trust, the beneficiaries had left it too late to take the matter to court.  It is generally the case that claims need to be brought to court within 6 years of any wrongdoing.

The Court decided that there was no limitation period that could be used to prevent a trustee from accounting to beneficiaries.

As a consequence of these two cases trustees should be mindful of the following points:

  • They have a duty to be ready to account to beneficiaries
  • All beneficiaries are entitled to information about their inheritance
  • Failure to provide accounts is not subject to a limitation period
  • All trustees are responsible for good record keeping

If you are a trustee concerned about how you should be administering a trust or setting up a trust either in your will or more generally then please contact Alexa Payet in our Contentious Probate team on 0207 288 4707 or email her at AlexaPayet@boltburdon.co.uk.

You can also contact one of our other solicitors in the Disputed Wills and Probate team here.

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