The Trust Document and Trustee's Duties

Trustees 'Need to KNow' Guides

This Trustees 'Need to KNow' Guide provides general guidance of the law at the date of publication. Specialist advice should also be sought.

Updated July 2020.

What is a trust?

A trust is an arrangement defined by law whereby an individual, or a group of people, are given legal title and responsibility for the ownership of assets for the benefit of some other person or group of people. It may be comprised of property, shares or just money.

How is a trust created?

A trust is ordinarily created in one of two ways:

  • by a deed of trust for a trust created during the lifetime (to take immediate effect) of the person or people giving assets to the trust; or 
  • by a will for a trust that is to be created on or shortly after the death of the person making the will. The individual (or individuals) giving assets to the trust is/are known as the settlor(s). 

What are a trustee’s duties? 

The unique concept of a trust is the separation of the legal ownership by the trustees and beneficial ownership by the beneficiaries. Trustees have duties of honesty, integrity, loyalty and good faith to the beneficiaries of the trust. The trustees must always act in the best interests of the beneficiaries. They must observe the terms of the trust, exercise reasonable care and ensure the correct distribution of assets, act impartially between the beneficiaries and provide certain information to the beneficiaries when asked to do so.

What should a trustee look for in the trust document? 

The trust document (whether by lifetime settlement or will) states who is responsible for looking after the gifted assets (the trustees) and who is to benefit (the beneficiaries) as well as any rules or conditions that they must comply with. The trustees have legal title to the assets in the trust and are responsible for administering the trust in accordance with its terms. The beneficiaries are able to benefit from the assets held in the trust. The trust document may also nominate a “protector” who is responsible for ensuring that the trustees operate the trust in accordance with its terms and the intent of the settlor. Trustees have various legal powers to administer a trust, the scope of which is set out in the trust. Some trusts are extremely prescriptive whereas other trusts allow the trustees to exercise their discretion on how best to allocate trust assets and income. 

What about worldwide assets?

Additional consideration needs to be given in relation to worldwide assets. Not all jurisdictions recognise trusts. Moreover, certain jurisdictions impose forced heirship rules and/or are subject to matrimonial regimes that require property to be dealt with in a particular way. These regimes expose a trust holding applicable assets to potential challenges. 

How can we help? 

We act for trustees, executors, personal representatives and for individuals claiming against estates, trustees or other parties. We also often advise on complex and cross-jurisdictional issues, and regularly work alongside other intermediaries based offshore. Our team is recognised for our expertise in this field by the legal directories: The Legal 500 and Chambers & Partners. If you have any questions arising from this Need to Know please do not hesitate to contact our Wills, Trusts and Inheritance Disputes Team.

Latest blogs & news

Spotlight on dementia: can you challenge a will despite the views of medical experts?

Alzheimer’s disease, the most common form of dementia, has been in the spotlight recently given a recent scientific breakthrough with the US approving the first new Alzheimer’s drug in 20 years. Light has also been shed on dementia and assessing testamentary capacity in the recent case of Hughes v Pritchard [2021] EWHC 1580 Ch. In this case, Mr Hughes, who suffered from moderately severe dementia was nevertheless deemed to have capacity at the time of amending his will by his GP, a view supported by a joint medical expert later instructed in the case. Despite this, his will was overturned by the judge on the basis that he did not have the requisite capacity to make the changes to his previous will, which were much more significant than the medical professionals, and indeed Mr Hughes, had appreciated.

When does the clock start ticking on trustees’ negligence?

Matthew & Others v Sedman & Others [2021] UKSC 19 

The Supreme Court recently handed down a judgment dealing with time limits in a “midnight deadline” case. The claim was brought by new trustees and beneficiaries of a will trust against the former professional trustees. The claim involved allegations of negligence against the former trustees, along with breach of trust and breach of contract.

Looking out for financial abuse of the vulnerable

 Financial abuse of older and vulnerable adults is sadly becoming more prevalent

You gotta’ have faith…in ADR

My previous blog examined whether Kenny Goss, the ex-partner of George Michael, may be entitled to a provision from the late singer’s estate, notwithstanding the fact that their relationship had broken down in 2009 (seven years prior to Mr Michael’s death). It was reported at the time that Mr Goss was seeking an award of £15,000 per month on the basis that Mr Michael had been financially maintaining Mr Goss at the time of his death. Pursuant to the Inheritance (Provision for Family and Dependants) Act 1975, Mr Goss made an application for reasonable financial provision from Mr Michael’s estate because he had not been left anything in the singer’s will.

Inheritance claims by adult children

In recent years the courts have seen a significant number of claims under the 1975 Act bought by adult children. This week it has been widely reported that the two adult daughters of Tony Shearer, a high profile banker and finance governor of a well-known public school, have failed in their attempt to bring a claim against their late father’s £2.2 million estate. Mr Shearer made no provision in his estate for his daughters leaving the majority of his wealth to his second wife.

What is required to show dishonesty in the case of a professional trustee?

Examining the impact of Sofer v Swiss Independent Trustees SA on practitioners in England and Wales. 

This article was first published by STEP, December 2020: Katherine Pymont, 'Moments of Truth', Trust Quarterly Review (Vol18 Iss4), pp.36-41

Whoever thought Will forgery would be easy?

Two recent decisions relating to forged wills have highlighted what evidence will be sufficient for a court to make a finding of forgery.

Contentious Trust and Probate Quarterly Round-Up: Q4 2020

This quarterly contentious trust and probate litigation update provides a summary of a cross-section of reported decisions handed down in the courts of England and Wales in the period October 2020 - December 2020.

Beneficiaries in the dark: what can you do to obtain the information you need?

Beneficiaries often have questions and concerns over how the estate of a loved one is being administered but are sometimes kept in the dark by personal representatives (PRs). Under section 25(b) of the Administration of Estates Act 1925 (AEA 1925) PRs can be required by the court to provide, on oath, a full inventory of the estate and an account of what steps they have taken to administer an estate. 

Leaving a legacy to charity: avoiding a will construction claim

The High Court has recently given judgment in the case of Knipe v The British Racing Drivers’ Motor Sport Charity and Ors [2020] EWHC 3295 (Ch), a summary judgment application concerning the construction of a will of a deceased racing driver, Mr Barrie Williams, who had sought to make several bequests to charity but the names of the organisations had not been correctly recorded.

When can a Will be rectified? Barrett v Hammond (2020)

One of the questions we are often asked is whether an individual’s will can be amended after their death if it doesn’t reflect their intentions. This is sometimes possible under a process known as rectification, although the circumstances in which rectification is available are limited. A claim for rectification was recently considered by the court at the end of 2020 in the case of Barrett v Hammond & others.

Did George Michael have the freedom to exclude his ex-partner from his will?

It has been alleged that the ex-partner of George Michael, Kenny Goss, may be considering issuing a claim against the singer’s estate. Goss was excluded from the singer’s Will but purportedly claims he is entitled to a monthly allowance of £15,000 as the singer provided this monthly allowance to him before their relationship broke down in 2009.

Highly publicised matters arising in relation to the administration of the late Steve Bing’s estate in the US give rise to some interesting legal issues

Before the Family Law Reform Act 1969 (“the 1969 Act”) came into force on 1 September 1970, the common law rules of construction that a child is legitimate only if the child was born or conceived in wedlock applied when dealing with trust deeds or wills. The 1969 Act is not retrospective so difficulties may still arise in relation to trust deeds or wills settled/executed prior to that time.

Think twice: might the estate be insolvent?

This blog focuses on two practical considerations that should be borne in mind when dealing with an estate where there are any suspicions that the value of the assets when realised may be insufficient to meet all debts and liabilities in full.

Glover v Barker – Cost Orders against Litigation Friends

It is not uncommon in claims involving trusts and estates for one or more of the parties to be a child or other protected party. This is particularly true of claims under the Inheritance (Provision for Family and Dependants) Act 1975 and in cases involving trusts with minor beneficiaries. The procedures for litigation by or on behalf of a protected party are covered by Part 21 of the Civil Procedure Rules. 

How to challenge a will

This article was first published by EPrivateClient on the 18th August 2020

Contentious Trust and Probate Quarterly Round-Up: Q2 2020

This quarterly contentious trust and probate litigation update provides a summary of a cross-section of reported decisions handed down in the courts of England and Wales in the period April 2020 - June 2020.

Solicitors’ Delay in preparing a Will – When is it Negligent?

Delay is a common complaint in professional negligence claims against solicitors in the context of wills and probate. For example, If a client is in poor health or advanced old age and wants to create or update their will, they might instruct a solicitor to assist with this. If the client dies before the new will can be prepared and/or executed, the beneficiaries who would have inherited, had the will been put in place before the client’s death, may look to bring a professional negligence claim against the solicitor if there has been undue delay by the solicitor in preparing the will.

Testamentary Capacity and Undue Influence – When does a Professional Negligence Claim arise?

Solicitors in any field of practice are under a duty to exercise reasonable care and skill when acting for clients. In wills and probate practice, that duty also extends to the beneficiaries of a testator. If the solicitor has acted in breach of that duty, which causes loss to the client or their beneficiaries, this could form the basis for a professional negligence claim against the solicitor.

The Forfeiture Rule - can a person who is convicted of killing another benefit from their crime?

Most people would agree that if a person is convicted of unlawfully killing another person, it would be wrong for them to be allowed to benefit from their crime. For example, if a husband kills his wife and is the main beneficiary of his wife’s valuable life insurance policy, or is the main beneficiary of her estate under a will she has made, it would generally be unpalatable for the husband to be allowed to benefit from the policy or the estate. This principle is unheld in law by what is known as ‘the forfeiture rule’.

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