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This Is Why You Should Always Appoint Professional Trustees!

Appointing trustees who are also beneficiaries can lead to conflicts of interest and that is why it is always best to appoint independent professionals to do the job. That point was clearly made by a family dispute concerning farmland with development prospects that had a potential value in excess of £10 million.

farmAfter the couple who had bought the 12.3-acre farm in the 1950s died, the land was left in trust for their six children equally. Four of the children had subsequently died and the current trustees were the two survivors and the son of one of them. They were beneficiaries of the trust, as were three of the couple’s grandchildren whose parents were deceased. The trustees had entered into option agreements with a housing developer in respect of the land, giving rise to its high potential value.

The grandchildren suspected that the trustees had failed to act impartially and fairly and that money had been paid to other beneficiaries but not to them. They also wished to check that the option agreements had been prudently entered into and whether the land had been generating any income. Although they had recently been provided with trust accounts, they claimed that they were otherwise being kept in the dark as to the manner in which the trust was being managed.

After the grandchildren launched proceedings, seeking disclosure of a large number of documents concerning the trust, the trustees argued that they were engaged in an illegitimate fishing expedition, aimed at finding ammunition to use against them in a breach of trust claim.

In ruling on the case, the court noted that it was not required to make any firm findings against the trustees, who might have perfectly proper and innocent explanations for everything they had done. However, in granting a disclosure order, it found that, on the evidence available, the grandchildren had raised ample grounds for exciting the suspicions of the court.

The trustees had initially denied, on a very weak basis, that the grandchildren were beneficiaries of the trust and had taken an extreme and indefensible approach to the disclosure issue. A less confrontational and more cooperative approach might well have avoided the dispute and, by putting forward a series of hopeless arguments, the trustees had brought the litigation on themselves. The grandchildren had the right to hold the trustees to account for their stewardship of the trust and were entitled to know what had been done with the trust property.

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