Trusts can offer great flexibility. They allow property to be ring-fenced; placing it in the hands of trustees who have wide powers to deal with it for the benefit of the named beneficiaries. Farmers in particular often find that the trust offers the most practical solution to the succession of the family farm on their death. In most cases such trusts function perfectly, with the trustees fulfilling their obligations to the satisfaction of the beneficiaries in whose benefit they act. However, on occasion the relationship between trustee and beneficiary can break down. Let’s consider an example.
Mr McGregor, a farmer, died in 2009 leaving two adult children. His Will set up a trust of the farm with his children as beneficiaries. Mr McGregor made clear in a letter to the trustees, his two oldest friends, that he wants the farm to continue and be preserved. The trustees have decided to sell off some of the farmland. The beneficiaries disagree with this transaction. They feel it will devalue the farm and wish to keep the land united. They have told the trustees of their objection but they appear to be going ahead with the sale anyway. In the two years since Mr McGregor died the trustees have never produced trust accounts.
The provisions governing the duties of trustees and rights of beneficiaries are often contained within the trust instrument itself (be it a Deed or perhaps in a Will) but the law also provides for certain of these under statute and case law.
Trustees must wherever practicable consult the beneficiaries of full age concerning the exercise of any function relating to the land and so far as their wishes are broadly in line with the purpose of the trust, give effect to those wishes. Trustees are also under a duty to produce accounts for the beneficiaries to examine. The trustees appear to have failed in both these duties and the beneficiaries may have an action against them for breach of trust. Such an action could result in the removal of the trustees altogether. The beneficiaries would also be able to take an action to obtain a Court order requiring the production of trust accounts.
Most disputes of this nature can be settled but it is reassuring to know that remedies are available through the court.
This is a broad and complex area, if you have any problem relating to a trust of any kind then please do not hesitate to contact Amanda Smallcombe. Amanda is an associate member of the Association of Contentious Trust and Probate Specialists and can be contacted on 01206 217395.
