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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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can a trustee be a beneficiary and manage the trust fund singularly

Customer Question

can a trustee be a beneficiary and manage the trust fund singularly ? would this situation create a conflict of interest?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

Yes a trustee and beneficiary can be the same person.

You would have to keep the roles and decision making very separate so as not to cause a conflict of interest and breach of fiduciary duties. If you are the only beneficiary then the chance of this is limited.

There may be other considerations for not taking both roles for example tax reasons.

Can I assist you any further with this?

Kind regards

AJ
Customer: replied 2 years ago.

yes please. my sister has been controlling the funds as the other trustee is an accountant and cannot provide financial advice. my sister is also the other beneficiary ( myself being also a beneficiary) the problem arising is the trustees have not conducted any regular reviews over a ten year span. that being not action has been taken to seek any independent financial advice preferring to leave the funds with one source Barclays Wealth. I feel that not enough care has been taken towards myself as when I die my sister inherits the residual trust fund.

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

So is the idea that you want to be appointed as a trustee?

Will the other trustees agree to this?

Kind regards

AJ
Customer: replied 2 years ago.

I feel that as the trust fund value is only £90,000 a third trustee would be too many. I would want one of the other trustees to stand down. As one trustee makes little contribution they should resign. Having the beneficiary's as trustees would make more sense and more accountable.


I cannot stop thinking as it stands a conflict of interest arises.

Expert:  Alex J. replied 2 years ago.
Hi,

There is obviously potential for conflict of interest but if you and your sister consent to it as beneficiaries then you wont actually be in breach of your fiduciary duty.

Where any decision may create a potential conflict of interest your approach should just be to inform the other trustee of the potential conflict as soon as you become aware of it.

Will your sister consent to your appointment?

Kind regards

AJ
Customer: replied 2 years ago.

after 10 years with poor returns and no independent financial advice sought l would insist. the other option is to dissolve the trust fund. l have never intervened which may have been a mistake on my part.


 


the second trustee only prepares the annual accounts and is paid for her services out of the trust fund account. there seems no value of retaining the trustee for her involvement?


 

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.


Can you give me any information about the terms of the trust. Does the deed say how someone can be appointed or removed as a trustee?

Kind regards

AJ
Customer: replied 2 years ago.

no the will is specific. Susan, my sister will receive the transfer of funds upon my death. there is no stipulation as to appointing or removing a trustee. however, the will was made before the trustees act 2000.


there are not other beneficiaries apart from the two of us.

Expert:  Alex J. replied 2 years ago.
Hi

Thank you.

But the will itself creates the trust for you and your sister?

If you are going to remove one of the trustees and get yourself appointed you need to do it either by consent, in accordance with the terms of the trust or by court order.

Therefore if your sister is willing to agree to your plans to appoint it would make the process more straight forward. As the other trustee have you asked her if she will agree?

Kind regards

AJ

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