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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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Is it possible to wind up or change the details in a trust.

Resolved Question:

Is it possible to wind up or change the details in a trust. There was a v complicated trust set up many years ago. My mother, aunt, Myself and sister and our children were beneficiaries but the costs of managing this complicated (supposedly clever) arrangement has meant that the trust will surely have disappeared with mgt fees, legal fees etc before our children receive it. It's current form (each generation has had a different format) is three funds and those three funds are split between living children at the time of death of that generation of parents - until the final generation where it gets divided between all children of myself and my sister when both of us have died. That is likely to be in at least 40 years and surely most of it will be gone.The most important beneficiary that the trust was set up to take care of - a few generations ago died nearly 20 years ago. This last aspect of the trust was set poorly, the solicitor who set it up manyyears ago and has been managing it wants to retire so wants to pass it on to another solicitor. It's relative value has dramatically decreased because of the stock crash etc.. The value to cost to manage ratio has dramatically decreased since it was set up so seems a total waste of what is there a cheap way to wind up the trust or to reorganise it so that the management isn't so hard? Can we apply to a court ourselves to do this as the legal fees for each individual - 5 (3- minors) would be prohibitive.
Submitted: 1 month ago.
Category: Law
Expert:  F E Smith replied 1 month ago.

It is not unusual for solicitors to recommend these complicated trusts and for clients to be dragged in to them because it’s a licence for the solicitor to print money. Sometimes, the cost of administering relatively small amounts of money from the trust is actually more than the amount being administered.

If all the beneficiaries of the trust are in agreement and are all over age 18 (which obviously they are) then under the ruling in Saunders v Vautier, the trust committee brought to an end and the proceeds distributed without the need for a replacement trustee. This could have been done at any time in the past if all the beneficiaries agreed.

There is an argument that the solicitor who was administering the trust has been negligent and looking after self-interest if you had expressed an interest in finishing the trust, in the past, and he didn’t advise you of the above. That could be the pressure you need to bring on him to wind up the trust.

If you Google the case law, there is a lot of commentary on it

Can I clarify anything for you?

Please rate the service positive. It’s an important part of the process by which experts get paid.

We can still exchange emails. Best wishes.


Customer: replied 1 month ago.
Three of the beneficiaries are minors and would get the absolute amount when both myself and my sister die. Fund b is for me to use the interest until I die and fund c is for my sister to use the interest until she dies and then when we have both died and there is no chance of either of us having any more children each fund gets divided absolutely between all children.Right now we each have fund b and c invested as a percentage in our own properties (as we previously had it in shares and it lost so much value after receiving a small amount of interest and the fees of management being paid) so when we die the property will definitely have to be sold to get that % share out and then the children who use that as their home could end up loosing their home. We want to try to separate it so that each child's interest is taken care of and that it doesn't dwindle to nothing and we don't end up loosing the properties.We expressed an interest in ending or reorganizing the trust in the past and it was advised by barristers that it was very expensive to wind up as the costs of valuations and future valuations and going to court etc.. would take away lots of the value of the trust. It was decided that that would not happen.However I found out last week that one third of it has been wound up without my knowledge, so now I am paying 50 % of the management with me and my family receiving the benefit of about one fifth of the funds.
Expert:  F E Smith replied 1 month ago.

Leaving the cost of the valuations aside, you are going to need the parents consent and a parental indemnity from the parents if the beneficiaries are going to agree to this because the parents are going to be acting on behalf of the minor children.

It seems that the situation is that whereas the children could get something now, if it carries on as it is, when you and your sister eventually die, there is going to be nothing left.

What you need to do of course is convince the parents that it's in the best interest of their children's finances to take a chunk of money now rather than wait until you your sister died.

They are going to need to take legal advice on this and it's only fair that the trust fund would pay for that legal advice.

The trust is going to need to be valued and an estimate of the future value to the children put on the trust assets for them to decide whether they would be better off waiting or not.

It is the valuing of the trust now and the valuing of the trust using projections in the future which is probably going to be the difficult part although any competent actuary would be able to do without although it's not going to be cheap and I strongly suspect the fee for that alone would be a couple of thousand pounds.

In the other beneficiaries of the remainder are minor children, you have to convince the parents to wind the trust are now rather than wait. If they are simply not interested in winding it up now and they would rather wait for their children to get whatever's coming, but then that's the end of the matter.

F E Smith, Advocate
Category: Law
Satisfied Customers: 8445
Experience: I have been practising for 30 years.
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Customer: replied 1 month ago.
I have now been able to read your response from my last message and think that information gives me enough to get started without a phone call. So I don't want to organize a phone call at this point.Both the parents want to wind up the trust so that should be something we can sort out. It is the trustee that is saying we cant do. Thank you for your help and advice. (FYI- Navigating this website can be hard when other pop ups asking for a call cover up pages with your response, I am sure that you don't have anything to do with that but its just feedback for you.)Best wishes

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