The press recently reported on a case which highlights the importance of seeking professional advice on who the trustees of your Will should be.
In 2015 Melaney Watford was appointed to act as Trustee and Guardian for her friends 17-year old son when both of his parents unexpectedly died. The parents estate left him a £125,000 lump sum and £200 per month. However, Ms Watford used the trust fund to pay her own household expenses and has been convinced after it emerged that she has spent over £60,000 of the trust fund and cannot now repay any more than £1,500.
Melaney has been jailed for two years as a consequence of this but this doesn’t help the beneficiary who has been left behind without the monies his parents intended.
What is a trust?
A trust is a way to manage money or other assets for someone else. There are three main people involved in any trust:
- The settlor - the person who puts the assets or money into the trust
- The trustee - the person who manages the trust
- The beneficiary - the person who benefits from the trust
There may be more than one settlor, beneficiary or trustee involved in a trust.
There are a number of different reasons to set up a trust:
- To protect funds for a minor
- The beneficiary is too young to manage their own affairs, typically under 18.
- The beneficiary has a permanent disability which means they can’t manage their own affairs
- To ensure funds stay within a family for future generations
Your Trustees must be people who you completely trust as they will take full responsibility for any assets held within the trust. The role of a trustee is to manage the trust fund, and only use it in accordance with the trusts instructions.
A trustee has a duty to conform to the terms of the trust. Legally a trustee cannot spend money in a trust on themselves (unless they are also a beneficiary). If this happens, beneficiary can bring an action against the trustee - which is what happened in the case above.
It is common for people to include trusts within their Will and for this reason it is essential to ensure you take professional advice about the implications of the trust and the people you are appointment as trustee.
If you would like more information about Trusts or would like to arrange an appointment please contact Lauren Smith, Partner and Joint Head of Wills, Probate & Trusts on 0114 3990096 or email@example.com