Trust Fund Issues (Long Post)

Malthusian

sk_45 said:

How about this for negligence or dishonesty:

1. A letter from the bank to mother dated Oct 1984 clearly stating that the portfolio is under regular review. However from the initial record of investments made in 1984 and the next document of investments in 1990 I can see 3 changes bought in 1986 in equity holdings. Remember there were only 10 in the portfolio and 7 of them were bought in 1984. PLEASE NOTE that the investment schedule thankfully has a column date of purchase.

"Buy and hold" is exactly what prudent trustees should be doing. Trying to get the beneficiaries rich quick by churning the portfolio and playing the stockmarket is not one of the trustees' duties.

2. One of the investments bought was British and Commonwealth shipping, which went into liquidation. They clearly were not f**king reviewing it were they?

Being clairvoyant is not a duty of a trustee.

How did you manage to work in banking for twenty years without understanding that nobody can consistently predict when businesses will go bust? Did you predict the liquidations of Enron, HBOS and Carillion? If so why didn't you short their shares and make a fortune?

If the trustees had invested all of the money in British and Commonwealth and lost the lot, that would have been a failure to invest the money prudently, but from the information in your post they diversified the trust's investments (by the standards of the 80s) and there is no evidence of a failure to meet their duties.

3. A letter from the bank to mother dated Sept 1984 stating the following: "You will see from the schedule of investments in your husband's estate there is £9,500 held on a building society account, it is suggested that some of those monies be invested in British and Commonwealth and Northern Foods to yield 2.7% and 4.8%". The money was earning 8.75% in the building society!

Presumably these were equities so the total return could have exceeded 8.75% if they'd done well. If there was no potential upside all the existing shareholders would have dumped the shares and stuck their money in the bank. Poor investment performance is not grounds for a complaint.

4. Poor investment performance is not grounds for a complaint.

5. This one definitely falls on your mother. What bank is going to risk a family feud by going over the head of the beneficiary's own mother (who is also the co-trustee) and telling the son that they can make a claim on the trust fund for education purposes (reducing the income available to the mother)?

I realise this isn't what you want to hear but the good news is that we aren't charging you for it, which is what solicitors would be doing.

For the record my poor mother did seek advice from citizens advice, her friends et al.

Citizens Advice is for people on the breadline who are struggling with the benefits system. Not to help trustees of a trust worth over 300 grand in today's money to meet their legal duties for free. People who refuse to pay for advice on how to co-manage a fund worth £300k+ in today's money should expect to get what they pay for.

The good news is that despite not wanting to pay anyone for professional independent financial advice (or if she did, they didn't tell her what she wanted to hear) she has still muddled through to the fairly decent result that her needs have been provided for over the past 40 years (presumably, or you'd have said) while still guaranteeing a five figure sum left over for her child.