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Will leaves money in trust to children: can the executors be held responsible for trust mismanagement and if so can the Trustee role be passed to the children's parents?
My question is about Trust management. I am one of two executors to the estate of a family friend who died leaving a Will. The main beneficiaries of the estate are children, some of which are under the age of 18. The conditions of the Will state that the share of any person under 18 will be held in trust until they attain the age of 18. The Will also appoints the executors (e.g, me !) as trustees. Estate administration is complete and a financial statement has been sent for approval to beneficiaries or their legal guardians. I and the other executor have no family or personal ties to many of the beneficiaries and would like to pass trust responsibility to the parents of those under 18 (some are as young as 7 years). However, I have been made aware that the beneficiaries may have future recourse to the original trustees (me again !) if their share/trust is mis-managed or even lost. The situation is made more complex insofar that the marriages of some of the parents of under 18 beneficiaries have broken down. Is there a process that can be followed that allows transference of trust management without placing myself at risk and without incurring the cost of engaging professional trust managers?
You can certainly retire as a Trustee and appoint someone else in your place. In the Deed you would have an indemnity from the new Trustee, but indemnities are not a perfect solution – it depends on the new Trustee and whether he's "a man of straw" and how he manages the Trust in the future.
You could probably set up individual Trust Funds for each beneficiary and appoint the parents of each child as Trustees but it will clearly take some time and effort on your part to sort it all out and each Trust for a minor will need two Trustees. Choose your new Trustees well I think is the watch word.
I would also check the Will to make sure there isn't an infant receipt clause (we usually only put them in for small legacies to children but it is worth checking) if there is one then your problems could be over.
You say that you don't want to involve professional advisers, presumably because of the costs, but the costs would come from the Estate and be spread between all the beneficiaries. Therefore if it was my head on the line I think I would get this done properly and consider appointing professional Trustees who know what they are doing to minimise the risk of the beneficiaries seeking you out once they are 18 and disgruntled!
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