The recent case of Henchley v Thompson in the Chancery Division provides a handy summary of the law relating to Trustee’s duties to provide an account to beneficiaries. Trusts had been created to benefit the settlor's second wife, children and grandchildren. The original trustees had died and the defendant had taken on a role looking after aspects of the trusts. The main trust asset was a property. A share portfolio had been liquidated over 20 years previously and no tax returns had been filed for the trust since 1996. The defendant asserted that the trust had been wound up in the early 1990s. The defendant had not kept records relating to the trusts, claiming it wasn’t his responsibility to do so as one of the other trustees had that role, and claimed limited involvement with the trusts.
The claimants' case was that they were entitled to an order requiring the defendant to provide an account relating to the trusts, regardless of whether there had been any wrongdoing.
Chief Master Marsh sitting in the Chancery Division of the High Court found that:
- De facto trustees are subject to the same duties as actual trustees, and both are obliged to account to the beneficiaries. The court has a discretion about whether to order an account, but this would ordinarily be exercised and the circumstances in which it would not do so are limited.
- There is no limitation period applicable to a claim for an account in common form.
- Trustees are jointly and severally responsible. Whilst it is acceptable for trustees to divide their responsibilities between themselves, this does not absolve the others of their obligation to keep records and account to the beneficiaries if the trustee whose role it is to provide this information, fails to do so.
- The style of trust accounts and the level of detail may vary, but trustees should show how the assets have been dealt with and what distributions and disposals have taken place.
A point to keep in mind is that whilst there is no limitation period applicable to a claim by beneficiaries for the Trustees to produce an account, which means that such a claim can be brought at any time; once an account has been provided by the trustees (either voluntarily or by court order), and the beneficiaries have reviewed the account, if any claims are identified as a result as against the Trustees for breach of trust, those claims will be subject to the usual limitation periods.
For further advice relating to Trustees duties and actions for accounts or breaches of trust, please contact Daniel Winter who is a Partner in our Wills and Trusts Dispute Resolution Team on 01279 755777.
Daniel is a certified contentious trusts and probate specialist with ACTAPS, the recognised association of legal specialists in this complex area of law.