Are you a Trustee without realising it?

Many people think of trustees as those who manage large sums of money for big charities. However, trusteeship can happen in everyday family life.

For instance, an adult child may help their elderly parent manage their finances. They use their parent’s money to pay for household bills, buy groceries and organise care. They are not acting for themselves, but for their parent. In doing so, they may have stepped into the role of a trustee (or something very similar).

Hidden responsibilities

When you are looking after money that is not yours, the law expects you to meet certain standards:

• The decisions you make must always be in the best interests of the person to whom the money belongs. Decisions must always put the vulnerable person first.
• Whilst not a strict duty, it is strongly advisable to keep records. Every penny should be accounted for. Without receipts it can look as though money has gone missing, even when it has not. It can be very difficult to recall what a transaction was without records.

Where people go wrong

Problems often arise after someone has passed away, when family members or solicitors start looking at the accounts. If there are no receipts, gaps in the records, or withdrawals that cannot easily be explained, questions are asked. What may have been an innocent oversight, like paying cash without getting a receipt, can lead to disputes.

Even if you would not consider yourself as a trustee, the law may still treat you as one. This means you could be held personally responsible if money is unaccounted for. This may cause huge distress at a time when families are already dealing with grief, or with care responsibilities.

Protecting yourself

There are some simple steps you can take to protect yourself:

1. Keep every receipt and record payments clearly
2. Use separate bank accounts where possible
3. Be transparent with other family members about what you are doing
4. Seek advice early if you are unsure.

How this applies if you are an Attorney

The duty to keep records is different depending on whether you are formally appointed under a Lasting Power of Attorney (LPA) or you are simply helping someone on an informal basis.

• An LPA gives you legal authority to act and without it, banks, utility companies, care homes and government departments do not have to deal with you. Families often fall out when money or care decisions are involved. An LPA makes clear who has been chosen to act as an attorney, thereby reducing disputes.
• Keeping records is a legal duty. Attorneys are required by law to keep accounts, receipts and records for all decisions made on the donor’s behalf. The Office of the Public Guardian (OPG) can ask to see records at any time, particularly if a concern is raised.
• As an attorney you are managing someone else’s assets. The records show that decisions were made in the donor’s best interests and not for your personal benefit.

Helping a vulnerable loved one is an act of compassion, but it can also put you at risk. By understanding the duties that come with that role, whether or not there is an LPA in place and by keeping good records, you can protect yourself and the person you are looking after.

What to do if there is a dispute later on

It is always hoped that all family members or anyone else who is close to, and caring for, a vulnerable person will work together to ensure that this happens in the most appropriate way and ‘by the book’. Unfortunately, this is not always the case.

After someone dies, there are sometimes disputes about who had access to the deceased person’s money and how this was spent. If possible, the situation is best resolved between the individuals concerned. However, it is always advisable to take legal advice, so that you know and understand your rights.

‘Contentious probate’ or ‘inheritance disputes’ commonly relates to disputes over what is written in a Will or who has been left out of it when they expect to inherit. However, specialists in this area of law will also be able to help with disputes over money that was spent on the person’s behalf before their death, particularly if this has reduced the value of their overall estate.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.