Acting as trustee of land: what do I do?

You can become a trustee of land in two main ways. You could expressly agree to act as trustee, by entering into a formal written document known as a trust instrument. Or you could become a trustee automatically, without necessarily realising it.

For instance, if you have allowed a friend/relative to transfer property into your legal name, on the basis that the friend/relative retains the equity in the property, then you are a trustee of that land. The person who owns the equity in the land is known as the beneficiary.

You should think very carefully before deciding to be a trustee. It can be a demanding and time-consuming role. Unless you are a professional trustee, it is unlikely that you are entitled to charge for your time. Although the court can authorise payment to a lay trustee, the court will only do so in exceptional circumstances. 

As a trustee, you are required to:

• act in the best interest of the beneficiaries, for instance by keeping the property in repair;
• exercise such care and skill as is reasonable in the circumstances. More care and skill is required of professional trustees (such as solicitors, accountants and fund managers) than lay trustees;
• keep accounts. You should generally provide beneficiaries with trust accounts and you need a very good reason to refuse to disclose them; and
• avoid situations where you may profit from your position as trustee.

This is not a complete list of trustee duties.

If you breach any of your duties, the beneficiary (or beneficiaries) may bring a legal claim against you for compensation and/or for your removal as trustee. This is what happened in the case of Brudenell-Bruce v Moore [2014] EWHC 3679 (Ch). The claimant, Lord Cardigan, was a beneficiary of a large estate which his family had owned since soon after the Norman conquest. Lord Cardigan put pressure on his friend, Mr Moore, to accept the role of lay trustee. Mr Moore accepted the role, and a professional trustee was also appointed.

Some years later, Lord Cardigan brought a legal claim against both trustees. Among other things, Lord Cardigan alleged that the trustees had failed in their duties by:

• failing to repair a building known as the stable block; and
• allowing Lord Cardigan’s uncle to occupy a cottage on the estate rent-free. The uncle, whose name was Lord Charles, had lived in the cottage for decades. Until October 2013 Lord Cardigan appeared to be happy in this arrangement, however he then changed his mind.

The court held that there was no breach of trust in relation to the stable block. The stable block had been leased to a company named Golf Club Investment Holdings plc (GCIH) in 2007. In 2009, when the trustees should allegedly have acted to repair the stable block, little more than two years of the 150-year lease term had elapsed. From the estate’s point of view, it was obviously preferable that GCIH should bear the cost of any repairs. It was not certain, moreover, that the sorts of work that allegedly should have been undertaken would have been of much use. The lease was forfeited in 2011, and by that time the estate was desperately short of funds. Therefore, the trustees were justified in focusing on finding a purchaser, on the basis that a purchaser would carry out a full refurbishment of the stable block.

However, the court held that there was a breach of trust in relation to the cottage. Although Lord Cardigan’s change of mind regarding Lord Charles’ occupation was unattractive, there are circumstances where trustees may even have to act dishonourably (though not illegally) if the interests of their beneficiaries require it. Accordingly, one or two months after October 2013, the trustees should have asked Lord Charles to pay a market rent for the cottage. If Lord Charles had been unwilling or unable to do so, the trustees should have taken steps to evict him.

Overall, the trustees were ordered to pay compensation of £64,225 to the trust. Mr Moore was also ordered to repay the sums he had received as remuneration for his services.

In light of the breakdown in relations between Mr Moore and Lord Cardigan, the court ordered Mr Moore’s removal as trustee. However, a mere breach of trust, and/or mere friction between trustee and beneficiary, does not necessarily justify the removal of a trustee. The court will consider the surrounding circumstances, such as the seriousness of any breach of trust, and whether the removal would involve a significant expense to the trust, before deciding whether to remove a trustee.

If you are thinking of becoming a trustee of land, or if you are already a trustee of land, we are well-placed to advise you on your position and options.

For more information about the topics covered in this article, please contact Stephanie Butler. Law covered as at February 2022.