Beneficiary Duties towards Trust

Will leaves a right of occupation for 5 years. The beneficiary is to pay outgoings, insurance and keep property in good repair, but the clause does not say that this is a condition of their occupation.
Beneficiary has not insured the property and is allowing the property to fall into disrepair. One of the trustees is not bothered about the situation, however the other trustee would like to ensure the beneficiary does what he is supposed to do but does not know what to do.
What steps can the trustees take against the beneficiary if he fails to perform his duties? bearing in mind that they are not a condition of his residence.

Sally-Ann Joseph
Rose & Rose

It would be good to know the precise terms of the will as to payment of outgoings, but I would expect that on most forms of words I can think of it would be treated as a condition of occupation.

On which basis a claim for possession might be made in the county court. It would probably end up being compromised on terms providing for the life tenant to carry out the terms of the will.

The difficulty comes if the cost of repairs are beyond the means of the life tenant. The duties of trustees who do not hold funds they can use for repairs is unclear; in the only case of which I have knowledge a possession order was made so the life tenant could qualify for a local authority old person’s bungalow and the trustees were able to sell the property in a slightly dilapidated state and in that case everyone was, I think, happy.

Certainly I think the trustees have to do something and in the short term they should try and obtain insurance. Its not always easy if the insurers are aware that the property is occupied and not in repair and the cost may be significant. Nevertheless I would advise the trustees to pay it out of their own pockets, and rely upon it being reimbursed, even if only when the property is sold.

Tim Gibbons

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If the matters referred to are not a condition of the beneficiary’s occupation, I am not sure how they are “duties” which can be enforced.

If the will directs that the beneficiary “is to pay outgoings, insurance and keep the property in good repair”, it is unclear why these are not conditions of his enjoyment of the property as, if they do not impose conditions, such words would appear meaningless.

If the words do impose conditions, then the trustees are responsible for monitoring that the beneficiary complies, and to take appropriate action if there is non-compliance (which could include revoking the right of occupation, etc.). However, if there are no enforceable conditions attaching to the beneficiary’s right of occupation, the fall-back position will be that the trustees have the responsibilities, including arranging funding for the works, insurance, etc.

In any event, though, the beneficiary in occupation should normally be liable for the services they use (e.g. electricity, gas, TV licence, council tax).

It may well be worth getting a quickie opinion from a member of the Chancery Bar, to confirm upon whom the will places responsibility for the issues in question.

Paul Saunders

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The exact wording is as follows:

“Until the Occupant has in the opinion of my Trustees ceased to be entitled under (a) to use the House as his principle place of residence neither it nor the Effects shall be sold without his consent but he shall pay all outgoings and keep it in good repair and insured to the satisfaction of my Trustees”

Sally-Ann Joseph

Rose & Rose

Can the reversioners be asked to agree that if no action is taken the trustees will not be liable? If anyone should put their hands in their pockets it should be the reversioners.

Simon Northcott

Expenses incurred by trustees in enforcing a duty to repair against an income tenant can be charged to capital. The charge to capital may require the property to be sold, which could, depending on the occupier’s interest, determine his rights.
Alexander Learmonth
New Square Chambers