The deceased’s 50% share of a jointly-owned property (c.£400,000) has fallen into a Life Interest Trust for the surviving civil partner, who is the life tenant. The property is to be sold (value c.£800,000), and the Will permits reinvestment of trust capital into a suitable replacement residence for the life tenant.
The life tenant now wishes to acquire a leasehold Grade II listed property valued at £500,000, utilising all of the trust capital towards the purchase. The proposed property has been on the market for a prolonged period (circa two years) and presents features that may adversely affect capital preservation and marketability (i.e., listed-building liabilities, leasehold title and potential depreciation of lease term).
The trustees have duties under the Trustee Act 2000 to act with reasonable care and skill, to protect and preserve the trust fund, and to act impartially between the life tenant and the remaindermen. Placing the entire trust fund into a single illiquid, high-risk asset may expose the remaindermen to an unacceptable risk of capital loss on eventual sale.
To demonstrate compliance with their fiduciary obligations, the trustees could obtain and document independent advice — e.g. RICS valuation including marketability assessment, specialist legal advice on title and listed-building obligations, and (if necessary) financial advice as to investment suitability — and minute their decision-making process, including consideration of alternative, less risky suitable properties.
On that basis, i would appreciate opinion / precendent on whether trustees have good grounds to conclude that the proposed investment is not in the best interests of all beneficiaries and properly decline consent?.