Potential conflict of interest

I am instructed by the trustees of a large trust that has now come to an end. It is complex and there are issues concerning the impact of capital gains tax and income tax on the individual beneficiaries.

I have advised the trustees that they need to flag up the issues to the beneficiaries recommending they take independent advice for the trustee to consider before making any distribution

One of the current trustees is a retired accountant and he is getting jittery and has suggested he wants to retire and appoint as his replacement one of his former partners who works at his old firm. So far so good. However, that partner has already provided and agreed to provide further advice to some of the beneficiaries and I believe there is a conflict of interests.

Is there a conflict of interests of another partner of the same firm takes on the role as replacement trustee?

Any help gratefully received as a matter of some urgency so we can consider what we can do asap.

Many thanks


Lis Whybrow



12 Worcester Road


Worcestershire WR14 4QU

Tel: 01684 892939

Fax: 01684 892327

Has the “trust come to an end”, though?

If the trust has truly come to an end, then the trustees will be holding on behalf of the beneficiaries on bare trusts only from the date upon which the trust ended.

If the trust has ended, the trustees will give effect to the instructions of the beneficiaries – who will need to rely upon their own advice.

In the particular circumstances, are there any matters upon which the trustees need to take their own advice? If not, then I would not see there being a conflict if a partner who is not advising any of the parties were to act as trustee (sorry for the multiple “not”s). However, they would probably want the comfort of knowing and understanding why the current retired accountant “is getting jittery”.

If the trust is ongoing, and it is only the “purpose” of the trust that has come to an end, there is the risk that the trustee partner may be advising the trustees against the beneficiaries, which would not be comfortable for the firm. If the retired accountant were to be replaced by a partner of the firm, then I suggest the firm would need to be advised by an independent firm. Perhaps the better solution would be for the replacement trustee to be completely independent of the firm.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

The trust has ended and is being finalised as the life tenant has died. The estate of the settlor who set up the trust is now being concluded. There is a very large portfolio of shares which has yielded a lot of income which is currently retained in the portfolio as the trustees do not wish to trigger a huge loss.

The remaindermen comprise UK beneficiaries, offshore beneficiaries and charities and I have flagged up possible issues if do not split the distributions across tax years and wish to write to the beneficiaries asking them all to take advice as they consider appropriate.

Not all the IHT has been paid and we are very much in the early stages of this, having only got probate for the life tenants estate at the end of last year and there being some adjustments in values on that which will impact on the trust value and IHT liability

All a bit of a nightmare really with so many permutations! We are acting for both the trustees in the winding up of the life interest trust and the executors of the life tenants estate some of the beneficiaries being the same, some different.

With the trust fund, following the life tenant’s death, HMRC will treat the trustees as holding on bare trust for the beneficiaries, in proportion to their entitlements. Accordingly, for UK tax purposes, there is no question of distributing the trust fund across tax years for tax purposes, as the beneficiaries became absolutely entitled upon the life tenant’s death.

The situation may differ, of course, for the non-UK beneficiaries, but in trying to fit distributions around their tax laws, you might find it merely complicates issues for the other beneficiaries.

As the beneficiaries of the trust fund and estate are not the same (albeit some do share in both), I think it important to ensure the trust fund and estate are fully segregated to ensure there is no risk that the administration of one is unduly influenced by factors in the other.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals