Evidence and the prudent trustee

‘Alice’s Adventures in Wonderland’ saw the Queen of Hearts applying a simple method for settling legal cases in double-quick time: “Sentence first, verdict afterwards!” – with evidence nowhere to be seen. Now Brian Clarke, Managing Director of Key Financial Reporting Limited (KFR), outlines the importance of maintaining evidence for professional trustees in view of the investment regime provided by the UK Trustee Act 2000.

Contact: Dionne Maher, Manager, Key Financial Reporting Ltd Tel +44 (0) 1534 630500, Email: dionne.maher@key-trust.com

When Georgina Nestle took her complaint about mismanagement of her trust fund to the courts, her trustee was able to show that it had not acted unreasonably at each stage – notwithstanding that the fund had suffered a significant loss in value over 38 years compared with a recognised equity index. Although the trustee bank, National Westminster, won its case, the Court of Appeal held – with a glancing reference to its “incompetence” – that a trustee was not liable for depreciation in value of a trust fund except in the case of proven default; it was recognised that there was no particular formula which could be applied to guarantee a specific financial outcome. The importance of preserving the trust fund was paramount and outweighed enhancing the value of the fund (Nestle v National Westminster Bank plc, 1992).