Trust issues: past, present and future

This article delves into the world of trust management, using the classic tale of Charles Dickens' "A Christmas Carol" as a backdrop. It explores the challenges trustees face, such as ensuring continuity, effective supervision of underlying companies and navigating future tax and regulatory landscapes.

Introduction – Stave 1

Marley was dead, to begin with. Everyone knew that, especially Mr Scrooge. He was the sole director of the company, which acted as trustee of the Guernsey law discretionary trust Marley had long ago settled for his spendthrift nephews and nieces.  

How different things were from when Marley was alive. In those days, Scrooge had regular contact with Marley. Marley wrote letters indicating his wishes for the trust, and the beneficiaries understood that they could not simply have all they wanted from it. In short, everyone knew where they stood.

That all changed.  

Scrooge's dealings with the beneficiaries became infrequent and strained, turning him into a reclusive figure, fearful of their demands. The affairs of the trust had become as rigidly frozen as the icicles that hung from the grime-blackened panes of Scrooge’s windows on the chill night before Christmas.

It was on that night, an ominous and dark night to be sure, that Scrooge was sitting huddled under a blanket before his weakly burning fire, which he stoked now and then with the latest issue of the STEP journal and some overdue FATCA returns.

A cold wind howled outside his miserable lodgings, and he shivered like a leaf. Suddenly, a more dismal and terrifying noise disturbed his already trembling state. Chains. Clanking chains – and approaching his big old front door, through which without further warning there came a ghastly apparition of a man, skeletal and, as Scrooge scoffed, more gravy than the grave: Marley. Surely, Jacob Marley.

Scrooge became as white as his pallid bedrobe. In fear, he threw his copy of Lewin at the spectre, but to no avail, as the learned volume pierced its form as if passing through thin air.

The spectre addressed Scrooge in chilling tones: 

“Ebenezer Scrooge, since my death, you’ve lost control of my trust and become a reclusive hermit, hiding from my wasteful nephews and nieces. The trust fund is depleted, unable to provide for my beneficiaries or even cover your exorbitant fees. Your turkey company, once thriving, is now a ghost town, thanks to my eldest nephew’s mismanagement.

Tonight, you will be visited by three spirits: one to show you the errors of your past, another to reveal the harsh realities of your present, and the third to warn you of a dreadful future. It is your choice.”

With that, the spirit faded, leaving Scrooge alone with his fears. “Humbug,” he muttered, pulling the covers over his head as the clock struck one. Silence followed. “Bah humbug,” he grumbled, drifting off into a fitful sleep.

The Ghost of Christmas Past – Stave 2

Scrooge was awoken suddenly, as if hands had pulled back his bedclothes to let in a flood of light. Before him, illuminated, stood a slight figure, like a child but yet showing the ravages of time. The figure spoke, “I am the ghost of Christmas past, not the distant past, but your past” and with those words, Scrooge found himself reliving before him all that had happened since Marley’s death.  

The Ghost was angry at Scrooge.

“You have been a terrible trustee since Marley died” it accused.  

“The turkey company, the trust’s only asset, should be thriving, not languishing under the nephew’s incompetent management.”  

Scrooge squirmed, but before he could say anything to defend himself, the ghost continued.

“You should have intervened, replaced him with a capable individual, and ensured the trust’s assets were protected and enhanced. It is clear that you have done neither.”

Scrooge could not bear to hear it anymore but had no choice. The Ghost’s vision shifted, revealing how Scrooge had ignored letters from the beneficiaries, dismissing their concerns and pleas for financial assistance. His neglect had left the trust depleted, and the beneficiaries destitute.

The ghost pointed at Scrooge and said: “As a trustee, it was your duty to maintain regular contact with the beneficiaries, keep them informed of the trust’s affairs, and address their distribution requests promptly, even when there were no funds to distribute. You failed on all counts.”

Scrooge felt a wave of despair wash over him. Surely, the Ghost had exhausted its list of accusations. Yet, the spectre had one final, damning revelation: “You’ve enriched yourself with exorbitant fees, depleting the trust’s remaining assets. Your fees were excessive and unjustified. You’ve proven yourself an incompetent trustee, incapable of managing the trust. You should have stepped down in favour of a more capable individual, perhaps a professional trustee like Ocorian, or at least appointed them as a co-trustee. Had you done so, the turkey company might not be in its current state of ruin.”

As suddenly as it had appeared, the figure vanished, and Scrooge once again found himself in darkness. This hadn’t happened, had it? He thought as he tried to renew his sleep. “Humbug.”

The Ghost of Christmas Present – Stave 3

The clock struck, and again, Scrooge’s dismal bedchamber was filled with light. This time before him stood a luxurious and opulent figure, conveying the very essence of Christmas cheer. Around it was laid a banquet, lavish and teeming with seasonal produce and goods. Except for one thing: turkeys. Where were the turkeys?  

As Scrooge followed the Ghost, he found himself in the boardroom of the turkey company, now a chaotic mess. A bitter dispute raged, and stacks of unsold turkeys lay forgotten. The staff, demoralised and jobless, were leaving the building.

Scrooge, initially dismissive, claimed the company's problems were not his concern. The Ghost, however, corrected him: 

“As a beneficiary, you have a responsibility to act, even if you’re not a shareholder.”

Scrooge, grasping at legal loopholes, mentioned anti-Bartlett clauses. The Ghost, however, insisted on a more proactive approach. “You need to safeguard the trust’s interests, not simply monitor them.”

Realising the gravity of the situation, Scrooge was lost for words and gazed at the Spectre in disbelief. At length, he asked in a faltering voice: “So, what, Spirit, can I do?  Surely, I have to do something.”  

The ghost nodded. “Think about your role. What powers and rights do you have? How can you use them to find out a) how things have got to this sorry state, and b) what you can now do for the future?”

Scrooge delved into the company’s financial records and discovered a critical error: a massive overorder of turkeys had left the company unable to fulfil both Christmas and New Year orders. A class-action lawsuit threatened to bankrupt the company.

Scrooge was initially very flustered: "I must immediately liquidate this company,” he said, taking short breaths.  

The Ghost raised his hand as if to stop him in his tracks. “Why not administration?” he asked. “Might then the company yet survive?”

Scrooge thought hard on this suggestion, and after mulling it over:

He appointed administrators, Scrooge could settle the class-action suit and restructure the company.  

He replaced his nephew with two competent directors, ensuring the company’s future.

With that, the spirit vanished, and darkness again prevailed. But this time he prepared himself for the third ghostly visitation.  

Scrooge was less dismissive of what had occurred and thought hard about what he had witnessed.

The Ghost of Christmas Yet to Come – Stave 4

A third, chilling toll echoed through the night. As the final note faded, a hooded figure materialised, its form shrouded in darkness. A skeletal hand, gaunt and menacing, emerged from the robe, pointing directly at Scrooge.

Behind the spectre, two forlorn figures clung to its robe, their faces etched with misery. Scrooge recognised them, a pang of guilt shooting through him.

“I am the Ghost of Christmas Yet to Come” its voice a hollow whisper. “follow me.”

With a heavy heart, Scrooge trailed the ghostly figure to a desolate graveyard. A solitary tombstone, weathered and overgrown, bore his own name: Scrooge. The inscription beneath was a chilling indictment: “Wedded to the Past.”

Fear, cold and raw, gripped Scrooge. “Spirit,” he stammered, “what can I do to change this dreadful fate? How can I save myself and others?”

“I shall show you” the Ghost replied.

Scrooge found himself transported to his office, a pile of unopened mail towering on his desk. A new edition of the STEP Journal lay open, and Scrooge, with a self-satisfied smirk, thought, “Thank goodness Marley died before the 6th of April. I won’t have to worry about those terrible tax changes.”

As he turned to the mail, a wave of dread washed over him. A letter from DivorcesRUs demanded urgent attention regarding a complex trust issue. Then, a realisation struck him: the business was struggling. The directors had resigned, and turkey sales were plummeting due to growing environmental concerns and the bird's reputation for dryness.

“A loan,” Scrooge thought, “that’s the answer.” But a check of the Land Registry revealed a crippling restriction: he hadn’t filed his Register of Overseas Entity Return. Banks would turn him away.

The next letter, from HMRC, brought with it a wave of despair. A late filing penalty loomed, a constant reminder of his negligence.

“Please, Spirit,” Scrooge pleaded, “is there a way to escape this bleak future?”

“The future is not set in stone,” the Ghost replied, “unless you choose to remain unchanged.”

The scene shifted. Scrooge was in a solicitor’s office, grappling with the overwhelming challenges before him. 

“You need help,” the solicitor advised, “a co-director to handle the complex compliance issues.”

Time accelerated. Scrooge had hired a dedicated compliance expert who brought order to the chaos. A business development specialist was brought on board, diversifying the company with innovative plant-based products. The business thrived, and Scrooge was able to consider distributions to the trust beneficiaries for the first time in years.

In Guernsey, Scrooge sought legal advice on protecting the trust from a contentious divorce. The island’s robust legal framework offered the necessary safeguards.

Finally, Scrooge found himself in a boardroom, surrounded by the younger generation of beneficiaries. They expressed remorse for the family’s past tax avoidance and proposed using the trust for positive social impact. Scrooge, humbled and inspired, supported their vision to create a more sustainable future.

Christmas Day – Stave 5

Scrooge awoke to the joyous sound of church bells. Snowflakes danced outside his window, and the streets were filled with cheerful people. A young boy carrying a massive turkey caught his eye.

“What’s today, my fine fellow?”  he asked.  

“Today? Why, it’s Christmas day, of course.” the lad replied.  

I don’t believe it, Scrooge thought. The ghosts have done it all in one night.  

"God bless you, and a very Merry Christmas to you all.”  

The end

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