Red flags

Trustees have a duty of care to their clients, and this is never more pressing than when discussing the issue of fraud and the financial abuse of the vulnerable. Professor Robin Jacoby of Oxford University addressed the recent BL Guernsey Trusts Conference on this topic, comparing practice in the trust sector with that of the act of making a will.
 
There are many factors that might make a person vulnerable to fraud in this area. Professor Jacoby highlighted signs to look out for including isolation, loneliness, recent losses, disability and a lack of familiarity with the way their finances work.
 
Dementia is the most prevalent vulnerability in terms of making a will. It is a syndrome, not a disease, and may have over 50 underlying causes, meaning that lawyers and trustees must be doubly vigilant.
 
Situations to be aware of for trustees include familial strife, mainly brought about by greed, sibling rivalries or changing relationship situations – a most common situation is where a wealthy elderly individual changes their will or wealth structuring so that it benefits a new, usually younger, partner over their own family.
 
In these situations it is important that trustees are confident that the changes are being made in the best interests of their client and that, as Professor Jacoby noted, there is no ”disorder of mind that causes disposition of estate that wouldn't have been done in a right mind”.
 
The red flags for this type of thing can be social or environmental, such as a recent bereavement, or psychological, such as deathbed wills or sexual bargaining.
 
There might also be legal factors to consider, such as when it is a new beneficiary instigating proceedings rather than the original settlor. Professor Jacoby advised that there should be a 'golden rule' that in the case of establishing, or changing, a structure for an elderly settlor there should always be an assessment by a doctor however embarrassing it may be to ask for one. The best way to present this is as the elimination of future risk – for example if the wishes of the settlor are above board, but are challenged later on as being made not in sound mind, a medical assessment can offer some protection.
 
It is clear that trustees could, and should, be aware of making changes to structures in these situations, and should always act in the best interest of clients – even if that means challenging them. In fact, it is clear that not only can trustees act in this way, but they have a duty to do so to ensure that a client’s wealth is properly protected.