Claire Horowitz Solicitor with AMD Solicitors considers when trust may not be enough!
Many of us have people close to us that we trust: family members, friends, carers, or neighbours and quite often the help that they provide is invaluable. However I often see many clients that have fallen into unexpected predicaments when the law fails to recognise what they had hoped to achieve by placing their trust in another. Here are some of the problems that in practice I have frequently come across.
Sometimes clients rely on other people to collect cash on their behalf for them from the bank or to pay their bills. They may have handed over their bank card and even pin number to allow this to happen. These clients are financially very vulnerable indeed.
However, if there is no legal document formalising the arrangement, in law this means that a person, has no legal right to continue to give assistance should the person requiring help lose their mental capacity. The way in which this relationship of trust can be legally recognised is by a Lasting Power of Attorney.
Another situation I have encountered frequently is when an informal loan has been made to a friend or family member and it is left as a matter of trust that this money will be paid back. If, however, the person receiving the money has unexpected financial difficulties, matrimonial problems or should that person die before the loan is repaid then the monies can be lost, as a loan may be difficult to prove.
Likewise with business relationships which often start informally. An individual may have transferred shares to friends or family members trusting that in the future they will give them or sell them back. Alternatively an individual may be in business with a close friend or family member and have trusted that they will never fall out or disagree in decision making.
Even if there is no such breakdown one of the owners may be taken ill unexpectedly or die. In this event the continuation of the business may be seriously affected. If however legal advice had been sought, a shareholder's agreement or a partnership agreement could have been put in place, together with a Will, correctly reflecting the intentions of all of the parties.
There are of course many other situations in which relying on “trust” can render clients vulnerable. The message is that it is imperative that you seek legal advice from your solicitor when planning family arrangements or business matters.
Claire Horowitz and her colleagues in the Wills and Trust and Commercial departments at AMD Solicitors can advise individuals and businesses. Telephone 0117 9621205 or email firstname.lastname@example.org.
Copyright AMD Solicitors 2011