When trustees cross the line: A family trust breach with criminal consequences
Trusteeship is often viewed as an honourable duty, particularly within families. But as the recent case of R v Katherine Hill makes clear, it is also a legally binding role with serious responsibilities. When those responsibilities are abused, the consequences can extend beyond civil liability and into the realm of criminal law.
A breach of trust and the law
Katherine Hill was appointed trustee of a fund set up for her 2 daughters by the children's late grandmother. Instead of managing the fund in her daughters best interests, Hill used over £60,000 of the trust money to meet her own personal expenses over a number of years.
The misuse of funds was discovered in 2018 and led to a criminal investigation. Hill was eventually convicted of theft and fraud by abuse of position and sentenced to 30 months in prison. Importantly, none of the misappropriated funds were ever recovered.
Civil or criminal? When a breach becomes a crime
Most breaches of trust are dealt with in the civil courts, often resulting in claims for compensation, removal of trustees or directions for future administration. However, not all misconduct stays in the civil sphere.
Hill’s conviction shows that when a trustee’s actions involve dishonesty or personal gain, the matter can escalate into criminal proceedings. The offence of fraud by abuse of position applies where someone in a position of trust exploits that position to cause loss to another or to benefit themselves.
This is not a theoretical risk. It is a clear legal route that prosecutors can and do take when fiduciary duties i.e. trustees acting in the best interests of the beneficiaries are grossly abused.
Informal doesn’t mean immune
This case is particularly relevant to family trusts or informal arrangements where professional supervision is absent. Trustees in these situations may not always recognise the boundaries of their role or the limits of their authority.
A “temporary” loan from the trust or using funds to solve a personal cash flow issue - even if intended to be repaid - can still constitute a breach. Where the intent is dishonest or self-serving, that breach could lead to prosecution.
A fiduciary role with serious weight
Trusteeship is not a symbolic title or a favour to the family, it's a fiduciary responsibility governed by strict legal duties. Trustees must act solely in the interests of the beneficiaries and must always be able to justify their decisions and actions.
Failure to do so can lead to civil liability at best or criminal prosecution at worst.
Need advice? We’re here to help
If you’re acting as a trustee and are unsure about your responsibilities, or you have concerns about how a trust is being managed, our personal law team is here to provide clear and confidential advice.
Whether you're dealing with a family trust or a more complex estate structure, it's always best to understand your duties before things go wrong.
For trusted guidance, contact Personal Law Partner Amjed Zaman on 01274 386 990 or ku.oc.fcl@namaza.
Thank you to Trainee Solicitor Matthew Robinson-Storey for drafting this article.
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