When Thomas Brittain, a wealthy businessman and philanthropist, left his home and a substantial trust fund to the elderly people of Dunblane, his hope was that future generations would benefit.

After his death in 1964, Abbotsford House was converted into a nursing home and the bulk of his estate was sold to pay for its upkeep.

But four decades on, the older residents of the Stirlingshire town are struggling to find out what became of this bounty. Abbotsford Nursing Home has long since closed and the building lies abandoned and derelict while a tortuous legal process to establish its ownership rumbles on.

It is the latest example of what campaigners say is a scandalous mismanagement of assets bequeathed to Scottish local authorities at the expense of those supposed to benefit from them.

Tom Bayne Allan, chairman of Dunblane Senior Citizens, said he has tried in vain to establish how Stirling Council aims to use the proceeds from selling the home to benefit the elderly people of Dunblane.

He is now attempting to access the Thomas Brittain Trust to raise the £125,000 needed to build a drop-in centre at the old Dunblane Co-operative building which the organisation has bought and turned into a social club.

But he says his efforts have been rebuffed. "The trust was established to benefit the elderly people of Dunblane but Stirling Council have proposed sharing it out between charities which either have nothing to do with the elderly or are providing services that the Scottish Executive pays for," he said.

Stirling Council assumed responsibility for Abbotsford nursing home when the authority was formed in 1996.

It then moved the home's residents to nursing homes outwith Dunblane and closed it the following year. Its intention was to sell the building, which according to reports was valued at £500,000.

It was only then that the council discovered they had taken ownership of the home erroneously. As it was part of the trust, ownership lay with Perth & Kinross Council and it was not theirs to sell.

Councillors in Stirling then proposed applying to the Court of Session in 2004 to amend the trust, allowing them to sell the now derelict building.

However, a spokeswoman for the council said this had to be postponed due to a change in Scots law which means applications to alter charitable trusts must be made to the Charity Commission.

She added that an application to the commission would be made "at the earlier opportunity" once new guidelines are published by the commission.