Trust disputes – expert legal advice

Our legal experts can help you with trust disputes including the removal of trustees and claiming money from a trust.

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Once the estate administration has been completed, the trustee’s role will be to give effect to the terms of the will and manage any trusts which are set up under the terms of the will. Often the trustees and executors are the same individuals.

Issuing arising during the administration of a trust are often similar to the issues arising during the administration of the estate. Communication between the parties is key to avoiding any disputes but the court’s will provide assistance when a resolution cannot be reached.

Below are some scenarios which we often come across when dealing with trust disputes.

Disputes concerning the trustees’ actions

If a trustee is failing in their duties, then a co-trustee or beneficiary can ask them to step down. A trustee who is faced with such a request can agree to step down and appoint another trustee in their place before they do so. However, if they refuse to retire voluntarily then the next step would be to check the trust document for any express powers on how a trustee can be replaced. As long as the steps contained in the trust document are followed, the trustee can be removed and they would not have much reason to object.

However, it the trust document is silent or the other trustees and beneficiaries cannot agree about whether the particular trustee should be removed, then either the other trustees or the beneficiaries can apply to court to have the trustee in question removed. Whilst this is not an application that the court will grant lightly, they may do so if for example, the trustee has:

(a) committed a breach of trust by failing to follow the terms of the trust document;

(b) no longer has capacity to make decisions or;

(c) is conflicted because they have personal interests which conflict with the interests of the trust.

This is not an exhaustive list and each case is determined on its own facts. If you have concerns over how a trustee may be administering an estate, contact us today to see how we can help.

Discretionary trusts and dissatisfied beneficiaries

If a testator has created a discretionary trust in their will, the trustees will have the job of exercising that discretion. This means that they will have much more choice over what they are allowed to do and usually they will be given the power to decide who should benefit under a trust. The testator may have created a separate letter of wishes which sits alongside their will which will indicate their wishes, but the trustees will not be legally bound to follow them if they do not want too.

This situation means that if a trustee decides to select a particular beneficiary over another, who then benefits from the trust, the other beneficiaries will be left feeling disappointed and may even wish to challenge the trustee’s decision.

Beneficiaries of a discretionary trust have limited rights. If you were named as a potential beneficiary under a discretionary trust but the trustees have decided not to include you as one of the beneficiaries whom they want to benefit from the trust, we would need to look closely at the wording of the trust to determine what your rights are. However, in most cases, you would not have an automatic right to receive trust property. The purpose and nature of a discretionary trust is that it leaves the ultimate decision over who should benefit, in the hands of the trustees.

Third party disputes

A trustee may find themselves in a position where they need to make a decision about whether or not pursue or defend litigation on behalf of the trust. Sometimes this is because the beneficiaries of the trust have fallen out but other times it is because a third party either owes money to the trust or is claiming money from it. In these situations, trustees will naturally be concerned about what steps they should or should not take – and whether or not they will be able to recover any of their legal costs.

In such a situation, the trustees can consider making an application to court for directions on what they should do. This is known as an application for a Beddoe Order and helps provide clarity and even protection on what steps they ought to take. If the order is granted, it also provides an indemnity to the trustees for any costs they incur in relation to the litigation, including any adverse costs.

Need more trust dispute advice?

For expert advice, get in touch with us today. Our approach is supportive, friendly and – most importantly – highly effective.

When you get in touch with our trust dispute specialists you will receive an initial conversation to see how we can help.

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