When administering a trust, disputes can occur between a trustee and a beneficiary or between two beneficiaries.
Most trust disputes arise when
- one beneficiary interprets the trust differently from another beneficiary
- there are disagreements on the value of assets in the trust
- the beneficiaries accuse the trustee of mismanaging the trust
To avoid the risk of future disputes, the individual making the trust (settlor) does so with extreme care. Even if that is the case, disputes may still arise.
Challenging the validity of a trust
The beneficiaries can challenge the validity of the trust if one of the following can be proved:
- the settlor lacked mental capacity or was unduly influenced when creating the trust
- the trust documentation lacks clarity
- the trust was not formed properly
- the trust is fake
- the trust requires modification
Removing or replacing the trustee
The primary job of a trustee is to administer the trust according to the wishes of the settlor and make sure that all beneficiaries receive what they are supposed to.
If a beneficiary feels that the trustee has mismanaged the trust, he may want to replace the trustee. The trust documentation must be read carefully to know if a beneficiary has the power to remove a trustee.
According to the Trustee Act 1925, a trustee can be replaced if he
- is dead
- is continuously outside the UK for over 12 months
- wants to be released from his duties
- is unfit or incapable
- is an infant
Of course, the Court always has the power to remove a trustee. Whether it will intervene or not depends on the circumstances and the nature of assets.
Usually, the Court intervenes when
- there is evidence of serious misconduct or
- the trustees cannot administer the trust collectively because relationship between them has broken down (applies when there are more than one trustees)
The beneficiaries can make a claim in the Court against a trustee if he
- mismanaged or misused the assets in the trust
- denied a beneficiary access to assets that he is entitled to
- did not pay trust income to a beneficiary who is entitled to it
- hid trust information that is supposed to be disclosed
- violated the trust or allowed a co-trustee to violate it
Resolving a trust dispute
The first step in resolving a trust dispute is to bring all the relevant documents at one place. The most important document is the trust deed or the will.
Since trust disputes often involve family members, relatives, and friends, the emotional strain is usually high, resulting in extreme stress. However, if you remain calm, you can reach the best possible solution in the best possible time.
Almost all trust disputes are complicated. Therefore, it is highly recommended that you take professional legal advice before stepping into the dispute.
How Aristone Solicitors can help
Our solicitors come with a lot of experience in making claims against trusts as well as defending claims against trust. Therefore, whether you are a beneficiary who wants to claim against the trustee or a trustee who has been challenged by the beneficiaries, you can contact us to get help.
