Trustee Disputes
Whether you're dealing with unclear terms, a trustee refusing to share information, or allegations against you, trustee disputes can be difficult and stressful.
While some can be solved amicably, others can become more contentious, putting relationships under strain and potentially increasing the costs of administering the trust.
Led by Ashleigh Wong, Head of Contentious Probate and Disputes, our team of trustee disputes solicitors advises both trustees and beneficiaries, providing clear advice and a route to resolve the dispute.
Call 03444 124348 or enquire today, and we’ll talk through your circumstances.
What Are Trustee Disputes?
Trustee disputes are legal disagreements relating to the management or interpretation of a trust. They can happen between trustees and beneficiaries, or between co-trustees.
While they’re called ‘disputes’, they can actually be amicable or contentious. Trustees may simply need legal advice to resolve uncertainty about how a trust's terms should be interpreted. Meanwhile, hostile disputes could involve allegations that a trustee has acted improperly.
Contentious disputes are often less about the wording of the trust itself and more about how those responsible for the trust are managing it.
What Are a Trustee’s Duties?
A trustee's exact powers and duties will be set out in the trust deed, but there are several key responsibilities involved:
- Acting in good faith: Trustees must act in the interests of the trust and its beneficiaries.
- Acting impartially: If there are multiple beneficiaries, trustees need to stay neutral.
- Following the trust’s terms: Trustees must act within the powers given to them by the trust instrument.
- Protecting assets: Trustees are responsible for safeguarding assets.
- Exercising reasonable care and skill: Trustees must use reasonable care and skill when carrying out duties such as investing (Trustee Act 2000).
- Keeping records: Trustees need to keep clear, accurate accounts of the trust.
- Managing their responsibilities: Trustees cannot hand their duties to someone else unless the trust deed or the law allows it, as the role is a personal one.
- Balancing income and capital: Depending on the terms of the trust, trustees may need to balance providing income to beneficiaries while preserving the value.
Many of these are fiduciary duties, meaning the trustee must act in the best interest of the trust and its beneficiaries, not for their own benefit or the benefit of any third party.
Common Trustee Disputes We Can Help With
Our trustee disputes solicitors are equipped to deal with a variety of disputes. While some can be more hostile than others, our team is experienced in reaching a resolution. Here’s what you could be dealing with:
- Breach of trust: Trustees have ignored the deed, misused funds, or caused a loss.
- Co-trustee disputes: Trustees have been unable to agree on selling a property, making investments, or making payments.
- Information refusal: Beneficiaries have been kept in the dark about assets and accounts.
- Poor investment and asset management: Risky or unsuitable investments have been made, or assets have been left to lose value.
- Unfair distributions: One beneficiary has been favoured, or discretionary decisions have been made for the wrong reasons.
- Ambiguous terms: Disagreements have arisen over what the wording of the trust means.
- Validity challenges: Someone has claimed that the settlor lacked the mental capacity to create the trust.
Signs a Trustee Is in Breach of Their Duties
There are several signs that a trustee may be in breach of their duties.
For example, you may have requested trust accounts but received no response, noticed unexplained or delayed payments, or have concerns about how the trust’s assets are being managed. You might also suspect that a trustee is benefiting personally or favouring one beneficiary over another.
If you’re experiencing any of these concerns, our team can help you understand your position and the options available to you. Get in touch today.
Beneficiary Rights: What You’re Entitled To
If you’re a beneficiary, it’s important to understand your rights, particularly because trustees have discretion over how the trust is managed.
You’re entitled to question trustees if you feel they haven’t met their duties. However, this doesn’t mean you have the right to be consulted on every decision. You can only ask trustees to explain their decisions and raise any concerns you may have, but they aren’t obliged to give reasons.
If a breach of duty has occurred, you may have grounds to take legal action. You’ll typically have six years from the breach to bring court proceedings.
Are You a Trustee Facing a Dispute?
If you’re a trustee facing a dispute, we know how difficult this can be, particularly if you believe you’re acting in the best interest of the trust.
Whether you’re deadlocked with other trustees or beneficiaries have raised concerns about how you’re managing the trust, we’ll help you understand your position, assess any liability, and explore the best way forward.
Contact our team today.
How Trustee Disputes Can Be Resolved
Your resolution path will depend on the dispute you’re facing. Some examples include:
| Your situation | Resolution path |
|---|---|
| Trustees are deadlocked | Review the trust deed, explore negotiation or mediation, and consider a court application. |
| Beneficiaries suspect a breach of trust | Gather evidence, request relevant accounts, explore mediation, and consider a court application. |
| The trust is ambiguous | Seek formal legal interpretation, explore mediation, or apply to the court for a judge's interpretation. |
| No information or accounts | Formally request disclosure and, if necessary, apply to the court to compel accounts or information. |
| Loss to the trust | Investigate the loss, request relevant accounts, seek repayment, and consider an injunction to protect assets. |
| Trustee profited personally | Request accounts, seek repayment, explore mediation, or consider trustee removal where appropriate. |
| You're a trustee facing a claim | Review indemnity clauses, maintain accurate records, seek relief from personal liability, and consider stepping down as a trustee. |
Every case is different, so it’s not a one-size-fits-all approach. We’ll look at your specific circumstances and the most appropriate path for you, always aiming to resolve the dispute before court proceedings.
Our Step-By-Step Approach
Understanding what to expect when dealing with a trustee dispute can make the process feel less unsettling. Our approach typically includes:
- Initial consultation: We’ll review the trust deed, the accounts, and the circumstances of your dispute.
- Clear advice: Our team will explain your position and the potential costs involved.
- Formal letter: Where appropriate, we’ll prepare a formal letter setting out your concerns.
- Negotiation or mediation: We’ll explore negotiation or mediation to help reach an agreement without going to court.
- Court proceedings: If the dispute can’t be resolved, we’ll represent you through court proceedings and handle each stage of the process.
We’ll outline what to expect and give you an indication of timescales based on your circumstances.
Who Pays the Legal Costs in a Trustee Dispute?
The general rule is that the unsuccessful party pays a share of the successful party's costs. A trustee acting properly can usually recover reasonable costs from the trust fund, and can apply for a Beddoe order for protection before acting
The cost of resolving a trustee dispute will depend on the circumstances and how much work is involved. We offer fixed-fee and hourly rate options, with our costs explained upfront, so you know what to expect. For more information, visit our pricing page.
Why Choose Bell Lamb & Joynson for Trustee Disputes?
Whatever trustee dispute you’re facing, we understand that it can be tense and stressful, particularly when close relationships are involved.
At Bell Lamb & Joynson, our team is committed to giving you clear advice and genuine support from day one. But you don't have to just take our word for it; we hold multiple accreditations, professional memberships, and awards, reflecting our commitment to our clients.
If you’re concerned about a potential breach of trustee duties, or you’re a trustee facing a claim, call 03444 124348 or enquire today.
Frequently Asked Questions
What is the difference between a beneficiary and a trustee?
A beneficiary is the person who benefits from a trust or estate, whether through money, property, or investments. A trustee, on the other hand, is the person responsible for managing the trust. Their duties typically include maintaining records and making distributions.
What happens if trustees disagree?
If trustees disagree, it’s best to resolve the issue through discussion and compromise, while keeping the interests of the beneficiaries in mind. However, this is easier said than done, particularly because trustees usually need to act unanimously unless the trust deed says otherwise. If an agreement can’t be reached, it may be appropriate to seek directions from the court or, in some cases, consider whether a trustee should be removed.
Can a trustee be removed without their knowledge?
Not usually. Removal normally involves notice or the trustee’s own signature on retirement/removal deeds. However, it can happen under a power in the trust deed or by court order without the trustee’s agreement.
What information can a beneficiary ask a trustee for?
Beneficiaries can request to see accounts and documents related to the trust, but the information they’re entitled to receive can depend on the terms of the trust and the trustees' discretion. They may also ask trustees to explain their decisions, but they aren’t obliged to give reasons.
Can a trustee be held personally liable?
Yes, trustees can be held liable for breaches of duty, including financial losses and unfair distributions.