Common types of trust dispute
- Trustees refusing to provide information
- Disputes between trustees and beneficiaries
- Disagreements or deadlock between trustees
- Breach of trust or trustee misconduct
- Alleged breaches of fiduciary duties
- Trustees acting outside their powers
- Loss or mismanagement of trust assets
- Conflict of interest concerns
- Applications to remove a trustee or appoint a replacement
- Disputes over the interpretation of a trust deed
- Challenging or varying the terms of a trust
- Applications for additional trustee powers
- Disputes involving discretionary trusts
- Allegations of undue influence affecting the creation or operation of a trust
Our specialist trust dispute solicitors advise trustees and beneficiaries on these issues, including cases that require negotiation, mediation or court proceedings.
Trust disputes in Scotland
Trust disputes arise for many reasons, including disagreements within family relationships, concerns about a conflict of interest, alleged breaches of trustees' fiduciary duties, or questions over whether trustees are acting within their powers.
Trusts can be very effective for ringfencing and managing assets for beneficiaries for a variety of reasons. However, problems can arise where the beneficiaries and trustees do not see eye to eye, particularly where trusts involve complex assets or sensitive family relationships.
Due to the nature of trusts, trustees can only exercise powers given to them, and within the boundaries of the trust deed – in most circumstances this won’t cause issues, but it can be restrictive if a course of action would be sensible and trustees can’t do it. If trustees act outside of their powers, they can open themselves up to liability if any beneficiary questions their action, so to avoid liability an application to the court may be required to authorise the proposed action.
Any trustee decision usually requires a majority, and in situations where there are just two people acting, it is not uncommon to see one who is perhaps unable to act, or where both are at loggerheads, and the result is a deadlock meaning nothing can progress with the trust’s administration. If this happens in practice, either the co-trustees or any beneficiary can seek a remedy via the Court.
Even if there is no deadlock, situations can arise where progress is not being made, beneficiaries are perhaps left in the dark, or where it may seem that a trustee is acting in their own interests potentially due to a conflict of interest.
How our trust dispute solicitors can help
Challenging a trust/Can you challenge a trust?
There are circumstances in which the validity or operation of a trust may be challenged. The appropriate route will depend on how the trust was created, its terms and the nature of the concern.
For example, questions may arise about capacity, the interpretation of the trust deed, whether trustees are acting within their powers or whether undue influence affected decisions surrounding the trust.
We can review the trust documentation and surrounding circumstances, advise on whether there may be grounds for a challenge and explain the options available for resolving disputes.
How can new trustees be appointed?
There are circumstances where it may be appropriate to remove a trustee.
Where the issue is simply that there is an executor or trustee who can no longer act due to their incapacity, or if they have gone missing, this may require a court application to seek their formal removal and to allow the remaining executor/trustee to press on.
It can be more problematic if you are seeking the removal of someone because they are unfit to act or they are simply not engaging. This will require evidence to show the court that it is not just that trustees or executors do not get along, but the person is obstructing or refusing to progress the administration of the estate or trust.
Our team have helped both beneficiaries and co-trustees through these difficult actions and are happy to discuss the steps involved.
What information can a beneficiary request from trustees?
Often one of the biggest hurdles for beneficiaries is not knowing what trustees have done with a trust, or a lack of transparency. Any beneficiary is able to call upon trustees to account for their dealings with a trust.
This is a powerful remedy to get clarity on what assets are held in the trust, what the trustees have done and to raise queries on anything that might appear missing, undervalued or that could be a breach of trust.
We have acted in a number of actions for beneficiaries pursuing such information and can certainly help you answer any nagging doubts you might have had.
What happens if a trustee breaches their duties?
If it transpires that trustees have done something they didn’t have power to do, or had the power but it was perhaps not in the best interests of the trust, and this has resulted in a loss, then there may be a remedy to seek repayment to the trust from that person. We can review the terms of any trust deed and advise on whether a breach has occurred and help you through the process of seeking redress.
Can a professional trustee resign?
Where a trustee was appointed in a professional capacity and received remuneration for services given, then there must be an express power within the trust deed to allow that trustee to resign. If there is not, then an application can be made to the court for their resignation. We can assist with such applications if necessary.
Can trustees obtain additional powers from the court?
Trustees have the powers available to them under the terms of the trust deed, but they can also use powers available under statute provided there is nothing in the trust deed that is contrary to those powers.
One of the most common problems we see is where a trust deed is left directing that a property is held for the lifetime of a beneficiary. Whilst under statute there is a general power available to trustees to sell property, this would be contrary to the direction in the trust deed to retain it. This can be problematic when the beneficiary requires care or the property is just no longer suitable and the trustees want to be able to sell it.
This, and other similar issues where the trust deed contradicts general powers, can be resolved by applying to the court to seek authority to use that general power.
Can the terms of a trust be changed?
Where the trustees need something more extensive than simply asking for an additional power, for example the ability to alter how and when beneficiaries receive their entitlement to a trust, this requires a broader variation to the trust’s purposes and terms via the court.
This can be particularly useful if it is an old trust and it directs that a beneficiary must inherit at, say, age 25, but because of changes to the tax regime or other issues, it may no longer be appropriate for this to occur and the trustees and beneficiary wish to alter the trust provisions.
A trust variation involves the adult beneficiaries agreeing to the terms and someone appointed by the court to represent and agree the proposed variation on behalf of unborn or unknown future beneficiaries. It can be a costly procedure and this often needs weighed against the benefit to the beneficiaries in all the circumstances.
Our team have dealt with numerous trust variations and are expertly placed to help trustees through the process.
Why choose our trust dispute solicitors?
Our solicitors have a wealth of combined experience and expertise when it comes to advising on these difficult challenges and to helping people through the process whilst grieving.
Our specialist team is ranked tier 1 in the Legal 500 for Contentious Trust & Probate work and includes partners Scott Flannigan who won the Legal 500 Dispute Resolution Rising Star of the Year, 2023 and SJ Macdonald who is ranked Bank 2 in Private Wealth Disputes in Chambers & Partners.
Our expert team has various professional memberships, demonstrating their expertise, including the Society of Trust and Estate Practitioners (STEP), STEP Advanced Certificate in Trust Disputes, and law society accreditations.
Speak to our trust dispute solicitors today
To discuss the process of disputing a trust with a member of our expert team, please get in touch today.
Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.