What is a trust?
A trust involves the legal transfer of an individual’s assets such as property, cash, shares etc to another person or persons (called trustees). The trustees look after those assets and manage them for the benefit of other people (called beneficiaries). Once transferred, the trustees become the legal owners of those assets and the person who transferred them no longer owns them. The assets no longer form part of their estate and unless they are themselves a named trustee or beneficiary of they will have no control of what happens to those assets or any interest in those assets. Trusts are often recommended as a way for an individually to safeguard their assets either during their lifetime or after their death, if they do not want those assets to pass outright to family members.
How is a trust set up?
The details of this arrangement is normally set out in a document called a trust deed. This trust deed should set out the names of the trustees and the intended beneficiaries and also state what powers the trustees have in relation to the assets. Sometimes the “trust deed” may not be a separate document at all and a trust could have been created through a person’s will.
Often the trust deed is accompanied by a statement prepared by the person who transferred the assets setting out their wishes as to what they would like to happen to them e.g. if they want one beneficiary to receive more than other one. This statement is called a letter of wishes. However, the letter of wishes is just a guide for the trustees. It is not binding upon them and the trustees are free to ignore it and impose their own views. That can often lead to conflict as this gives the trustees a lot of control.
What types of trust disputes are likely to arise?
Even with the most careful of planning with trustees being chosen carefully and clear guidance given, trust disputes can still arise. Trustees have a great deal of power and discretion as to what is to happen to the assets which can inevitable lead to disagreements. Many trusts that are set up can involve different family members, either as trustees and/or as beneficiaries, each with different and competing views as to what should happen. This leads to conflicts and trust disputes.
Trust disputes tend to fall into two main categories:
What should I do if I have a trust dispute?
Whilst the person who set up the trust may have taken legal advice at the time, if they are no longer involved in the trust (e.g. they have passed away) then that advice is unlikely to assist anyone who is named as a trustee or beneficiary if a problem arises.
If you have concerns about a trust either as a trustee or beneficiary then you should take legal advice as soon as possible. Trustees have a great deal of legal obligations set out in so it’s important that they take action quickly to avoid being personally responsible for any losses causes to the trust. Beneficiaries want to ensure that their position is protected and trust assets are secured.
Our team of specialist trust dispute lawyers can assist you with any trust concerns that you may have.