Trust Dispute Solicitors
Trustees hold assets for the benefit of others — and that obligation is enforceable. A trustee who mismanages the trust, acts in self-interest, or refuses to distribute can be removed and made to account.
Trust disputes arise in a range of contexts — family trusts created under wills, discretionary trusts, life interest trusts, and trusts implied by law over property. Whether you are a beneficiary whose entitlement is being ignored, or a trustee facing a claim from a beneficiary, a solicitor will identify the correct legal position and advise on the most cost-effective route to resolution.
Types of Trust Dispute
Trust disputes — the legal issues and the remedies available.
Trusts disputes range from removing a failing trustee to claiming an equitable interest in property. A solicitor will identify the type of trust and the applicable legal principles before advising on the appropriate route.
Trustee removal
A trustee who is in breach of trust, who has a conflict of interest, who has become unsuitable, or whose relationship with the beneficiaries has broken down irrevocably can be removed by the court under section 41 of the Trustee Act 1925. Removal requires evidence that the trustee's conduct is such that the welfare of the trust requires a change. A solicitor will assess the grounds, attempt to negotiate a voluntary retirement in the first instance, and issue proceedings for removal where that is not agreed.
Breach of trust
A trustee must act in the best interests of the beneficiaries, invest prudently, keep trust accounts, act impartially between beneficiaries, and not profit from the trust. A breach of trust — including misapplication of trust assets, failure to invest, making unauthorised profits, or distributing to the wrong beneficiaries — makes the trustee personally liable to restore the trust to the position it would have been in but for the breach. A solicitor will quantify the loss, obtain the trust accounts, and pursue the trustee for the shortfall.
Constructive trusts over property
A constructive trust arises — regardless of the legal ownership recorded at HMLR — where a person has made a direct contribution to the purchase price or mortgage of a property under a common intention that they would have a beneficial interest. The law of constructive trusts is most frequently in issue in disputes between cohabiting couples, family members who contributed to property, and property investors. A solicitor will assess what evidence of common intention and direct contribution exists and advise on the realistic share of the beneficial interest that can be established.
Resulting trusts
A resulting trust arises where property is transferred to one person but paid for by another — the property is held on resulting trust for the person who paid. This most commonly arises in family transactions where a parent pays for property placed in a child's name, or between co-purchasers where the legal title does not reflect the contributions made. A solicitor will assess the evidence of the payment and the circumstances of the transfer, and advise on the correct legal basis for the claim — constructive or resulting trust, or both.
Variation of trusts
The terms of an express trust can be varied under the Variation of Trusts Act 1958 where all the beneficiaries are adult and between them have an absolute entitlement to the trust fund — the rule in Saunders v Vautier. The court can approve a variation on behalf of beneficiaries who lack capacity or who are not yet born, where it is for their benefit. Trusts are also varied informally by deed of variation — most commonly to pass assets down to the next generation to save inheritance tax. A solicitor will advise on the appropriate mechanism and manage the application or documentation.
Life interest trusts and family home disputes
A life interest trust — commonly used in wills to protect a surviving spouse's right to live in the family home while preserving the children's interest in the capital — can give rise to disputes between the life tenant and the remainder beneficiaries. Disputes arise over who pays for repairs, whether the property can be sold, and whether the trust has been properly administered. A solicitor will advise on the rights of both the life tenant and the remainder beneficiaries and manage any dispute between them.