Disputes over family trusts jump 43% to record high
Sibling rivalry and intergenerational bickering have driven the number of people contesting family trusts to record levels this year, according to new figures.
Lawyers say that families are often more fragmented, with divorce and remarriage routine. They are also taking squabbles over family-owned wealth to court.
The number of disputes over trusts coming before the High Court rose by 43% last year, says Wilsons, a law firm that made a freedom of information request.
Most disputes are settled before an incident goes to court but the number of cases reaching the High Court rose from 98 in 2012 to 201 in 2016.
Charlotte Watts, a partner at Wilsons, said the increasing complexity of family structures is boosting the number of cases, alongside a greater willingness among individuals to take disputes over trusts to court.
Trusts are used to protect assets and ensure distribution of property or assets to beneficiaries according to the wishes of the person who set up the trust. Such structures can provide fertile ground for disputes to arise, particularly where several family members are involved, say experts.
One recent high- profile dispute involved the Davidson family, members of which waged a legal battle over more than £500 million of trusts. The case exemplified what can go wrong with family trusts, arrangements that, until recently, allowed assets to be sheltered from inheritance tax without control being handed to children or other beneficiaries.
In 2015 the Davidson children embarked on legal proceedings to remove their parents' power to appoint trustees. Trustees wield considerable power, holding assets on behalf of beneficiaries, taking investment decisions and choosing, within limits, who benefits from a trust and by how much.
If one adult child is chosen as a trustee over another, or removed as a beneficiary while others remain, disputes can escalate. Multiple marriages also increase the chances of tension between step- families, making it more likely for disputes to be taken to court.
"Family structures are becoming more complex, increasing the chances of misunderstandings, jealousy and arguments when it comes to money or property held in trusts," said Ms. Watts.
"Rivalry between family members can quickly become rife when difficult relationships are dragged up and exacerbated by disputes over trusts. This is particularly true where inherited wealth or properties that have been in a family for several generations are concerned."
Beneficiaries of the trusts are often the children, who may resent being beholden to trustees when a lump sum cash gift can seem more attractive. Some beneficiaries use the courts to sue trustees they see as taking liberties, or neglecting their duties, Ms. Watts said. Greater awareness of individual rights means people are more likely to be willing to sue or take cases to court.
Trustees are also increasingly cautious in their dealings with trust funds and often ask a court to approve their actions rather than take the risk of sued.
Matthew Yates, a partner at law firm Hunters said cases involving trusts going to court do not always involve a claim against a fellow trustee. Claims can