Collaborative Post

Contesting a Trust

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More often than not, the law on trusts can prove extremely confusing.  Whether you are feuding beneficiaries, a trustee faced with a claim, a beneficiary with concerns over how a trust is being run, or someone trying to administer a trust correctly, seeking the advice of a solicitor who specialises in trust dispute can help.  

It is becoming increasingly common for trusts to be used to control the distribution of someone’s assets, as well as helping to minimise the tax liability on their estate upon their death.  These types of trusts can be created during a person’s lifetime or through a valid will at the time of their death.

What is a Trust?

Simply put, a trust is a legal document that enables one or more persons (trustees) to hold assets on behalf of another person.  Trust funds or deeds of trusts as they are also known are a great way to help protect your loved ones and ensure they are provided for in the future.  Setting up a trust fund can help to:

  • Protect Your Assets: This will ensure your assets are not used to pay for any big fees like care home costs
  • Guarantee an Income for Loved Ones: Setting up a trust can help to provide financial stability for the future
  • Help Avoid Inheritance Tax – This will help to make sure your shares, money and property are passed on in the most tax efficient way

Top Reasons to Set Up a Trust

 

  • Managing Assets

 

If your beneficiaries do not have the desire or capabilities to manage your assets, having an appointed trustee can help to manage your assets and solve any problems.  Perhaps your children are still minors or have a disability. You can choose to manage your estate whilst you are alive, but when you are gone, a trust can help to provide proper management.

 

  • Protecting Your Assets

 

If you’re looking for a way to protect your current assets from a marriage breakdown, creditors or from people in your life that could influence your chosen beneficiaries, a trust can be an effective way of ensuring your estate is safely taken care of for your beneficiaries.

 

  • Providing Privacy

 

 

In most cases, following your death, your will will likely go through probate.  This means that your will becomes a public document, alongside the value of the assets that helped form your overall estate.  In contrast to this, a trust document is private and can help keep any information concerning your estate confidential.

 

 

  • Multiplying Tax Exemptions

 

It is also possible to use a trust to access additional tax exemptions.  This includes the lifetime capital gains exemption (LCGE) or the principal residence exemption (PRE).

 

 

  • Avoid Probate

 

 

Any assets that are held within a trust fall outside of your estate.  This means they are not required to go through probate or incur the payment of probate fees.

Who Should Consider Creating a Trust?

Anyone has the ability to create a trust.  Many of the people who opt to create a trust, do this to create a legacy that will benefit either children or grandchildren.  Trusts can also be an excellent vehicle for mitigating costly inheritance tax bills.  

What is a Trust Dispute?

A trust dispute refers to any dispute relating to the running or administration of a trust.  This includes a dispute regarding the interpretation of a trust, an issue with feuding beneficiaries or difficult trustees, as well as contention regarding the value of assets.

Even with careful planning, trust disputes can still arise.  Causes of these disputes range from disputes concerning the actual trust document to disputes between trustees and beneficiaries.  When it comes to trust disputes, the quicker you obtain specialist knowledge and legal advice, the greater the likelihood is that your claim will be handled in a timely manner.  Seeking advice from solicitors like The Inheritance Experts can help to make sure that issues are resolved early enough to prevent them from spiralling into expensive court cases that can quickly cause fractures and destroy family relationships. The Inheritance Experts have a 98% success rate with trust disputes, so you may want to take a read of their website and request a quote to see if they can help you make a claim.

With any trust dispute, at the centre of every challenge will be a person who feels they have been treated unfairly.  This individual may seek to prove that the trust is not being run accurately, or that the appointed trustee has misinterpreted the intentions of a trust.  You are able to make a challenge regarding the assets within a trust, as well as because of a disagreement between beneficiaries.

It is often a good idea to seek the help of expert solicitors in the event you are looking to:

  • Disagree with the reported value of the assets held in a trust
  • Looking to remove a trustee
  • Require assistance in making a claim against a trust for money owed
  • Need guidance and support on how to carry out the duties of a trustee
  • Looking to clarify the structure of a trust document

According to new figures from the Financial Times, the number of people looking to contest family trusts has reached record levels.  This is, in part, due to inter-generational disputes and sibling rivalry. As modern familiar are often far more fragmented, with divorce and remarriage now part of the routine, this can lead to trust disputes, when one or more family members feel they have been represented unfairly.  

If one adult child is chosen to become a trustee over other children or removed as a beneficiary while other children remain, trust disputes can quickly escalate.  Also, in families where multiple marriages have occurred, the likelihood of a dispute being taken to court is significantly higher.

Breaches of Trust

One of the most common causes of trust disputes is when a breach of trust occurs from a trustee.  In some cases, a breach of trust can result in either criminal or civil liability. A trustee who is dishonest and appropriates property with the intention of depriving a beneficiary is guilty of theft.

In these circumstances, a beneficiary can pursue proceedings to either obtain compensations or restore stolen funds from the trust.  

Handling Trust Disputes

Generally, a trust will be created to try and prevent any financial disputes.  Unfortunately, even in cases where extreme care has been taken to establish a carefully constructed trust, both trustees and beneficiaries can still be subject to a trust dispute.  More often than not, a trust dispute will involve family members, which is why it is vital that these kinds of disputes are handled with care and sensitivity. Making sure that you are working with the right lawyers helps to ensure that you can maintain your relationship with your family, as well as your legal rights.  

Main Reasons to Contest a Trust

As with wills, there are a number of main reasons why a trust can be contested by a beneficiary.  These include:

  • The trust needs to be modified or reformed
  • Improper formation of the trust
  • Testator was not mentally capable at the time the trust document was created
  • Uncertain interpretation of the trust document
  • Undue influence was used to pressure the testator into creating a trust

If you feel you are dealing with a trust that meets any of the above criteria, you may be in a position to contest the trust.  Just remember, it’s important for you to seek expert legal advice.

 

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