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Contentious Trusts Part 2: What are the paths to navigating resolution in a contentious trust?

Contentious Trusts Part 2: What are the paths to navigating resolution in a contentious trust?

17 October, 2024
Global Private Clients Trust Services Contentious Issue Resolution

Resolving disputes related to contentious trusts can be a complex and nuanced process. While each case is unique, there are typical paths to resolution that can help mitigate conflicts and reach amicable solutions. 

 

What are the common steps and approaches taken to address contentious trusts?

Initial dialogue and prevention

The first step in resolving contentious trust issues is often dialogue. Engaging in open and honest conversations can prevent disputes from escalating. Experienced trustees who can anticipate potential problems and initiate these discussions early on are crucial. For instance, if an older settlor has specific conditions for their children's inheritance, addressing these concerns proactively can help avoid future conflicts.

Mediation

If initial dialogue fails to resolve the issue, mediation is a valuable next step. Mediation is an informal process where parties can express their grievances in the presence of a neutral mediator. This approach is particularly effective for trust disputes, as many conflicts stem from emotional rather than financial issues. Mediation allows family members to air their concerns and work towards a mutually agreeable solution.

Arbitration

Arbitration is a more formal process than mediation but still aims to avoid court. However, there is some uncertainty regarding whether the outcomes of arbitration are binding on all beneficiaries. Despite this, arbitration can be a useful tool in resolving disputes, especially when mediation is not feasible.

Court intervention

When mediation and arbitration fail, the dispute may end up in court. This is generally considered the worst-case scenario due to the time, cost, and emotional toll involved. Court intervention can take various forms, including declaratory relief, where the court is asked to confirm the status or terms of the trust. This can be necessary when there is uncertainty about the trust's provisions or the roles of beneficiaries and trustees.

Declaratory relief

In some cases, the contentious nature of a trust may not involve direct disputes between beneficiaries and trustees. Instead, it may require clarification from the court on specific aspects of the trust. Declaratory relief can provide this clarity, allowing trustees to proceed with their duties confidently.

 

Who can help with contentious trust issues? 

Navigating the complexities of contentious trusts often requires the support of various professionals. But who exactly should you turn to when facing such issues? Here’s a breakdown of the key players who can provide the necessary assistance.

Lawyers

For beneficiaries dealing with contentious trusts, seeking the advice of a lawyer is highly recommended. Trust law can be highly technical and sometimes archaic, making it difficult for non-experts to navigate. A lawyer can help cut through the complexities and focus on the core issues that need resolution. They can provide clarity and ensure that the legal aspects are handled correctly.

Tax advisors

In addition to lawyers, tax advisors can play a crucial role in resolving contentious trust issues. Trusts often involve complex financial structures, and understanding the tax implications is essential. Tax advisors can provide expert guidance on how to manage the trust’s finances and ensure compliance with tax laws.

Trustees

While lawyers and tax advisors are invaluable, trustees themselves can also play a significant role in resolving disputes. Experienced trustees, especially those with a legal background, can offer empathetic support and a good sense of what issues require careful resolution and what can be set aside. They can help beneficiaries understand the emotional and financial aspects of the trust and guide them through the resolution process.

Trustees who have previously worked as lawyers bring a unique perspective to the table. They can listen to the concerns of beneficiaries and provide practical advice on what issues are worth pursuing and which are not. This empathetic approach can help beneficiaries feel heard and understood, which is crucial in resolving emotional disputes.

It’s important to note that pursuing legal action or seeking reprimands from regulators can be costly and may not always be worth the financial investment. Trustees can help beneficiaries weigh the costs and benefits of different approaches and guide them towards the most cost-effective solutions.

 

How can Ocorian help with contentious trusts? 

Resolving contentious trust issues requires a multi-faceted approach that begins with open dialogue and can escalate to mediation, arbitration, and ultimately, court intervention if necessary. Each step aims to address the underlying issues and reach a resolution that benefits all parties involved. By understanding these paths to resolution, trustees and beneficiaries can navigate disputes more effectively and preserve the integrity of the trust. For more information on how Ocorian can support, reach out to the team.