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Enhancing Public Accountability: Key Elements of the Public Office (Accountability) Bill 2025
Kirsty Cook
Trust structures provide fertile ground for disputes, particularly those that are familial in nature.
Trustees may find themselves caught in the middle of a family fallout or subject to a disagreement either with other trustees or one or more beneficiaries. There may be allegations of bias or mismanagement of assets or conflicting views as to the interpretation of the trust document. Indeed, any disagreement surrounding the administration of a trust would fall into the category of a trust dispute.
Trustees can have a lot of power. It is often for them to determine who benefits from the trust fund and to what extent. That in itself can cause issues, particularly given the increase in more complex family structures involving more than one spouse and children with different parents spanning several generations. If you then add a rogue trustee into the mix things can get very messy indeed.
In an effort to protect against future fallouts most settlors appoint trusted family members or friends as trustees. A professional trustee is also an option (instead or in addition to the aforementioned), and certainly worth careful consideration particularly when dealing with high value trust structures. It almost goes without saying that trust is the paramount factor in making the decision as to who best to appoint as trustees with cost, reputation and regulation additional considerations when selecting a professional.
When setting up the trust it is also important that trustees and beneficiaries both be aware of how the trust works and respective duties, responsibilities and obligations. This will enable a better working relationship. However, should relations go awry – and even when a trust has been created with the utmost care this is never completely unavoidable - there may be grounds to remove a trustee both without the court’s involvement or through litigation.
If there is an express power in the trust (always the first port of call) or the trustee is willing to take voluntary redundancy matters could be relatively straightforward. Equally, if adult capacitous beneficiaries are all in agreement and are absolutely entitled to the property subject to the trust then compulsory retirement may be an option.
However, if removal is against the will of the trustee in question necessitating action on behalf of a co-trustee or disgruntled beneficiary then an application to the court is likely to be necessary either in reliance on the statutory power of removal under Section 41 Trustee Act 1925 or by the court’s inherent jurisdiction.
In either case the court's main guide is the welfare of the beneficiaries and the competent administration of the trust. For example, the court is likely to act to remove trustees who have abused their trust where there is evidence of positive misconduct and if the court is satisfied that the continuance of the trustee would prevent the trusts being properly executed.
However, friction or hostility between the trustee and the beneficiaries is not, of itself, enough to have a trustee removed. If it were it is easy see to see how a dissatisfied beneficiary could manufacture a disagreement in an effort to form the basis of such a claim. Consequently a court would need to be persuaded that the breakdown was enough that removal is necessary so as not to obstruct the property performance of the trustee’s duties.
The court will also give weight to whether the settlor appointed the trustee subject to the removal claim and the reasons for that decision, particularly in circumstances where the trustee was intended to have a particular power or level of control over the aspect of the trust now subject to contention.
These types of cases actually going to court are fairly rare, such that a trustee will often elect to resign rather than defend a removal application. This is invariably because there is often little to be gained in remaining in the role of a trustee of a trust with hostile beneficiaries. Moreover, every case is fact specific and it can be hard to predict whether a removal claim will succeed which combined with the fact there may be exposure on costs for the trustee personally if the claim is successful is powerful in persuading a trustee to step aside.
This article was first published in the annual journal of the Global Family Office Community. To read the full version of the GFOC Journal Volume 5, please request a copy here.
Further information
If you have any questions regarding this blog, please contact Katherine Pymont in our Dispute Resolution team.
About the author
Katherine is a Senior Associate in the Dispute Resolution Team who specialises in Trust and Estate Disputes. Her experience in the field of Trusts and Inheritance Disputes covers challenging the validity of wills (including claims for lack of testamentary capacity, want of knowledge and approval, fraud, forgery and undue influence), claims under the Inheritance (Provision for Family and Dependants) Act 1975, removal of executors and trustees, breach of trust claims, fraud cases involving trust structures and professional negligence claims relating to wills and trusts.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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