The first step is to consider the trust deed carefully. In appropriate circumstances, it may be necessary to obtain the deceased’s medical records around the time that the trust was created. For example, where there is concern that the person who set up the trust did not have the necessary mental capacity to do so.
It may also be prudent to obtain witness statements from those who knew the deceased well and who may have been involved in discussions with the deceased regarding the creation of the trust. Such witnesses may be able to provide a clearer understanding of the circumstances within which the trust was created.
Deciding whether to contest a trust is a big decision. It is important to make sufficient investigations at the outset to ascertain the realistic prospect of your claim succeeding. It is far better to invest in making an informed decision than to embark upon proceedings with no merit, which could lead to adverse cost consequences and ultimately place you in a worse position than if you had taken no action.
The trust deed should be checked for a “no contest“ clause. This type of clause means that if you were to challenge the trust and lose, you would also lose your interest in the trust. If your claim is successful, you would not forfeit anything. To be valid, a “no contest” clause must be sufficiently clear and in line with public policy.
Exploration of early settlement
Once initial enquiries have been undertaken, and the relevant evidence is available, this will allow you to consider the strengths and weaknesses of your position. Armed with this information, it is a good time to explore early resolution at this early stage.
This can be done through formal correspondence, at a without prejudice meeting attended by all parties to seek a resolution or through formal mediation. Mediation is a form of shuttle diplomacy. The process is facilitated by an independent mediator who moves between the parties to assist them in achieving an amicable solution. It is important to recognise that an agreement between the parties is only possible if they are willing to compromise. It is helpful to think of it as an opportunity to reach a creative solution rather than a “win-lose” scenario. A successful negotiation requires all parties to take a step back, to consider those points which really are important to them and those points where they are willing to make a concession or consider an alternative approach.
It is important to behave reasonably at all stages of seeking to challenge a trust. Failure to do so may result in adverse cost consequences if the matter proceeds to court. If it is not possible to resolve matters in the early stages, the next step would be to issue court proceedings. Whilst this is a significant step, it is important to appreciate that only a few cases proceed to trial. It remains possible for the parties to resolve matters between themselves at all stages, albeit naturally, the longer the matter is disputed, the more costly it will become.
The takeaway message should be that it is crucial to do your “homework” at the outset to make a realistic assessment of the strength of your claim. We can help you obtain the relevant evidence and advise how it impacts your chance of successfully challenging the trust.
Following initial investigations, efforts should be made to try and resolve matters in the early stages before the parties’ positions become entrenched and to try to keep costs to a minimum.
On what grounds can a trust be contested?
- It is a “Sham trust“. A trust will be a sham where it is intentionally deceptive and is not a reflection of the settlors or trustees’ genuine intentions.
- The settlor and not the beneficiaries are the genuine beneficial owners of the trust assets, i.e. there was never any intention of the beneficiaries benefitting from the trust.
- The trust was set up as a vehicle solely to keep trust assets away from a legitimate claim, e.g., from a divorced spouse, a creditor, or to intentionally avoid a claim under the Inheritance (Provision for Family and Dependents) act 1975.
- The settlor lacked the requisite mental capacity when the trust was made.
- The trust is the result of undue influence upon the settlor and does not reflect their genuine intentions.
How much will it cost to contest a trust?
Costs will depend on the complexity of the matter, how much work is required to be undertaken and whether the matter settles in the early stages or Court proceedings are required. Funding is one of the matters that we would consider with you at the outset and as your matter progresses.
There are various funding methods depending upon your personal circumstances; for example:
- Legal Expenses Insurance
- Conditional Fee Agreement (“No win, no fee”)
- Deferred payment until the conclusion of the matter
- Private monthly billing
We fully appreciate that costs are an important factor in your decision-making process and that funds may not become available until the disputed estate can be administered. We will consider funding options with you at the outset so that all aspects of the planned course of action are clear.
Trust disputes can be difficult, stressful and emotional. Our role is to alleviate some of that burden and guide you to the best and most timely solution.
If you believe that you may have grounds for contesting a trust, please contact us on 01926 886688 for a no-obligation conversation.