Published by Nazmin Sultan-Khan on 25 August 2025

Trust disputes can be emotionally charged and financially devastating for all parties involved. Whether you are a beneficiary questioning a trustee’s decisions or a trustee facing allegations of mismanagement, understanding your rights and responsibilities is crucial for protecting your interests and preserving family relationships.

Understanding Trust Disputes in the UK

Trust disputes arise when disagreements occur between trustees, beneficiaries, or other interested parties regarding the management, distribution, or interpretation of a trust. These conflicts can stem from various issues, ranging from simple misunderstandings to serious allegations of misconduct.

Common Causes of Trust Disputes

Breaches of Fiduciary Duty

Trustees owe the highest standard of care to beneficiaries, known as fiduciary duty. Breaches can include:

Self-dealing: Using trust assets for personal benefit
Conflicts of interest: Making decisions that favour the trustee’s interests
Failure to act impartially: Favouring some beneficiaries over others
Lack of proper record-keeping: Failing to maintain accurate accounts

Ambiguous Trust Terms

Poorly drafted trust documents often lead to disputes when:

Terms are open to multiple interpretations
Powers and duties are unclear
Distribution criteria are vague
Succession provisions are ambiguous

Financial Mismanagement

Trust disputes frequently arise from concerns about:

Poor investment decisions: Failing to diversify or making high-risk investments
Excessive fees: Charging unreasonable trustee fees or expenses
Inadequate record-keeping: Failing to provide proper accounts to beneficiaries
Unauthorised transactions: Making distributions or investments without proper authority

Rights and Responsibilities

Beneficiary Rights

As a beneficiary, you have the right to:

Information: Request trust accounts and information about trust assets
Fair treatment: Expect trustees to act impartially and in your best interests
Legal remedies: Take action if trustees breach their duties
Distribution: Receive your entitlement according to the trust terms

Trustee Responsibilities

Trustees must:

Act in good faith: Always prioritise beneficiaries’ interests
Exercise reasonable care: Make informed decisions about investments and distributions
Maintain accurate records: Keep detailed accounts of all trust transactions
Provide information: Supply beneficiaries with relevant trust information when requested

Resolving Trust Disputes

Negotiation and Communication

The first step in resolving any trust dispute should be open communication. Many conflicts arise from misunderstandings that can be resolved through:

Direct discussion: Arranging meetings between all parties
Written correspondence: Documenting concerns and proposed solutions
Family meetings: Bringing together all stakeholders to discuss issues

Mediation

When direct negotiation fails, mediation offers a cost-effective alternative to court proceedings. A neutral mediator helps parties:

Understand different perspectives
Explore creative solutions
Reach mutually acceptable agreements
Preserve family relationships

Court Intervention

Sometimes court action becomes necessary, particularly when:

Trustees refuse to provide information
There are serious breaches of duty
Beneficiaries’ interests are at immediate risk
Alternative dispute resolution has failed

When Trust Disputes Intersect with Estate Issues

Trust disputes often overlap with broader estate and inheritance matters. Understanding the connection between trust administration and contentious probate proceedings can be crucial, particularly when trusts are established through wills or when estate assets flow into existing trusts.

Prevention is Better Than Cure

The best approach to trust disputes is prevention through:

Clear trust documentation: Ensuring trust terms are unambiguous
Regular communication: Maintaining an open dialogue between trustees and beneficiaries
Professional advice: Seeking legal and financial guidance when needed
Proper record-keeping: Maintaining detailed accounts and documentation

Protecting Your Interests

Whether you are a beneficiary concerned about trust management or a trustee facing allegations, early intervention is key. Consider these warning signs that may indicate brewing disputes:

Lack of communication from the trustees
Unexplained delays in distributions
Significant changes in trust value
Conflicts between family members
Questions about trustee decisions

Getting Professional Help

Trust disputes require specialist legal expertise. The complexity of trust law, combined with the emotional dynamics often involved, makes professional guidance essential for achieving fair and lasting resolutions.

Facing a trust dispute? Don’t let uncertainty jeopardise your financial future or family relationships. Our experienced trust dispute solicitors provide compassionate, expert guidance to protect your interests. Contact A L Law Associates today for a confidential consultation and take the first step towards resolving your trust concerns.

Frequently Asked Questions About Trust Disputes

1What is a disputed trust?

A disputed trust is one where there are active disagreements between parties about how the trust should be administered, interpreted, or distributed. These disputes may involve questions about the validity of the trust itself, the trustees' actions, or the rights of beneficiaries. Common areas of dispute include trustee decision-making, distribution timing, investment strategies, and interpretation of trust terms.

2What is the 10-year rule for trusts?

The 10-year rule refers to inheritance tax charges that apply to relevant property trusts (discretionary trusts) every 10 years. This periodic charge can be up to 6% of the trust's value and often triggers disputes about how to fund the tax liability and whether distributions should be made to avoid the charge. The rule applies to discretionary trusts and other relevant property trusts, requiring careful planning to minimise tax implications.

3How do you resolve a breach of trust?

Resolving a breach of trust typically involves several steps. First, document the breach by gathering evidence of the trustee's wrongdoing. Then, provide formal written notice to the trustee about the alleged breach. Next, seek appropriate remedies such as compensation, removal of the trustee, or other relief. If necessary, pursue court proceedings to protect beneficiaries' interests. Remedies may include personal liability for losses, trustee removal, account of unauthorised profits, or injunctive relief.

4Do all trustees have to agree to dissolve a trust?

Generally, all trustees must agree to dissolve a trust, unless the trust deed specifically provides otherwise or a court orders dissolution. However, beneficiaries may also petition the court for trust termination in certain circumstances, such as when the trust's purpose has been fulfilled, has become impossible to achieve, or when all beneficiaries are of full age and capacity and unanimously agree to termination.

5Can a trust be contested in the UK?

Yes, trusts can be contested in UK courts on various grounds. Common reasons for contesting a trust include lack of capacity when the trust was created, undue influence, fraud, mistake in the trust document, or failure to comply with legal formalities. The court can set aside, vary, or rectify trust documents depending on the circumstances and evidence presented.

Trust Disputes: What Every Beneficiary and Trustee Needs to Know