Beneficiaries are frequently unsatisfied with the actions (or often, the lack of action) of the executors of estates or administrators of family trusts, and the animosities that can arise are compounded if the beneficiaries feel they are being kept in the dark as regards the administration of the trust or estate.
Where a discretionary trust is set up, the trustees have the right to administer the assets of the trust in a discretionary fashion, which can lead to claims of unfairness and bias from those who feel that they are disadvantaged.
The dangers implicit in such arrangements are illustrated by a recent case which involved a trust set up under the will of a woman who died in 2013. Her will left her assets in a discretionary trust under the control of her solicitors.
There was a falling out between one of the woman’s daughters and the solicitors, who had refused to supply her with copies of the trust accounts on the ground that she was a beneficiary and the information she requested was confidential to the trustees and executor. The solicitors considered that to disclose the information to one of the woman’s daughters would necessitate disclosure to the other and, given that the relationship between the sisters was difficult, this would be unwise. A legal battle ensued regarding disclosure, with the end result that – after considerable legal costs, including taking barristers’ opinions – the trustees divulged the requested information.
The beneficiary then sought recovery of her legal costs. She went to court claiming that, since she had ‘won the point’, the trustees’ own legal costs should be paid by them, not from the assets of the trust.
The court found that the trustees had acted in good faith throughout and concluded that the legal costs should be met from the trust assets.