Discretionary trust disputes

We are experienced in dealing with discretionary trust disputes. Partner, Naomi Ireson, looks at a recent case involving a trustee who transferred trust assets to herself and was found to have breached the rule against self-dealing.

Discretionary trust disputes and the ‘self-dealing’ rule

Details of the discretionary trust dispute

A declaration of trust established under a Will provided for the assets in the estate to pass to one of the trustees. This included the deceased’s share in a holiday park business.

A discretionary trust dispute arose when the trustee acquired an additional 15% of the shares in the business, purchasing those shares from the trust.

The other beneficiaries objected and issued court proceedings to have the transaction set aside on the basis that the purchase of shares breached the self-dealing rule.

The self-dealing rule

The self-dealing rule prevents a trustee selling trust property to themselves. It is based on the principle that a trustee should not allow their personal interest to conflict with their duties as a trustee.

The trustee argued that the claimants had consented to the purchase and that there were exceptional circumstances. However, while the judge agreed the circumstances were unusual they were not exceptional, and the beneficiaries had not been fully informed. Accordingly the self-dealing rule still applied and the sale of trust assets to the trustee was set aside.

The claimants also wanted the trustee to be removed from office, but the judge refused to order that. The trustee had been specifically chosen by the creator of the trust to carry out that role and the judge therefore felt it was inappropriate to interfere with that appointment

How we can help with discretionary trust disputes

We have a dedicated team of lawyers who deal with contentious probate and discretionary trust disputes.  If you require initial guidance then you can call our free legal helpline on 0333 888 0404. Alternatively you can email brief details of your discretionary trust dispute to us at [email protected]

Naomi Ireson

Naomi Ireson

Naomi is a specialist inheritance dispute lawyer and one of England’s leading practitioners in this complex field. Her areas of practice include claims under the Inheritance (Provision for Family and Dependants) Act 1975, challenges to the validity of wills and beneficial interest claims involving estoppel and constructive trusts. She also deals with Court of Protection cases.
Naomi Ireson

Naomi Ireson

Naomi is a specialist inheritance dispute lawyer and one of England’s leading practitioners in this complex field. Her areas of practice include claims under the Inheritance (Provision for Family and Dependants) Act 1975, challenges to the validity of wills and beneficial interest claims involving estoppel and constructive trusts. She also deals with Court of Protection cases.

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Call the Slee Blackwell helpline on 0333 888 0404