Why Mediation Can Work Well In Trust And Estate Disputes In England & Wales

• Published date: 08 September 2022
• Subject Matter: Litigation, Mediation & Arbitration, Family and Matrimonial, Arbitration & Dispute Resolution, Wills/ Intestacy/ Estate Planning
• Law Firm: Withers LLP
• Author: Ms Dawn Goodman

Trust and estate disputes can be among the most unpleasant and difficult to settle.

Of course some may more closely resemble commercial disputes - an action for breach of trust, for example, where it is suggested that poor investment returns are due to some fault on the part of the trustees.

But others may effectively be a fight between family members, often after years of distrust and attrition, fought out on the battle ground of the trust or estate. Unlike most commercial disputes they carry a high degree of emotional charge, sometimes a degree of irrationality and almost always a powerful belief of holding the moral high ground.

Those which may be most intractable arise on succession, whether in the context of a trust or an estate, and the difficulties of finding resolution are exacerbated by the grief or bitterness, disappointment or unfairness felt by one or more parties. The tension and unpleasantness can be as acute as in a heavily- fought divorce, particularly if the dispute is essentially between siblings.

The other factors which make them difficult to resolve include the number of parties involved, the presence of beneficiaries who cannot represent themselves (children, unborn beneficiaries, those who have lost capacity and unascertained beneficiaries), the possible application of different jurisdictions' laws giving rise to a wider than usual range of possible results and the level of costs which may have built up since the dispute commenced.

There are, undoubtedly, trust or succession disputes which cannot be resolved without the Court's assistance, such as a declaration of validity, construction, rectification or variation, although it may be that the process may be less contentious and costly if the parties can at least decide to adopt a rational and proportionate manner in which to put their respective arguments to the Court.

Ironically however some of these qualities of trust and succession disputes that make them so difficult to settle, may, for those cases where a court decision is not imperative, make mediation among the most successful ways of achieving a consensual outcome.

The reasons for this are wide-ranging and include the following:

The scale of the likely costs in relation to the potential benefit

Trust and succession or probate disputes can be notoriously expensive. This is usually because of the scale of the enquiry but can be exacerbated by the way the parties conduct the litigation.

Of course if children and others who cannot represent themselves would be affected by the outcome and no-one has been appointed (by the trust deed, will or the court in some jurisdictions) to represent them and settle if in their best interest the result of any settlement process will only bind if the Court sanctions it. So, in the case of mediation where children, incapacitated adults or future beneficiaries would be affected, any resolution agreed between the parties can only be conditional upon the approval of the Court, which is unlikely to be given unless the interests of those who cannot represent themselves has been properly considered and catered for.

Many such disputes are about modest to medium size estates. If the costs were to be payable out of the estate (on the basis that the dispute was the 'fault' of the testator) the estate could be exhausted or seriously depleted. If the losing party is likely to bear not only his/her own costs but also a significant proportion of the costs of other parties, the impact can be life-changing.

If the reality of this unfortunate costs impact is understood at the outset the advantages of early mediation may be better appreciated.

At the other end of the scale eye-watering sums can be - and regularly are - spent by wealthy litigants on cross border succession disputes and trust litigation. Take for example the recent Grand View v Wong¹ litigation in Bermuda. The trial lasted 80 days. It was an all-or-nothing dispute: at its simplest (and it was clearly far from simple) the issue was whether it was permissible for the trustees to have appointed the entirety of a trust with the settlors' family as beneficiaries to a newly- added beneficiary - a purpose trust for charitable purposes. As noted later in this article all-or-nothing cases present significant opportunities for a mediated solution, not least when the costs and risks of litigating are factored in.

The certainty of getting the dispute finished

Even for the wealthiest of...