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trustees are less vulnerable to the wrath of unhappy beneficiaries. “It’s always difficult for beneficiaries to


challenge trustees because of the nature of the ‘discretion’ of the trustee,” says STEP’s MacKrill. “They have to show the court that discretion hasn’t been used properly. There were a whole series of cases in the 1980s and 1990s relating to the investment of funds by the trustees where the trustees failed to keep a proper eye on what was going on.” MacKrill says trustees are now clearer


on what their responsibilities are, and that developments in case law have helped them understand their discretions and the way in which they should be exercising it.


Aiming for resolution In cases that pit beneficiaries against each other – the ‘warring family’ model – the trustee’s role is different. “As far as the trustee is concerned, once a dispute arises, gathering all the facts and being able to provide clear opinions on how to proceed is vital,” says Deutsche Bank’s Conway.


If the trust has lost money, the beneficiary is within their rights to ask why, and question whether or not the trustee has fulfilled their fiduciary duty


“Clearly each case is different, but a good trustee needs to be aware of the relationships of those involved in the trust structure and alert to any potential conflicts that could arise as a specific dispute proceeds. Again, the trustee needs to remain able to make decisions detached from the emotive, and provide clear, concise communication between all the parties involved throughout the trust-dispute process.” This is where mediation can play a vital


role. “Mediation is extremely effective in providing a forum that’s private, confidential and frankly a lot cheaper than court action,” says Alistair Davidson. “And I think what we


have seen over the past five to 10 years is an increased recognition within the legal community at the very least that trust disputes require a certain skill set that wasn’t historically being found in pure litigation.” Ultimately, though, trusts are no different


to any other enterprise. When wealth is shared among individuals, there is always the potential for conflict. Thankfully, the financial services industry in the Channel Islands is better equipped than most to avoid or resolve even the most intractable arguments. n


Christian Doherty is a freelance business writer


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