Discretionary trusts and executors disputes
Discretionary trusts can often lead to executors disputes arising. For expert guidance on discretionary trusts and executors disputes call our free legal helpline on 0808 139 1599 or send us an email with details of your dispute.
The executors named in a will are responsible for administering an estate. If more than one executor is appointed they will need to cooperate and work together to ensure the beneficiaries receive their entitlement. If there is friction between executors, then problems can arise. This can lead to the administration of the estate being delayed. And if court proceedings are required the legal costs of any litigation can cut deep into the value of the estate.
Executor disputes can be particularly problematic when a discretionary trust is involved. This is because at the very heart of such a trust are wide powers for executors and trustees to use their discretion, and this can lead to arguments as to how that discretion should be exercised.
A very recent example of executors falling out over managing a discretionary trust is the estate of the celebrated British-Iraqi Architect, Zaha Hadid; the designer of the London Olympics Aquatics Centre and many other buildings across the world who left an estate worth £67 million.
A will was made, appointing Zaha Hadid’s business Partner, Patrik Schumacher, her friends, Peter Palumbo (a property developer) and Brian Clarke (an artist), and her niece, Rana Hadid, as the co-executors of the estate.
The will gave legacy of £500,000 to Patrik Schumacher and a further £1.7 million to be divided between four nieces and nephews, as well as her brother, Haytham Hadid.
However, the bulk of the estate, comprising property, business interests and the international architecture business, was left subject to a discretionary trust. So it is for the executors to determine how to distribute the estate amongst the potential beneficiaries, who include family members, charities, the Zaha Hadid Foundation (a charity established by the deceased personally) and “past, current and future employees and office holders” of her companies.
The will specified that should any portion of the estate that is subject to the discretionary trust not be distributed within 125 years, then it will automatically pass to the Zaha Hadid Foundation (whose current trustees are Peter Palumbo, Brian Clarke and Rana Hadid).
On 14 November 2018, Patrik Schumacher issued a claim in the High Court, to remove the other three executors from their posts, leaving him as the sole executor.
That claim is being resisted by the other executors, who argue that they were appointed specifically by the deceased because of the closeness of their respective relationships with her, and that Patrik Schumacher is seeking to gain financially from the estate by taking this action.
Clearly, there are significant issues between the executors and substantial differences in their views on how the estate is to be distributed. With court proceedings being issued, the estate administration is going to become severely delayed and the legal costs of a High Court claim (particularly given the value involved) will be sizeable.
We specialise in executor disputes, including discretionary trust executor disputes, handling cases throughout England and Wales. So, if you are involved in a dispute relating to the executors of a deceased person’s estate, as a named executor or as a beneficiary of the estate, then please contact our specialist team on 0808 139 1599 or send an email to us at [email protected]