Trust and estate disputes are increasingly commonplace, especially in the HNW community where there are complicated family relationships in play and/or the relationship between trustees or trustees and beneficiaries has broken down.

Legal disputes over a deceased person’s estate, and where trusts are involved, are an important field for private client lawyers and advisors. In this article, Katherine Pymont, a senior associate in the contentious trusts and probate team at law firm Kingsley Napley examines the terrain. The editors are pleased to share these views and invite responses. The usual editorial disclaimers apply. Jump into to the debate! Email tom.burroughes@wealthbriefing.com

It has been widely reported that a dispute has arisen regarding the estate of Leonard Cohen, the well-known singer and songwriter who died in 2016. His children and heirs allege that a trust valued at $48 million was tampered with after Cohen’s death to appoint his former manager Robert Kory as the primary trustee. As such, the manager is said to have falsely benefited from Cohen’s legacy artwork and archive. His children have now applied to the court to have him removed and return any money taken from the trust by way of payment for his role as trustee. Although the dispute is being dealt with (and the estate administered) in the US, it nonetheless raises some interesting issues were the same (or similar) situation to arise here.

Fraud 
Fraud in the context of estate and trust disputes can arise in a number of ways under English law. For example, a will could be fraudulent if the deceased has made a bequest to a beneficiary based on misrepresentations made by another person. Or someone might have impersonated the testator or settlor in order to execute a will or trust document. Or a valid will might have been destroyed by a third party seeking to benefit from a previous will or intestacy.
 
Challenging a will or trust (where the settlor is no longer alive) solely based on a fraud is difficult, however, not least because the deceased is likely to be the only first-hand witness and obviously is not able to give evidence. (In the Cohen case there would appear to have been an admission by the manager’s attorney that he physically created the forged document in question after Cohen had passed which may make an equivalent hurdle in the US easier to overcome). The burden of proof on a fraud allegation is higher than usual in a civil case.
 
Forgery
A forged will is one of the civil grounds for contesting a will. The will might have been forged in its entirety or it could simply be that the signature of the person making the will has been forged. Should a will challenge be successful on the grounds of a forgery, then it will be declared invalid. The same would be true of any trust document.
 
It is worth noting that both fraud and forgery are criminal offences in this country. Criminal fraud is an offence prosecuted by the CPS, the Serious Fraud Office or other authorised prosecution agencies and is triable before both the magistrates’ and the crown courts. If there is a finding of guilt (either from a jury verdict or following a guilty plea) a defendant will face a sentence of up to 10 years’ imprisonment. Sections 1 to 5 of the Forgery and Counterfeiting Act 1981 set out several criminal offences of forgery. These include making, copying, using and using a copy of a false instrument. In each case the prosecution must prove that the act of forgery is combined with an intention, by the person, that he or another shall use it to induce somebody to accept it as genuine (or a copy of a genuine instrument), and “by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.”
 
Removing a trustee
In terms of removing a trustee, there are various options potentially available to a disgruntled beneficiary and there is no one-size-fits-all answer.
 
The first port of call should always be the trust instrument to see whether an express power can be relied on to remove a trustee. In less contentious cases, voluntary retirement using Section 39 Trustee Act 1925 should be considered as well as compulsory retirement under Section 19 Trusts of Land and Appointment of Trustees Act 1996 and the possibility of replacement by another trustee under Section 36 Trustee Act 1925.
 
Where there is a dispute, it will likely be necessary instead to turn one’s attention to the court’s remedies; statutory power of removal under Section 41 Trustee Act 1925 or by the court’s inherent jurisdiction. In either event the court's main guide is the welfare of the beneficiaries and the competent administration of the trust. For example, the court is likely to act to remove trustees who have abused their trust where there is evidence of positive misconduct and if the court is satisfied that the continuance of the trustee would prevent the trust being properly executed.

It seems in the Cohen case that the admission surrounding the fraudulent creation of the document would likely be sufficient to meet the misconduct test (but the writer has limited information in terms of these proceedings). It is perhaps worth emphasising that friction or hostility between the trustee and the beneficiaries is not, of itself, sufficient reason to have a trustee removed under English law.
 
Trust and estate disputes are increasingly commonplace, especially in the HNW community where there are complicated family relationships in play and/or the relationship between trustees or trustees and beneficiaries has broken down. It is therefore important for both trustees, beneficiaries, and their advisors to be alive to the potential issues that might arise and how to deal with them.