Trust disputes—action for breach of trust

The following Private Client practice note provides comprehensive and up to date legal information covering:

  • Trust disputes—action for breach of trust
  • Breach of trust
  • Trustees' duty of care
  • What constitutes a breach of trust
  • Defences
  • The claim itself has no merit
  • Consent by beneficiaries
  • Court order
  • Release or acquiescence
  • Limitation
  • More...

Trust disputes—action for breach of trust

Breach of trust

Beneficiaries may consider proceedings either to restore a trust fund or obtain compensation on the basis that the trustees have exceeded their authority or failed to exercise their duty of care. Before taking those proceedings, those instructed to take action should consider whether:

  1. the act complained of is a breach of trust (or breach of fiduciary duty)

  2. there is a quantifiable loss and a readily identifiable link from the breach to the loss

  3. there is a commercial prospect of recovery from the trustee(s)

  4. the claim is outside the limitation period

  5. there is an exclusion clause that enables the trustee to escape liability

  6. the trustee is likely to be granted relief

  7. the beneficiary is guilty of acquiescence

If the first four can be answered positively and the latter three negatively, there may be a justifiable claim.

Trustees' duty of care

Trustees must act with such reasonable care and skill as is necessary in the circumstances.

In addition the Trustee Act 2000 (TrA 2000) imposes an additional statutory requirement in certain circumstances, set out in TrA 2000, sch 1 (for example acquiring land), unless the trust deed provides otherwise.

What constitutes a breach of trust

A breach will usually involve a trustee:

  1. contravening duties imposed by the trust instrument

  2. acting in excess of their permitted duties

  3. neglecting or omitting to fulfil their duties

  4. concurring or

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