Grasping the nettle on dispute resolution
Not every couple can, as Bill and Melinda Gates have done, split with a benign message of no longer believing in mutual growth, and often-familial disputes involving trusts and associated structures are now commonplace. We spoke to Trust Corporation International director Paul Buckle about the increase in such disputes and how they can best be mitigated or even avoided altogether.
Paul, why are disputes increasingly common in the private client world?
Disputes are a fact of life, and an unwelcome reality, and they are just as much a reality for the ultra-wealthy as they are for all of us. All families disagree and sometimes fight, but in the case of high-net-worth individuals, there is often more to fight over, not to mention the complex structures and arrangements in place that govern those assets and dictate their ownership.
As a result, we often find ourselves managing contentious situations across trusts, pension schemes and companies. So you could say that disputes – minor and major – are increasingly common across the board.
Can disputes ever be pre-empted and avoided entirely?Can disputes ever be pre-empted and avoided entirely?
Sometimes a fiduciary is only involved once the dispute is in full swing. But a good trustee should be trying to spot problems before they occur and be intervening to open a dialogue and prevent the situation from getting any worse. These situations often escalate because they are ignored and placed in the ‘too-difficult’ box.
Constructive dialogue is the best way to pre-empt a dispute, but even where the matter of contention has already come to light, hope is not lost. At Trust Corporation we believe that with careful management and guidance disputes can be resolved, very often amicably, out of court and to everyone’s satisfaction.
Are fiduciary professionals qualified to mitigate disputes?
To be able, as a fiduciary, to manage, understand and positively contribute to disputes, technically and tactically, is an acquired skill (and very different to that of an adviser). Yet it is not a skill that is widely available.
Those looking for proactive dispute resolution need a trustee who will confront difficult situations head on, whether that’s in the private wealth arena, or related to pension schemes, unit trusts or investment funds.
Of course trust disputes are very different from ordinary commercial disputes and bring unique pressures; they can be emotionally distressing, financially expensive and vastly damaging to reputations. Trust disputes can be intensely personal and highly charged for those involved. A trustee therefore needs to bring not only independence and a fresh perspective to the situation, but also needs to strike the delicate balance between being dispassionate but empathetic. Above all, you need to stay calm.
How does Trust Corporation International approach the more contentious elements of trust work?
Good trust work is built on solid relationships, so we always work with our clients as partners and identify what is important to them. That informs all aspects of our work, where we are pragmatic and meticulous, commercially astute in our dealings with third parties and robust in the face of a challenge.
Our experience in the contentious space is based on our team’s expertise and varied backgrounds. Many of our staff have legal, tax and accountancy backgrounds which means whilst we are not advisers, we are well placed to identify and understand the issues at an early stage.
It’s always important to have an eye for the end game. Sometimes people ask us to dismantle a structure they do not want, or even just to hold the ring, where there is a period of disharmony. In these cases, the structure will often be at the end of its life and needs terminating. But in other cases, working constructively through a difficult period can lead to future stability and a more positive relationship.
These days contentious work is sadly unavoidable but if you have to confront it, you should do it with confidence and sensitivity.