Legal disputes over trusts have soared by 238% during the recession, according to City firm Wedlake Bell.

Figures from the Ministry of Justice show the number of claims in the High Court in London involving trusts rose to 44 in 2009, up from 13 in 2008. In 2006, there were just three such cases recorded.

But Fay Copeland, a partner in the firm’s private client team, said the actual number of disputes involving trusts is likely to be significantly higher than that, as most claims are settled out of court.

Copeland put the increase in claims down to the fall in income from trusts, coupled with the rise in trustees’ fees. 

Beneficiaries who have seen the income generated by their trusts or the value of assets held in trusts slump during the recession, have increasingly looked to recoup their losses by bringing claims against trustees alleging their assets have been mismanaged, explained Copeland. 


She said: ‘The income generated by trusts will have fallen quite substantially during the recession. In addition, many beneficiaries have seen the capital value of investments and property held in trusts drop, often significantly.’
 
Copeland said trustees are usually likely to be banks or professionals such as accountants and solicitors, but could include family members, who often agree to act as trustees without really knowing what is involved.

As the administration of trusts and management of the assets has become more complex, Copeland said that family members can find themselves being criticised and caught up in a dispute.

Copeland added that the growing amount of red tape associated with managing trusts, due to increasingly complex tax rules and anti-money laundering compliance, had led to a sharp rise in the fees of professional trustees.

She said this is likely to have fuelled the anger of beneficiaries who have seen the income from their trusts fall. 
 
‘For many beneficiaries who have seen the value of their assets dwindle, this will have added insult to injury, fuelling litigation,’ said Copeland.