Trusts Disputes: ‘Put up or shut up’

Estate executors and trustees must comply with their legal duties when administering the estate. While it can be straightforward, problems can arise and put the brakes on a planned distribution to the beneficiaries.

The UK’s High Court has recently given useful clarification on the right approach where an individual raises the prospect of suing the estate – but has not actually issued proceedings.  The ruling has persuasive authority on the courts in the Bahamas and should be noted by all those concerned with trusts and estates.

What’s the background?

The deceased’s daughter asked the executors to undertake not to distribute her late father’s £3.4m estate because of a disagreement. She was unhappy with her brother’s entitlement from the residuary estate, which was to split between the two of them 60:40 in his favour, under the terms of the will

The problem for the executors was the fact she had not issued a claim against the estate, or withdrawn her challenge to their proposed distribution. If they distributed the estate anyway, they could face liability in the event of a future successful claim.

The trustees therefore asked the court for a ‘put up or shut up’ order under Part 64 of the Civil Procedure Rules in England and Wales  – effectively an order requiring any claim to be made promptly or forget it. The alternative was the executors being held to ransom indefinitely.

Here, the court took the view it could not determine the application and make a fully informed decision until it had been able to consider whether the daughter’s potential claim was insubstantial, remote or speculative. This meant looking at the merits of the claim, including the information and documents held by the trustees. Therefore disclosure on the part of the executors was required.

This was important for all the parties because the effect of a ‘put up or shut up’ order would be to extinguish the trustees’ liability in the event of a claim after distribution. The judge succinctly stated: “Full disclosure is the price to be paid by the claimants for the exoneration they seek.”

An order was made for disclosure and for witness evidence, so that the application could be fairly decided.

What does this mean?

Executors and trustees have an important role in the effective administration of trusts and estates; and while there is invariably some risk – however small – of a claim by a known person or an unknown beneficiary – there are tools available to protect the trustees from liability.

If you’re involved in a trusts dispute, it is crucial to take expert legal advice before further steps are taken by the trustees, particularly if you’re considering making distributions to the beneficiaries or you believe you have a claim.

How we can help

The specialist litigation team at litigation law firm ParrisWhittaker are experienced in advising clients involved in disputed trusts and estates. For strategic advice, get in touch as early as possible on +1.242.352.6112

¹In the estate of William Fraser Reid [2022] EWHC 755