Trusts Act 2019: Alternative dispute resolution

One of the purposes of the Trusts Act is to provide mechanisms to resolve trust related disputes. The Trusts Act will do that by making alternative dispute resolution (ADR) (e.g. mediation or arbitration) more accessible to resolve trust related disputes.

For example:

• where the terms of a trust do not require or allow ADR, the trustees will still be able to refer a dispute to an ADR process with the agreement of the parties to the dispute;

• where a beneficiary is unascertained or lacks capacity, in relation to an internal matter (e.g. a dispute between a trustee and a beneficiary or between two trustees), the court will appoint a representative for that beneficiary – the representative is able to agree to a settlement or arbitration agreement on behalf of that beneficiary;

• the trustees may give binding undertakings in relation to a settlement or arbitration agreement (despite the duty in section 33 that a trustee must not bind or commit trustees to a future exercise or non-exercise of a discretion); and

• the liability of trustees will be limited in relation to a settlement or arbitration agreement.

The alternative dispute resolution provisions in the Trusts Act will not apply to a dispute about the validity of the trust itself (refer to the definition of “matter” in section 142).

We have published A trustee’s guide to the Trusts Act 2019 (Guide) – the above is an extract from the Guide. If you would like a full copy of the Guide, please get in contact with us.

Disclaimer: This publication should not be construed or acted on as legal advice. It is brief and general in nature. Specific advice should be sought.