Mediation – Resolving trust and estate disputes

The son of the artist, Lucian Freud has launched a legal battle to claim a share of his late father’s £95.5 million fortune. A large proportion of the estate was left to a secret trust run by Freud’s solicitor and daughter who are now refusing to reveal the instructions that were left to them as to how the trust funds were to be divided. The legality of the trust arrangement is being challenged in the High Court and only time will tell if the challenge is successful.

Not many of us will find ourselves embroiled in a fight over a multi-million pound estate. However, even the smallest of estates can lead to acrimony between beneficiaries and family members. In this situation it may not always be necessary to become involved in lengthy and often costly litigation. If the parties are willing, mediation could hold the solution.

Mediation is a voluntary and confidential process whereby the mediator (an independent third party) assists the parties involved to achieve their own settlement to the dispute.

Confidentiality is key to the process. Nothing will be disclosed outside the confines of the mediation room. Discussions held between each party and the mediator are also confidential.

A popular misconception is that the mediator acts as a judge. This is not the case. They may express their views and make suggestions but it is for the parties to reach their own settlement and any views that the mediator holds cannot be imposed upon them.

What are the advantages of using a mediator?

Mediation can help preserve the assets held in the trust or the estate rather than having them swallowed up in litigation costs. Successful mediation can also avoid escalating family conflicts and preserve the relationships between the trustees and the beneficiaries. The privacy, informality and confidentiality of the process can also prove attractive as it avoids having ‘dirty linen washed in public’. It’s worth bearing in mind that the refusal by one party to attend mediation could lead to adverse cost consequences for that party should the matter ever proceed to court.

When to mediate?

Mediation should preferably take place before costs become disproportionate to the assets that are held in the trust or the estate. Parties might also find themselves wishing to opt for mediation in the middle of a lengthy and costly litigation providing, as it can do, a quick way to settle the matter. Mediation should also be considered early on in an attempt to restore relationships before the position of individuals become too entrenched.

Generally it can be said that mediation is something which should be considered sooner rather than later.

by Kieren Cross from the Wisbech office