By Jodi Langlois, Head of Private Wealth, Guernsey
Family trust disputes are rarely about wealth alone. A neutral, experienced step-in trustee can transform moments of conflict into opportunities for renewal and lasting stability.
Trusts are created to protect wealth and preserve legacy across generations, but even the most carefully structured arrangement can become a source of friction. When differing expectations, personalities and values collide, the structure meant to ensure harmony can become a flashpoint for conflict instead.
In family offices, this situation arises more often than people think. According to a well-cited U.S. study, an estimated 70% of high-net-worth families lose a significant portion of their wealth by the second generation, and this is likely linked to internal battles over inheritance.
When that happens within a family trust, the trustee’s role shifts from simple stewardship to something far more nuanced: restoring confidence, relationships and clarity. In some cases, that work may even require a fresh perspective from a second trustee, appointed to steady the structure from outside and rebuild trust from within.
From safety net to source of conflict: Why even well-designed trusts can fracture
Every contentious trust has its own origin story. Sometimes a settlor’s Letter of Wishes becomes outdated. Sometimes beneficiaries disagree about what “fair” means. A founder might still be running the operating business while adult children want liquidity for new ventures, or a next-generation beneficiary might challenge investment strategies that no longer reflect their social or environmental priorities. In multi-jurisdictional families, cultural differences can widen those gaps even further.
Trustees don’t simply navigate governance issues; they navigate human ones. The letter of the law provides structure, but it can’t replace empathy, communication or trust.
Common causes of conflict in family trusts
In our extensive experience of working with wealthy families across the globe, we most frequently see trusts become contentious when alignment breaks down around one or more of the following themes:
- Interpretation: Disputes over what the settlor truly intended, particularly when documents are open-ended or outdated
- Entitlement: Disagreements over who should benefit, when, and how much
- Control: Power struggles over investment decisions or governance direction, especially in family offices that have evolved into complex enterprises
- Communication: Breakdowns in transparency, inconsistent information sharing, or a lack of clarity in previous trustee decision-making
- Conduct: Personality clashes between beneficiaries and previous trustees, often intensified by generational differences or opposing views of what is “fair”
Cross-border tax issues, family breakdowns or changes in personal circumstances can heighten any of these tensions and turn a simple misunderstanding into a complex dispute.
Resolving family trust disputes without litigation
In Guernsey and similar international trust jurisdictions, we’ve seen rising use of private dispute resolution pathways, such as mediation and arbitration, to resolve these issues discreetly. As Ogier noted in a recent analysis, arbitration is an increasingly recognised method for resolving trust disputes because it offers a degree of privacy, speed and flexibility that traditional litigation can’t always provide.
This shift underscores a truth many families have already recognised: the longer a conflict drags on, the greater the emotional and financial toll. The end goal of a contentious trust is not for one side to “win,” but to rebuild stability throughout the wider family.
The role of a second trustee in resolving family trust conflicts
When conflict reaches a certain point, families often need a neutral third party to re-establish balance. The appointment of a new or second trustee can reset the tone by bringing impartiality to proceedings that have otherwise degraded.
When handled well, contention can strengthen the family office and trust framework rather than weaken it. By clarifying intent, refreshing governance plans and re-establishing open channels of communication, a step-in trustee can transform a dispute into a turning point toward renewal.
Navigating family conflict demands both IQ and EQ: technical knowledge and emotional intelligence. Guernsey courts have long recognised the difficulty of that balance, taking a pragmatic and supportive approach toward trustees who act in good faith and seek the court’s direction where needed. That environment encourages trustees to engage proactively rather than defensively when relationships fracture.
Lessons from the fiduciary front: Managing conflict in family trusts
Trustees who manage conflict successfully typically share these proactive habits in common:
- Communicate early and often: Proactive, regular dialogue with beneficiaries prevents assumptions and misinformation from taking hold
- Document everything: Record decisions (and the reasoning behind them) to evidence impartiality and eliminate ambiguity
- Engage advisers early: Collaboration with lawyers, accountants, family office managers and other professionals creates alignment and reinforces credibility
- Use mediation or arbitration as needed: Neutral, structured dialogue helps resolve disagreements efficiently and privately
- Educate beneficiaries: Transparency builds confidence. Explain how the trust operates, what trustees can and can’t do, and how decisions are made
- Review and refresh documentation: Update trust deeds, Letters of Wishes and governance protocols regularly to reflect current realities
- Encourage adaptability: Trusts that can evolve with changing family needs and values are far less likely to become contentious
- Foster dialogue: Create forums for open discussion between trustees, advisers and family members before small misunderstandings snowball into crises.
How we can help
At IQ-EQ we’re experienced in acting as replacement or “step-in” trustees when existing relationships become strained. When this happens, our first priority is to stabilise the structure by rebuilding communication while protecting the integrity of the trust.
Once confidence is restored, our work often continues. We stay alongside the family and their advisers to ensure continuity, strengthen governance and help prevent similar issues in the future.
Much like trusteeship itself, reestablishing familial trust after a conflict is a process, not a single event. We help families navigate these challenges with discretion, empathy and experience, ensuring that the structures built to protect wealth also protect family relationships.
Contact our team to learn more about how IQ-EQ can support your family’s governance and fiduciary needs.
