The Covid-19 crisis is likely to lead many high net worth families to be brought into disputes in different areas of their lives, including in their business, investments or family relationships. On a recent webinar organised by PCD, James Price spoke about how the economic downturn that is likely to follow lockdown, could result in trust disputes.
James looked at the considerations for trustees, investment managers and lawyers on issues that might arise because of the downturn, based on his experiences with the tech crash and the 2008 financial crash previously.
The likely pressure points for trusts are likely to be around:
- investment performance
- distributions
- the impact on underlying companies
- potential insolvency events
- blessing applications
With regards to investment performance, James said that trustees were likely to be concerned about claims that could be brought against them relating to reduction of trust funds. He reiterated that the drop of the value of investment funds does not lead necessarily to a claim being successful, and so he would recommend taking expert advice early on. He said the considerations here including the overall attitude to risk of an investment portfolio, and whether or not the trustees made sufficient plans as the Coronavirus became more widespread in early 2020.
James said that already, there are reported to be some issues around cash flow and liquidity within a trust. In some cases, he mentioned there are revisions being made to usual distributions to beneficiaries as part of wide ‘belt-tightening’ exercise.
James highlighted potential insolvency events that might overtake. People will be aware that in a situation where there is an insolvency risk, trustees will need to take action. James outlined the recent decisions regarding the Z trusts in Jersey that show the complex nature of issues relating to trusts being insolvent. He added that the remuneration of the trustees themselves is dependant on a trust being solvent, so is certainly something to consider.
The recording
To view a recording of the webinar, please click here.
The webinar is free to view but standard registration details are required.
Private Client Litigation in the wake of Coronavirus webinar series
James Price, Sam Longworth and Lucy Ward teamed up with PCD to look at the likely implications of the global pandemic on private client litigation. The presentation covering divorce and family considerations can be found here and and one regarding commercial litigation can be found here.
This webinar featured presentations on the key issues for private wealth advisors to consider, offering insights into the challenges ahead as well as providing practical tips to keep in mind as we all brace for the new normal.
Covid-19 is impacting individuals and companies around the world in an unprecedented way. We have collected insights here to help you navigate the key legal issues you may be facing at this time.
You can find further information regarding our expertise, experience and team on our Trust and Probate Litigation pages.
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