Fraud in trusts

Any suspicion of fraud in a trust naturally causes great concern. If you've been affected by an alleged fraud - whether as a trustee, executor, fiduciary or trust beneficiary - we can advise on the best strategy.

‘The classic example of fraud is a sham trust, set up to hide money from creditors, tax authorities or even due to a divorce,’ explains Steven Kempster, a partner in Withers’ contentious trust and succession team. ‘Or it might be an allegation of wrongdoing by a trustee or executor: perhaps someone has stolen from a trust, or there are concerns about ill-gotten gains going into it.’

We have significant experience of attacking and defending trusts and trustees. In one recent case, our US team in San Diego defended a trustee who was accused of breaching his fiduciary duties by the trust beneficiaries, who suggested that he was taking kickbacks from real estate agents and appraisers. We were able to show at trial that these claims were utterly without foundation, and the beneficiaries opted to settle before the trial concluded.

In some cases, deploying technical arguments to challenge the formal setup of the trust can achieve the best results. Here, our litigators’ in-depth knowledge of trusts can be a valuable weapon in a client’s arsenal.

However complex the situation, whether you are directly or indirectly affected by fraud, we offer pragmatic advice regarding proof and evaluation of evidence, as well as the available remedies, that will help you to decide on the best course of action. With lawyers based in 16 locations, from the US to Australia, we work as a single global team to get information and if necessary obtain and enforce a court order.

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Recognition

Top ranked firm for contentious trusts

Top ranked firm for private wealth disputes

Top tier firm for contentious trusts and probate

Contentious trusts and estates team of the year (2015-2017)

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Dawn Goodman and the contentious team at Withers have consistently delivered on instructions to bring clarity and context to our enquiries in a timely manner and on budget, which has been invaluable to our Client Service Directors in running and transitioning a large and diverse client base. We have been particularly impressed with the responsiveness of the team, which is sometimes required to advise on matters across languages and borders whilst acting seamlessly as correspondent to our own retained local advisers. My overall experience has been that for cases with large inherent or potential risks which may become contentious, Dawn’s team at Withers is a go to source of advice and support.

Phillip Ainslie, Technical and Compliance Director - Dominion (Geneva)

Meet the team

Track record

Heirs of a Swiss succession pact challenge the trustees of a British Virgin Islands trust

Proceedings were commenced in the British Virgin Islands (BVI), Switzerland and Italy in respect of a BVI trust where trustees had distributed to beneficiaries in accordance with a letter of wishes of the deceased settlor, who had died in Italy. It was alleged by disappointed heirs of a Swiss succession pact that the trustees had acted fraudulently in not abiding by the succession pact. Withers advised the beneficiaries including on the conflicts of laws issues arising, a succession pact being void in Italy. The matter was settled out of court.

Advice following the Madoff investment scandal

Following the Madoff scandal we advised the investment arm of a bank trustee with numerous Central and Latin American settlors / beneficiaries who had exposure to Madoff.

Swiss Trustees and a Swiss Bank

Advising Swiss trustees and a Swiss bank on the recovery of assets relating to unravelling an appointment upon the discovery of a fraud on a family trust and on the assets in the estate of the deceased settler in the sum of approximately £400m.

Asset freezing in Jersey

An unreported case centered on a civil compensation claim by the US Department of Justice and resulted in the freezing of assets in Jersey which were held by a Nevis trustee. Proceedings were issued in Jersey and Nevis.

Misrepresentation to Swiss trustees

A Protector misrepresented to Swiss trustees that the primary beneficiaries had agreed that very substantial trust assets should be appointed out to a secondary beneficiary who was a close relative of his on the basis that he would provide for the primary beneficiaries. Later the primary beneficiaries requested the trustees for help. Withers advised the trustees on taking steps to set aside the transfer to him. The matter was settled swiftly.

Allegations of fraud and misappropriation of business assets in the British Virgin Islands

Advising a private trust company in the British Virgin Islands holding significant interests in a number of energy businesses in Eastern Europe on issues arising from allegations of fraud and misappropriation of assets within the businesses. Actions were being taken by the governments and local courts in the relevant jurisdictions leading to a concern about the valid distribution of funds to the beneficiaries. Working with the lawyers advising the relevant businesses, we guided the trustees through some of the difficulties that arise where underlying businesses and individuals connected to them are the subject of fraud allegations and where court injunctions against those persons are causing problems for the administration of the trusts.

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