More than $100 million has been spent on a bitter family trust battle described as “catastrophic” for the mental and physical health of those involved.
The Royal Court has warned that further costs must be kept to an “absolute minimum” as it attempts to bring years of litigation involving a complex network of Jersey and Guernsey trusts towards a conclusion.
The dispute centres on trusts established or administered for the family of an anonymous man who died in 2019.
In 2021, the Jersey trusts were estimated to be worth around $382 million, while related Guernsey trusts were believed to hold approximately $550 million.
However, the family has since been involved in extensive legal proceedings in Jersey, Guernsey and elsewhere over the trusts and how they should be restructured.
There was “no real dispute” that more than $100 million had been spent since 2022 on proceedings and restructuring, according to Commissioner Sir William Bailhache.
At one point during 2023, spending was running at approximately $4 million per month, while the restructuring proceedings alone have cost more than $91 million.
Around $1.5 million was also spent on financial modelling for an earlier restructuring proposal.
The court said approximately 15% of the overall trust funds had now been used on legal costs and other expenses, adding that “one cannot think that this could have been contemplated with equanimity by the settlor”.
There are also concerns that the Jersey trusts could run out of readily available money if costs continued at anything like their previous rate.
One of the man’s adult children told the court that the litigation had been “catastrophic” for the adult beneficiaries’ mental and physical health.
The siblings have since managed to reach agreement among themselves on a proposed new way of dividing and restructuring the trusts, rebuilding relationships in the process.
Under that proposal, the man’s widow would receive $110 million outright, alongside other arrangements involving property and trusts for different branches of the family.
But the same adult child told the court that, despite the agreement, the family still felt unable to “see light at the end of the tunnel”.
Sir William said the “emotional stress and pressure on the adult beneficiaries is a real factor” and warned that the family harmony which had been restored could be shattered if the restructuring failed.
An attempt by the adult beneficiaries to cap further legal costs at $120,000 per month was rejected, with the court finding that setting an arbitrary limit could prove a false economy.
However, Sir William said it was “very much to be hoped” that everyone involved would recognise the need to keep costs to an “absolute minimum”.
