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Protect the trust. Preserve the family.
Trust disputes often involve family members who will need to maintain some relationship after the dispute is resolved. Court can damage relationships beyond repair. Mediation offers another path.
The Trusts Act 2019 supports mediation
New Zealand's Trusts Act 2019 was the first major reform of trust law in 70 years. Among its changes, the Act includes express provisions for Alternative Dispute Resolution (ADR) in trust disputes.
Courts now have the power to order parties to attempt mediation before proceeding to trial. This reflects recognition that trust disputes, which often involve close family relationships, are particularly suited to mediation.
But you do not need to wait for a court to tell you to mediate. Starting mediation early, before positions harden and costs escalate, often gives the best chance of preserving both the trust and the relationships.
Why the law encourages mediation
- Trust disputes often involve close family relationships
- Litigation can destroy relationships beyond repair
- Mediated solutions are more sustainable long-term
- Privacy is preserved in mediation
Common trust disputes that suit mediation
Trustee decisions being questioned
Scenario: Beneficiaries disagree with how trustees are managing the trust, investment decisions, or distribution policies.
Why mediation helps: A mediator can help trustees explain their reasoning and help beneficiaries understand their role, while finding ways forward that address concerns.
Distribution disputes
Scenario: Beneficiaries feel distributions are unfair or do not reflect the settlor's intentions.
Why mediation helps: The trust deed may allow discretion. Mediation can help parties understand the parameters and find distributions that feel fair to everyone.
Trustee conduct concerns
Scenario: Beneficiaries believe trustees are not fulfilling their duties, are favouring certain beneficiaries, or are acting in their own interests.
Why mediation helps: Court proceedings to remove trustees are expensive and public. Mediation can often resolve concerns through changes in process or trustee composition.
Multi-generational transition
Scenario: The next generation is taking over as trustees or becoming primary beneficiaries, and there is conflict about direction.
Why mediation helps: These transitions need ongoing relationships to work. Mediation helps establish understanding and working arrangements for the future.
Trust variation disputes
Scenario: Some parties want to change the trust, others want to preserve the original structure.
Why mediation helps: A mediator can help parties understand everyone's interests and find modifications that work for all.
Why trust disputes are different.
Trust disputes carry unique challenges that make mediation particularly valuable.
Family relationships at stake
Court proceedings pit family members against each other in an adversarial process. Winners and losers are declared. Evidence is given that cannot be unsaid. Even if you "win," the family relationships may be destroyed.
Emotions run high
Trust disputes often involve feelings of betrayal, unfairness, or disrespect that go beyond the legal issues. A skilled mediator can acknowledge these emotions while keeping the focus on practical solutions.
The settlor's intentions matter
Many trust disputes involve disagreements about what the settlor (often a deceased parent) "would have wanted." Court proceedings rarely resolve these questions satisfactorily. Mediation allows for conversations about values and intentions that courts cannot facilitate.
Ongoing relationships
Unlike most disputes where parties can walk away afterwards, trust beneficiaries and trustees may need to continue working together for decades. A mediated resolution that everyone can live with is more sustainable than a court-imposed outcome that leaves half the family resentful.
Privacy matters.
Court proceedings are public. Anyone can sit in the gallery. Judgments become searchable public records. Your family's finances, relationships, and conflicts become available for anyone to read.
Mediation is completely confidential. The process and outcome remain private. No public record is created. For families who value their privacy, this is often the decisive factor.
"Without prejudice" protection
Everything discussed in mediation is confidential and cannot be used in court if the mediation does not succeed. This allows parties to explore options freely without fear of prejudicing their legal position.
What trust mediation looks like
Trust mediations usually follow a structured but flexible process.
Pre-mediation preparation
Each party prepares their perspective. Key documents are gathered. The mediator may speak with parties separately to understand the issues.
Joint session
Parties come together. Each has the opportunity to explain their perspective and concerns without interruption.
Private caucuses
The mediator meets with each party separately to explore interests, test options, and work through obstacles.
Negotiation
The mediator helps parties find common ground and develop options that address everyone's core concerns.
Agreement
If resolution is reached, a binding settlement agreement is drafted and signed.
Most trust mediations resolve in one or two days. Complex matters may require multiple sessions. This compares to months or years for court proceedings.
When mediation is not enough
We should be honest that mediation is not always possible or appropriate.
- If a party genuinely refuses to participate in good faith, mediation will not work
- If there are allegations of fraud or serious trustee misconduct, court supervision may be necessary
- If the trust deed needs formal variation that requires court approval, a court process is needed
- If one party is determined to have their "day in court," they may not accept a negotiated outcome
In these cases, mediation can still help narrow the issues or achieve partial resolution, reducing what the court needs to decide.
Key Takeaways
- The Trusts Act 2019 expressly supports mediation for trust disputes
- Family relationships often survive mediation but rarely survive litigation
- Trust disputes involve emotions and values that courts struggle to address
- Mediation is confidential, with no public record
- Most trust mediations resolve in one or two days
- Even if mediation does not fully succeed, it often narrows the issues
Related Reading
What is Mediation and How Does It Work?
Mediation is a structured negotiation with a neutral third party. Learn how the process works, what the mediator does, and when mediation makes sense.
When Mediation Makes Sense for Business Disputes
Not every business dispute needs court. Learn when mediation offers a smarter path to resolution, and how to maximise your chances of success.