As the editors of the 2nd edition of ‘International Trust Disputes’ (2019) state in paragraph 17.27, ‘In trust disputes the structure of a settlement is often as important an issue as the financial terms. For example, is there to be a clean break or an ongoing trust? If an ongoing trust, how is that to be achieved and structured? These considerations are even more complex if the dispute involves a variety of trusts and beneficiaries with differing tax regimes. The advantages and disadvantages of potential routes to settlement are best considered in the calm space of the preparation phase rather than on the day of the mediation. Similarly, complex documents are best prepared subsequently. It may be helpful to have precedents available or even a draft settlement agreement if aspects of the structure can be agreed in advance.’
Where mediation is used as a process for innovative and bespoke lifetime estate and business succession planning, ideally a qualified tax adviser should be appointed to prepare an estate planning report (EPR) and a business succession planning report (BSPR).
These should be prepared after an inventory/schedule of the composition and value of the estate and family business has been prepared and before the mediator proceeds to interview each family member:
1. to confirm their acceptance of the facts set out in the inventory/schedule, so that from the outset all participants in the process are singing off the same song sheet; and
2. about what they each, want, need, prioritise and why.
In the case of an international family, their lawyers and tax advisers – appointed by the Family Office – can then engage with family members through a process of facilitated/mediated discussion to agree a holistic strategy and roadmap for practical implementation that is approved by each family member.
This may result in the drafting of a family constitution, and in the redrafting of the articles and memorandum of association of a family-owned company, a shareholders’ agreement and of an international trust deed which are no longer fit for purpose.
In contrast to the mediation of a dispute which will usually last between one and two days at the most, this process of dialogue, road mapping, and agreement, will take months, and can be accelerated if the mediator is assisted by a co-mediator.( See my article ‘Back to the future’ – Part 2 – Mediation and Estate/Business Succession Planning. Taxation (Tolley) 08.03.2022 (to which there is a link on the ‘Publications’ page at www.carlislam.co.uk).