Preserving Landed Estates: A tale of two generations, or merely a case of great expectations?

The dispute between the Marquess of Hertford and his son and heir, the Earl of Yarmouth, featured in various newspapers this week. These disputes often attract media attention on account of the historic families and landed estates involved. The case serves as a useful reminder of the issues often at play in cases involving landed estates in which the Mills & Reeve team have a lot of experience.  

While landed estates are often associated with particular families, the truth is that many of them are no longer owned by those families. Instead, they tend to be held on trusts or corporate structures designed to ensure the continuation and success of the estate for future generations. In some cases, those structures might have historically been put in place as a result of previous generations’ poor management and wild lifestyles...    

Those responsible for managing these structures can include members of the family (who may also themselves be beneficiaries), as well as professional advisers who are well placed to consider the issues which might arise during the day-to-day running of the estate or more specific problems that might present themselves. Examples of disputes that commonly arise are between one group of beneficiaries and others, or between the beneficiaries and the trustees on how the estate income should be applied, whether the estate assets should be diversified, whether capital improvements should be made and whether development potential should be exploited. Trustees can come under a lot of pressure in regard to this decision making and there's usually no one answer that suits everybody.

The beneficiaries of the structures are often the members of the families who once upon a time owned the estate outright. Usually this will include the present holder of the title, their heirs and any other children, as well as possibly their siblings and remoter relatives. How and when each beneficiary may benefit from the estate will often depend on the terms of the trust or articles of association which govern the structure in each case, and there will often be conditions attached to their entitlement. A common feature is that beneficiaries might only become entitled to benefit from the structure upon reaching a certain age.  

Often, the trustees have a large amount of discretion when it comes to deciding who might receive a benefit, how much they should receive and what form the benefit might take. This is to enable them to react to problems which may arise which are particular to each beneficiary, but always balancing what is in the best interests of the estate as whole. 

There have been instances where some estates have seen beneficiaries “cut off” from benefitting for a time as a result of disapproval by a family member or settlor of a beneficiary’s actions or conduct. Whilst one benefit of these structures is ensuring the assets are not affected by the personal problems of each generation, this discretion can lead to arguments arising where beneficiaries feel they have not been provided for as they should under the terms of the trust, as appears to have been the case with the Earl of Yarmouth and his father. In extreme cases, this can lead to attempts by beneficiaries to challenge the decisions and management of the trustees, replace trustees where they feel they haven't given due consideration to their interests, or even in some extreme cases try to vary or end the structures themselves.  

It'll be interesting to see how the Earl of Yarmouth’s case plays out. It appears that the trustees are coming under fire for their decision-making and it remains to be seen whether they are able to hold on to office.

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