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A recent High Court decision provides a useful reminder about who pays the legal costs when a trustee ends up in court over a trust.  In Jones v Sheppard [2025] EWHC 1693 (Ch), a grandmother had created a trust worth £1.8 million for her grandson.  The trust money was used to purchase a property in Barbados. The grandson later took his grandmother (who was the trustee) to court, seeking information, trust accounts and protection against the property being sold.

By the final stages of the case, much of the dispute concerned the trustee’s accounts and whether various expenses should properly have been charged to the trust.

The grandson won on some points. Around £32,000 of spending was disallowed, together with an issue concerning some legal costs.  He argued that, because he had achieved much of what he wanted from the proceedings, the trustee should not be able to recover her legal costs from the trust. The Court disagreed.

The usual rule for trustees

As a general rule, a trustee can have their legal costs paid from the trust fund as long as those costs were properly incurred in court proceedings. That protection is important.  A trustee should not necessarily have to pay personally simply because a beneficiary challenges the way in which the trust has been administered.

However, the protection is not automatic. The court can look at things like whether the trustee acted in the trust’s best interest, whether she stood to personally benefit, and whether she acted unreasonably in bringing, defending or handling the case.

In this case, the court found that the trustee had acted reasonably. She had provided accounts at an early stage, later updated them and supplied supporting documents.  Although some entries in those accounts were successfully challenged, that alone was not enough to deprive her of her usual protection.

The court therefore ordered that the trustee’s legal costs should be paid from the trust fund and assessed on the indemnity basis. The precise amount remained subject to agreement or assessment.

Key takeaways

• Trustees do not automatically lose their right to costs simply because a beneficiary succeeds on some issues.
• The important question is whether the trustee’s legal costs were properly and reasonably incurred.
• A trustee who acts unreasonably, for a personal purpose or contrary to the interests of the trust may lose the right to be indemnified.
• Beneficiaries considering legal action should remember that even successful challenges to individual items in trust accounts may not result in the trustee personally paying the legal costs.
• Trustees facing a dispute should take early legal advice and keep a clear record of why decisions and expenditure are considered to be in the interests of the trust.

If you would like further advice please contact one of our Wills, Probate, Tax and Trusts experts today.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.