Trust litigation comes in many forms because it can occur before or after the settlor’s (the creator of the trust) death. Trusts also come in many different forms, which create greater material for a dispute. Trusts are often created to provide for a minor, protect against incompetence, provide tax benefits, creditor protection and/or privacy, or prevent a beneficiary from receiving a lump sum of money. Through a trust agreement, the settlor has a say in how and when money is distributed to the beneficiaries.
So why would there be a dispute over a trust? There are many reasons trust litigation arises, and there are many types of people that can initiate it. Typically, it begins with a beneficiary who has an issue with the trustee, the terms of the trust agreement, or the creation of the trust altogether.
The basis for attacking a trustee could be, among others, breach of fiduciary duty, self-dealing, enforcement of distribution terms, material violation of the terms of a trust, trustee incapacity, or trustee mismanagement. These claims may allow for the recovery of damages from the trustee as well as their removal.
Though there are many reasons to pursue claims against a trustee, the trustee is also afforded some protection. A trustee often has a right to use the trust funds for his defense. While the majority of litigation arises out of issues pertaining to the beneficiaries, our Firm has represented settlors, trustees, and beneficiaries.
Trust Creation Disputes
Another significant cause of trust litigation arises through the very creation of a trust. To be a valid trust the settlor must have intended to create a trust; the settlor must also have mental capacity to create a trust, and free of undue influence. This creates opportunity for someone to oppose the validity of a trust.
Often this situation will arise when a family member has been cut out of a testamentary trust (one created in a will) or a trust created at the same time as a will, and was not provided for elsewhere. They could also be angry about who was named as the beneficiary seeking to prevent them from receiving anything at all.
These are just a couple of examples of when and how trust disputes might arise. There is a wide variety of situations which lead to a trust litigation. If you believe that there is an error in the creation, maintenance, or management of a trust, please contact our offices to discuss your situation.
Trust cases allow for an hourly fee or, depending on the circumstances, a contingent fee. This may depend on the type of trust, the dispute involved, and the type of distributions available.