Disagreements over a trust and how the assets are managed and distributed can be agonizing and expensive. Trustees and beneficiaries have disputes, family members, and friends fight, and if the issues can’t be resolved, the parties may eventually take their disputes to court. That’s when trust litigation can become an issue.
Purpose of a trust
One of the principal purposes of a trust is to provide structured distribution of property from one generation to the next. A trust allows you to decide ahead of time which property you want to give to which loved ones. As with any other legal process, there may be issues with a trust that require the parties to participate in trust litigation. In that situation, you should have an estate planning attorney who is experienced in litigation to help you through this process.
Common reasons trust litigation may become a necessity
The most common situation that leads to litigation is when there is a question as to whether the person who created the trust lacked the legal capacity at the time. In that case, there will likely be a need for litigation to determine whether the trust is actually valid. The same is true if there are questions as to whether the person was coerced into either including certain provisions in the trust or creating the trust entirely. If there was any undue influence or improper persuasion that may have inhibited the trust maker’s free will, then litigation will be required.
Most people want to avoid trust litigation
Trust litigation is typically very expensive, drawn-out, and full of resentment. For that reason, most people would prefer to avoid litigation if at all possible. If you are responsible for handling a trust, there are a few steps you can take to prevent trust litigation. For example, being sure to carry out all of your duties properly, as trustee, is very important. Also, it is important to be sure that the trust documents are not ambiguous
Carry out your duties properly
A trustee needs to be responsible and honest in managing assets, which includes giving accounts to beneficiaries regarding the trust contents; often, litigation arises from an accusation by a beneficiary that a trustee is guilty of mismanagement or lack of transparency. Keep detailed and organized records of everything related to the trust. It’s also best that you obtain the assistance of a reputable lawyer with trust management.
Make sure the trust documents are not ambiguous
Before taking on your duties as a trustee, it is a good idea to make sure that the trust agreement was properly drafted so its terms are clear. Any ambiguities that may lead to a dispute among beneficiaries need to be resolved as soon as possible.
Be prepared for likely sources of concern
If there is a particular asset or trust provision that will most likely become a source of dispute, then special care may be required to handle those issues. There could also be a particular beneficiary who is more likely than others to cause problems for the trustee. Taking these issues into consideration ahead of time and discussing them with the grantor will make it easier to avoid trust litigation.
Be sure the trust documents are updated if necessary
If the documents are outdated or significant changes in life circumstances necessitate modifications, those changes need to be made as soon as possible. Otherwise, you will ultimately have major issues. Your legal documents should be kept current. That means, if you need to update the beneficiaries on your life insurance policies or if there has been a divorce, appropriate changes need to be made.
There needs to be communication
Litigation often results from someone who may have been a beneficiary of a trust, no longer being a part of it. When individuals find out that they were either disinherited or they will not receive what they thought they should have received, disputes will undoubtedly arise. If a family wants to avoid arguments after a death, everything should be discussed ahead of time. No one wants to be surprised.
If you can’t avoid it you need a trust attorney
Trust litigation is a specialized area of the law. In many cases, trust litigation will require multiple petitions based on separate claims. For instance, petitions may be required regarding financial elder abuse, capacity issues, undue influence claims, creditor’s claims, and probate. In order to be successful in pursuing all of these legal claims, you need an attorney with sufficient knowledge and experience of California’s probate laws.
Join us for a free seminar! If you have questions regarding trust litigation, or any other estate planning needs, please contact the Schomer Law Group for a consultation, either online or by calling us at (310) 337-7696.