Trust Litigation

Trust litigation generally involves challenges to the validity of a trust document and/or challenges to the administration of a trust. Trust documents usually authorize the trustee to defend the trust and prosecute actions for the benefit of the trust.

Challenges to the Validity of the Trust

A significant portion of trust litigation involves challenges to the trust by beneficiaries or persons who were not included as beneficiaries. There are a number of possible challenges that involve allegations of lack of capacity, undue influence, duress, mistake and elder abuse. Most trusts contain “no-contest clauses” which may act as a deterrent to a trust challenge. However, a no-contest clause will not necessarily deter a family member who is excluded completely. A trustee can significantly shorten the statute of limitations to challenge a trust by providing notice of the deadline to the interested parties, and return, challenge the validity of the trust; thus, it is recommended that a notice of this kind be provided.

Challenges to the Administration of the Trust

Another significant portion of trust litigation concerns matters of trust administration. A trustee has an affirmative duty to properly administer the trust. This means that a trustee with no knowledge or experience in trust administration will likely proceed at his/her own peril. A trustee owes a fiduciary duty to the trust beneficiaries and must not favor him/herself over other beneficiaries. The trustee must act for the benefit of all trust beneficiaries fairly, honestly, and in good faith. In family situations, this can be a great challenge. A trustee who fails to properly administer the trust is open to criticism by trust beneficiaries, creditors, and taxing authorities that may result in litigation in efforts to replace the trustee and hold the trustee personally accountable for misdeeds. Unlike probate court administration, where there is direct court oversight and strict rules to perform duties and tasks at certain time intervals, trust administration is typically accomplished without any court oversight. Hence, if a trustee does not perform certain duties in a timely or reasonable manner, litigation may result as the only enforcement mechanism to compel the trustee to act. A trustee is usually authorized by the trust document itself to hire professionals to assist in competently performing duties. When appropriate, an experienced trust attorney and a tax professional should be consulted. The costs of professional fees will be paid by the trust if reasonable and necessary.

How Our Trust Litigation Lawyers Can Help

Our estate planning and tax attorneys at NewPoint Law Group, LLP, have experience in assisting trustees to properly administer trusts and competently perform their duties in order to prevent trust litigation. If you are a trustee being threatened with litigation, or a beneficiary who believes the trustee is not properly administering the trust, please contact our firm as soon as possible for professional guidance. We can offer support in efforts to resolve matters without the need for litigation wherever possible. If litigation becomes necessary, our attorneys are well equipped to litigate the matter and resolve all issues for the benefit of the client. To schedule a free consultation, call 800-358-0305 or contact us online today.