The legal fraternity knows that trust litigations are one of the most common kinds of lawsuits in the US courts. You are likely aware of what trust litigation is. However, if you’re not, we are here to explain.

Trusts are created to hold the assets of an individual on behalf of the benefactors. In trusts, grantors place their assets, which are managed by trustees. These trustees manage the assets on behalf of the benefactors. It makes a trust “tripartite” and not a contract between two people.

Besides the added layer of complexity that makes trusts different from other types of estate planning, there’s more you should know. Sometimes, there may be multiple grantors, beneficiaries, or trustees involved. So, it should be evident that you need an expert to deal with matters of trust.

Also, you may become embroiled in trust litigation when a related party decides to sue you. Thus, it is better to have expert help on hand because of the complex nature of trust litigation

Lawsuits are rife in the US. The cost of lawsuits makes up more than 2% of the country’s total GDP! Trust litigation is no different. Since it is a specialized area, it is even more complicated than other areas of estate planning.

For example, you may have to deal with multiple petitions/complaints about related but separate claims. In a situation, there could be issues of undue influence, financial elder abuse, creditor claims, capacity, etc. To win in the face of such a multi-pronged attack, you’ll have to pursue all of these legal claims successfully.

The requirement for expertise in estate planning & legal issues

No one likes to be sued. It is a painstaking process that takes years to settle. Trust litigations are especially the worst as they involve complex litigation processes and procedures.

To be successful at trust litigation, you must have an expert attorney by your side. It is because they will be taking the case through the trial. However, it is equally crucial for you to know about the possible scenarios that can land you in trust litigation.

Common trust litigation matters

Some matters that require trust litigation experts include:

A challenge of a trust’s validity

When parties are disputing the valid nature of a trust, the said trust could end up in litigation. For instance, the people involved may have doubts about the legal capacity of the person making a trust. Usually, in such situations, the mental competency of a beneficiary comes under question.

Either way, if a person can make a case that there was the interference of free will, they can take the case to court. Should they win, the court can dissolve the trust in question.

Undue Influence

In this case, the influence of an individual over a now-deceased person comes under question. A claim could be made by the beneficiary that the trust used influence to make the grantors change their will. Some ways through which someone can exert undue influence involve suggestions while others may be regarded as coercion.

It is, for example, easier to trick a person with dementia into making a change. Starving someone, withholding their medication, continuously badgering them while on the death bed, are other ways to influence them.

Say, someone brings this matter – of undue influence – to a court’s attention. The court will look into various factors when making the decision. These factors are commonly called the “carpenter factors,” some of the most well-known ones are:

  • Whether the defending beneficiary was present when the execution of trust – or desire to create one – was happening
  • What the defendant’s attorney has to say about the drawing up of the trust
  • If the defendant knew about the trust before its execution
  • If the defendant or the defendant’s attorney gave instructions to the grantor on how to draft the said trust
  • Whether there were witnesses when the defendant decided to execute the trust
  • If the defendant kept the trust safe

By viewing such factors, a court can determine if someone was unduly influencing the individual who made the trust before passing away.

Breaching Fiduciary Duty

Since the trustee has legal fiduciary duties they must follow, they come in contact with the assets during collection and distribution. It also allows them to mishandle the trust that those assets make up.

In some cases, they do so unknowingly, but it can also be intentional in other cases. If the trustee falls short of performing these duties, they are leaving themselves open to trust litigation. Usually, it is the decedent’s beneficiaries who open a case against the incompetency of trustees.

Final words

In this blog, we have outlined the scenarios that can land you in trust litigation. Other than these scenarios, there are creditor’s issues, mental incapacity, etc. that can lead to trust litigation. Therefore, protecting your estate – and yourself – from such litigation should be your top priority when creating a trust.Bottom of Form