What Is Trust Litigation?

Trust litigation deals with conflicts that emerge from the creation, administration, or execution of trusts. A trust is a legal arrangement where someone is responsible for managing assets for the benefit of another. This would be a trustee and the trust’s beneficiaries. Unfortunately, the execution of a trust is not always simple. Sometimes, major disagreements and disputes can surface, requiring the court to get involved and remedy the situation. Having a better understanding of what the trust litigation process looks like can help one avoid conflicts or navigate them if they do arise.

What Causes Trust Litigation?

There are a ton of different reasons why individuals might find themselves in litigation over a trust. Some of the most common reasons include:

• There has been a breach of fiduciary duty: A fiduciary duty is a legal obligation to act in good faith. For a trust, this means upholding the details of how the estate should be executed. Any intentional act to question the trust’s compliance can warrant an investigation and litigation. If it was not done on purpose, there can be instances where a trustee was negligent or just simply did not understand their responsibilities.
• There is a disagreement on the interpretation of the trust: Sometimes, parties might have a different understanding of how the trust should be executed. Unfortunately, the estate in question could be that of someone who has already passed away and can no longer clarify their intentions. In these instances, the court and legal counsel will need to assess their own interpretation of what is laid out in the trust and reach a consensus on how to move forward.
• The validity of the trust is in question: At some point in the process of trust administration, someone might question the validity of the trust. There could be concerns that the person who created the trust was not in the right mental capacity to make such significant decisions, or they were inappropriately pressured to make certain decisions against their own will. This is a serious accusation and will need to be investigated before the trust can be executed and closed.

What Is the Trust Litigation Process?

The process of engaging in trust litigation follows a standard sequence:

1. Filing a petition: Whatever party is raising a concern is responsible for initiating the process by filing a petition. This can be done in probate or civil court.
2. Notifying all parties involved: Everyone who has a stake in the trust must be notified of the litigation proceedings. This includes all beneficiaries and trustees.
3. Discovery investigation: The discovery phase is where evidence is collected and reviewed for consideration. This can include financial records, digital communications, or other evidence that both supports and potentially refutes the accusation.
4. Mediation or settlement discussions: If the parties involved are trying to avoid an official court hearing, they can attempt to resolve the differences through mediation or a settlement offer. This can expedite the process significantly if everyone reaches the same conclusion and agrees to accept the new conditions.
5. Trial: If an attempt at mediation was not successful in reaching a settlement, the dispute will have to go to trial. This is where both parties will hire a trust and estate attorney to represent their interests. A judge and jury will have the final say after hearing both sides of the trust dispute.

FAQs

Q: Can a Trustee Withhold Money From a Beneficiary?

A: Yes, there are certain circumstances where a trustee would be able to keep money from a beneficiary. However, there needs to be a justification other than some personal reasons. For example, if the beneficiary has not yet met the conditions laid out within the trust to receive assets, the trustee can withhold them until the conditions are met. This is a legitimate reason. A trustee could not, however, withhold a trust’s execution simply because they had a disagreement with the beneficiary outside the context of this trust.

Q: How Long Does It Take for a Beneficiary to Receive Money From a Trust?

A: There is no universal time period for when a beneficiary is guaranteed to receive trust funds. Different factors can affect the timeline, such as:

• The terms and conditions of the trust
• The nature of the assets
• If any disputes have surfaced during the administration of the trust

Generally, a straightforward trust that has not been contested will only take a few months to complete. More complex trusts with a ton of different assets can really extend that timeframe. It’s crucial for the trustee and beneficiary to prioritize open communication to ensure that everyone is aligned on the timeline.

Q: Can a Trustee Ignore a Beneficiary?

A: A trustee has a fiduciary duty to act in the interests of all beneficiaries they represent. Within this responsibility, they must address all concerns raised by beneficiaries and keep them informed throughout the entire process of the trust’s administration. If a trustee intentionally ignores any inquiries or concerns from a beneficiary, that can be considered a breach of their fiduciary duty. This could result in trust litigation, which would significantly delay how quickly the beneficiaries receive the assets and funds they are looking for.

Q: How Are Trusts Distributed to Beneficiaries After Death?

A: After the death of the settler who created the trust, the assets identified within the trust are now open to be distributed to the beneficiaries in accordance with its terms and conditions. The trustee is first responsible for ensuring that any outstanding debts or taxes owed are taken care of. They also need to check in with all the beneficiaries and ensure that everyone is comfortable with the proceedings and see if they have any concerns. The assets within the trust can be distributed either all at once or staggered over time, depending on the instructions within the trust. Beneficiaries have the right to be informed immediately of any delays or complications that may arise throughout the process that would prevent them from receiving the assets or funds they are expecting.

Contact Ross Law Group, APC, Today

If you are facing trust administration disputes and are looking for legal counsel to assist, contact us at Ross Law Group, APC, today. We are very familiar with the trust administration process and have the skills required to authenticate a trust’s validity and ensure that it is distributed as intended.