There are any number of reasons why a living trust can be challenged in court, including:
- Trustee mismanagement
- Undue influence
- Ambiguous language in the trust itself
- Disagreements between beneficiaries
- Questions about the mental health of the grantor
If you have questions about navigating one of these disputes, make sure you speak with a qualified trust litigation lawyer.
Why Do Trusts End Up in Court?
There are several reasons to include a living trust as part of your estate plan, but foremost is the desire to avoid the court system. While those who die with only a will in place are almost sure to have their estates subjected to the probate system—a costly and time-consuming process for your heirs and beneficiaries to face— a living trust generally provides a way to avoid this outcome, sometimes eliminating legal intervention.
With that said, trusts themselves can sometimes be subject to legal disputes, requiring the intervention of the court system. When this happens, grantors, trustees, heirs, and beneficiaries alike may benefit from the expertise of a trust litigation attorney.
6 Reasons Why Trusts End Up in Court
In addition to keeping a trust litigation lawyer on file, it can also be helpful to know why trusts wind up in court in the first place. Here are a few of the most common issues.
1) Trustee Mismanagement
When someone (the grantor) establishes a trust, they must list someone to serve as the trustee. The trustee is tasked with managing and administering the property contained in the trust. They have a fiduciary obligation to act in the grantor’s best interests and any heirs or beneficiaries named in the trust. Naturally, when selecting a trustee, it’s important to choose someone ethical and responsible, someone who will not be negligent or beset by partiality and favoritism.
Sometimes, trustees fall short of their fiduciary duties, whether through dishonesty or ignorance. Examples include misusing funds, neglecting the required distributions, or failing to communicate appropriately with heirs and beneficiaries. The appearance of self-dealing may also result in charges of trustee mismanagement.
Those who feel like their assets have been compromised due to a trustee’s mismanagement may take legal action against the trust itself, leading to a dispute in court.
2) Undue Influence and Trust Manipulation
Undue influence is the term used to describe individuals who use a position of trust or authority to obtain all or part of an estate wrongfully.
For example, say that the grantor is an elderly woman diagnosed with dementia. The grantor has three children who all live far away, and a boyfriend who lives with her and takes care of her daily. The boyfriend could use his proximity with the grantor to influence a change in the trust, asking her to amend it so that all assets go to him, not the children.
Undue influence is a common cause of legal challenges to wills, trusts, and estates. If you suspect a case of undue influence, speaking with a trust litigation attorney may be worthwhile.
3) Ambiguous or Unclear Trust Provisions
When drafting the language of a trust, clarity is critical. For this reason, it’s always wise to work closely with a skilled estate planning lawyer who can help you avoid ambiguities.
The law defines trust ambiguity as any situation in which two people could read the language of a trust and each reasonably reach a different set of conclusions about the grantor’s intentions. This kind of unclearness often results in a legal dispute requiring the intervention of a trust litigation lawyer.
4) Disputes Among Beneficiaries
One of the benefits of estate planning is that it allows you to be clear and precise about how you desire your assets to be distributed upon your death. Even so, you may have survivors who dispute your stated allocations, whether because they don’t receive what they perceive to be their fair share or they don’t receive anything.
While such disputes can often be avoided by clearly communicating with your family members about how your estate will be handled upon your death, there may still be issues where beneficiaries raise questions or concerns. For example, an heir may worry that one of the other beneficiaries exerted undue influence over the estate planning process, resulting in a feud that can only be settled in court.
5) Challenges to the Grantor’s Mental Acuity
When creating or amending a trust, it is generally assumed that the grantor is in their right mind. One of the most common ways for a beneficiary or an heir to dispute a trust’s validity or to question a more recent amendment to the trust is to claim that the grantor was not in the right mental condition, perhaps alleging dementia, Alzheimer’s, or a similar disease.
6) Improper Trust Formation
A trust may also be disputed if there is reason to think it wasn’t adequately drafted; for example, it’s unclear or missing essential elements, such as a named grantor, qualified trustee, beneficiaries, assets, and terms.
If questions arise about any of these elements, the trust’s validity may be challenged in court, possibly requiring intervention from a trust litigation attorney.
Avoiding and Responding to Trust Disputes
Nobody wants their estate to become embroiled in a legal skirmish, which makes it so important to choose a qualified estate planning attorney to help draft clear, exacting language. Additionally, it’s critical to select someone ethical and responsible to serve as the trustee.
Even with the most robust precautions in place, disputes can sometimes arise. To navigate claims regarding a trust dispute, seek an experienced trust litigation lawyer.
The bottom line: If you’re involved in a trust or considering creating one, always seek expert legal advice to ensure clarity and minimize the potential for disputes.