Trusts are one part of estate planning that allows a person to dictate how their possessions and assets should be handled at either a designated time in their life or upon their death. However, trusts are complicated documents that require a lot of exact language and specific planning. There are many aspects of a trust that can go wrong when implemented. Whether there is interference from those named in the trust, poor execution by the trust administrator, or other complications, trusts are often challenged in court.
The loved one who established the trust, however, did not do so with the thought or intent that it would cause conflict later. They created it to help build a solid foundation for their family, who will benefit from the hard work they put into building a collection of assets that are worth passing down. However, when these complications arise, working with a trust litigation attorney can help resolve any disagreement so that your loved one’s wishes are faithfully carried out.
Entering into trust litigation means there is a challenge presented against a beneficiary or a trustee for their behaviors toward others named in the trust or against the trust itself. Litigating this conflict seeks to bring a resolution to this challenge. Entering into this process allows the person who is filing the complaint to access a great deal of information, such as:
On the other side of the challenge, trust litigation allows those accused to defend themselves and grants them access to the same information to dissuade others from filing baseless claims.
While many will not need to resort to litigation, as most beneficiaries and administrators are committed to the wishes of their loved ones and serve their interests, there are times when those same people can be untrustworthy or seek personal gain. Depending on the type of trust established, some are unable to be changed once they are written. This means that, should the relationship between the grantor and those in the trust become strained for any reason, it could spill over once the trust is executed, causing unnecessary disputes.
Trust documents are drafted that include a specific asset list and how those assets should be divided. Trusts seek to establish a connection between three involved parties:
Trusts offer a great deal of flexibility to the grantor, including establishing exactly when beneficiaries will have access to the assets named within. They also offer opportunities to provide long-term income for children, arrange care for family members with special needs, and even establish charitable contributions. This could mean that the trustee is responsible for holding assets in an account and distributing them only when told to do so according to the trust that the grantor established.
With so many aspects to the process, it is easy to see why trusts could end up in litigation. A trustee has the fiduciary duty, or legal responsibility, to act in the interests of the grantor. If there is any miscommunication or unclear messaging, this could be considered a breach of fiduciary duty and open the door to litigation.
When a trust enters into litigation, the trust itself is at the center of the argument. Litigation could arise when any of the following occur:
Although trust litigation can sometimes happen, trusts are one of the ideal ways to protect your assets and separate yourself from the process. Once the trust is established, the responsibility shifts to the trustee, who is responsible for ensuring that your wishes are carried out.
Working with an attorney who focuses on trust litigation helps you navigate the complexities of the situation. Whether you are a trustee or a beneficiary, it is easy to be caught up in baseless claims, discover misappropriated funds, or witness the manipulation of the grantor or the trustee to make certain decisions. An attorney helps you prepare for these should they arise, but they also help protect your rights should you need to file a claim yourself.
As with any case, there needs to be evidence to prove the discrepancies or fraudulent activity. Attorneys have access to resources that can help in the discovery of these wrongdoings. They also have the legal knowledge to interpret the wishes of the trust itself and argue the legalities. Whether you are the accuser or the defendant, a trust litigation attorney is there to help guide you through the process so you can make informed decisions.
Certain types of trusts can help protect assets from a legal claim. When some trusts are challenged, the assets named within them could be seized. However, if you establish an irrevocable trust, and remove yourself as a beneficiary within it, your assets may be protected from such seizure should litigation arise.
California does not have a pre-established timeframe within the statutes that determines when the trust should be executed. However, there must be a reasonable timeline, and the statutes do mandate timely distribution. This vague wording, however, could make it difficult for an executor to distribute assets at the time the beneficiaries would like. This process could take months or years, depending on the complexity of the trust.
While it may seem that beneficiaries are left to follow whatever the trust dictates, there are rights granted to them in the process. Beneficiaries have a right to know the trust exists, to receive a copy of the trust, and to receive information regarding the accounting of the trust as it relates to their interests.
Unfortunately, unless there is a breach of fiduciary duty or a clear violation of the trust’s terms, beneficiaries have little recourse to challenge an executor. While some beneficiaries may disagree with a process or a decision, as long as it is within the bounds of the trust’s terms, beneficiaries must accept the process.
Trusts can be complicated documents that require careful planning and execution. If you have questions about estate planning, establishing a trust, or trust litigation, contact the offices of Hinojosa & Forer, LLP. Our team has the answers to your questions to ensure that the wishes of a trust are carried out as intended.