The main idea behind the trust is to prevent legal hassles among family members. The assets are transferred to certain individuals based on terms that the individual, who established the trust, set out while he or she was alive and could interpret his or her intentions. This is what is supposed to happen. In reality, there is a whole range of litigation cases involving trusts that occur years after the individual who established the trust is long gone.
Most people think trusts are absolute once signed, but the truth is not visibly always the case. A trust is only as strong as its trustee and the documentation. Once any of these aspects fail, this is where concerns follow. In such cases, one might wonder, "Can you sue a trust?" Others may also file a legal action following a trustee's actions.
According to a recent empirical study of 640 contested trust petitions in San Francisco Superior Court, it found that roughly 75% of the lawsuits were driven by issues involving trust administration. The findings suggest that trust disputes may often arise from how a trust is administered after its creation, rather than from challenges to the validity of the trust itself.
Disputes Over the Trustee's Conduct
The most common reason for filing a lawsuit against a trust does not relate to the document or to any breach of its terms. It relates to the trustee, who is the person assigned to manage the trust itself.
The trustee must be loyal towards the beneficiaries and must treat trust property in an extremely careful manner. They should maintain good accounting, avoid personal use of trust property, and act in the beneficiaries' best interest. If such a responsibility is not kept, beneficiaries will be entitled to some legal actions.
Common reasons for a beneficiary to sue a trustee may be refusal to render an account, favoring some beneficiaries over others, or commingling of the trust funds with personal money of the trustee. The most severe violation of the terms is self-dealing, and usually it provokes the most vigorous reaction from the court. In these cases a beneficiary will usually be able to petition the court about compelling an account, replacing the trustee, or holding the trustee personally liable for any losses suffered by the trust.
Disputes Over the Validity of the Trust Itself
A completely separate class of disputes revolves around whether the trust is valid at all. In most cases, challenges to the trust assume that the individual who set it up lacked the capacity to enter into such an agreement. This type of dispute argues that undue influence was exerted towards the trustor or that the trust agreement itself is fraudulent.
Such a dispute normally arises when the trust underwent some major changes near the end of the life of the trust maker and, in particular, if these changes favored a new caregiver or recent family member over those named previously in earlier trusts. To contest a trust is to raise a completely separate legal issue from challenging the actions of the trustee.
Property and Asset Disputes
Sometimes, the battle is not about the actions of the trustee or the validity of the trust itself. The issue is one of determining what property is supposed to be in the trust. Property that never had its title changed, properties that did not make it into the funding process of the trust, or property from a family member who claims they were promised a certain property outside of the trust can create problems.
Elder Abuse and Financial Exploitation
Issues of trust related to elder financial abuse are different from those of a typical dispute regarding the allocation of the property. This kind of situation usually involves someone who had access to the elderly or vulnerable individual and took advantage of the situation to change how the property was allocated to themselves via a last-minute amendment to the trust or by adding a new beneficiary. The courts take this issue seriously, and some states such as California have special provisions for this reason.
Why Litigation Happens Even With a Well-Drafted Plan
These disputes do not mean that the estate planning failed. Most conflicts arise from circumstances that occur after the trust is signed. An issue could stem from a particular behavior that a trustee exhibited, distrust within the family, or modifications to the trust documents that nobody outside the inner circle was aware of.
For California residents who suffer from these problems, seeking legal advice from an Upland estate planning lawyer is advised. These lawyers can help build safeguards into a plan from the start, but no document fully prevents a determined trustee from acting badly or a family member from contesting something they don't like.
Trust is a legal arrangement, not a person or a company. And when it comes to a lawsuit, there is almost always a name that serves as a trustee rather than the trust itself. If a trustee is suspected to be mismanaging the trust, a person must first understand the true nature of the trust. The same goes when an individual has concerns about the trust or if it has undergone changes.
There is little point in waiting, as most trust cases become more difficult to resolve the longer they remain unresolved.
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