Trust Dispute Lawyers
What is a trust?
A trust is a legal instrument that authorizes one person to hold legal property for the benefit of other persons. The person creating the trust is called the settlor, while the person(s) in charge of the property are called the trustees. The recipients of the property are named as beneficiaries in the trust document.
So, in a trust, the settlor will transfer property interests to the trustee who will distribute them to the beneficiaries. Sometimes the settlor is named as the sole beneficiary, in which case a trustee may not be necessary. A court may appoint a trustee when needed.
There are several types of trusts, such as living trusts, spendthrift trusts, charitable trusts, and testamentary trusts. Consult with a lawyer from more details on the different types of trusts and their uses.
What are some common types of trust disputes?
Since there usually are several different parties involved in any given trust, disputes are a common occurrence. Some types of trust disputes involve:
- Settlor capacity: Whether the settlor had the legal capacity to create the trust (i.e., a sound mind and of legal age)
- Undue influence: Whether the settlor was subject to undue influence or coercion when creating the trust
- Fraud: Whether the trust was influenced by conditions of fraud or duress
- Trustee mismanagement: The trustee is supposed to act in the interests of the settlor and beneficiaries, not themselves. They are obligated to invest any assets prudently and not commingle trust property and monies with their own. Trustee mismanagement may involve:
- Failure to provide correct accounts of trust assets and property
- Failure to prudently invest or administer trust monies
- Commingling trust assets with personal assets
- Using trust assets for personal reasons
- Disregarding trust instructions regarding distributions of property
Of these types of trust disputes, the most common issues are those involving trustee mismanagement. A growing trend has emerged where trustees misappropriate trust funds for their own use. For this reason it is important to select a trustee who is neutral, skilled in handling property, and who is disinterested from the trust purpose.
What are the remedies for trust disputes?
If the trust dispute has arisen over trustee mismanagement issues, often times the court will allow the settlor to remove the previous trustee and select a new one. Alternatively, the court may issue a constructive trust, which is an alternate trust designed to counteract trustee abuses.
If the trustee has appropriated trust funds for their own use, they may be liable to the beneficiaries for the entire amount used. Beneficiaries may not remove trustees unless this is specifically stated in the trust instrument.
If the trust dispute is regarding issues with the creation of the trust, such as fraud or duress, the court may declare the trust void. They may declare the document void either in full or in part. A judge will typically allow the settlor to draft a new trust in lieu of the old one.
Court rulings vary by state with regard to the above matters as well as in dealing with internal conflicts. For example, sometimes the trust dispute is due to internal conflicts with the trustees over assigning trustee powers. In such cases a court will usually require the trustees to reach a majority vote.
Do I need a lawyer for trust disputes?
Disputes over trust matters are serious because they can potentially affect a large number of people. Also, disputes can arise at the various stages of the trust endeavor, such as during creation, implementation, and distributions. You should contact a wills/trusts lawyer if you suspect that a trust dispute has arisen. A competent trusts attorney can direct you to the appropriate legal remedy.
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Last Modified: 01-04-2013 02:50 PM PST