A trust is a legal relationship that a person (the “trustor”) creates which entrusts his or her assets to another person (the “trustee”) for the benefit of someone else, (“the beneficiary”) or for a specific reason.
Once a trust is created, the trustee has a fiduciary duty to act in the best interest of the trust and its beneficiaries. Many disputes arise because beneficiaries disagree with the construction of the trust, or how the trustee is handling or administering the assets.
What Are Some Common Types of Trust Disputes?
Any time money or property are involved, it is not uncommon for disagreements to come about. Many issues may arise, but the following are the more common trust disputes:
- Whether the trustor was of sound mind (legal capacity) to create the trust.
- Whether the trustor was pressured or coerced to create the trust (undue influence).
- Whether the trustor was affected by fraud, or if the signature was forged.
The most common trust disputes typically involve the mismanagement of the trust by the trustee. For example, the trustee may have failed in providing correct accounts of assets and property. Or, they didn’t properly invest or administer money to the beneficiaries. If the trustee mixed their personal assets with the trust, or didn’t follow the exact instructions of the trust, then problems and disputes may arise.
Some trust disputes can be minor, while others can become more difficult legal problems. Consulting an attorney at the creation of a trust, as well as any time a disagreement or dispute arises, is highly recommended.
What Are the Remedies for Trust Disputes?
Several remedies exist for trust disputes, and state laws vary on their resolution. Minor internal conflicts may often be resolved by coming to a majority vote. More serious disputes can be resolved in court, or through Alternative Dispute Resolution (ADR).
Remedies for disputes regarding a trustee’s mismanagement are often resolved by removing the trustee, and allowing the trustor to choose a new trustee. Alternatively, a judge may order a constructive trust which counteracts a trustee’s mismanagement of the trust in question.
If the court finds the trustee used assets from the trust for their own use, they may be held liable and ordered to fully reimburse the beneficiaries. If a judge finds a trust was created under fraud, duress, or if the trustor was not of sound mind, he or she may fully or partially void the trust.
In lieu of going to court, ADR is often recommended as a method of resolving trust disputes. A qualified attorney can assist you on deciding on your best possible option for resolving a trust dispute.
Do I Need a Lawyer for Trust Disputes?
Trusts can be very complex. Any time a dispute arises over monetary appropriation, it is highly recommended to consult an estate attorney with experience in trusts who is knowledgeable on trusts and your state laws. A lawyer can help in deciding your best options as well as represent you in court or in an alternative dispute resolution for your case.