Before discussing some of the common types of trust property disputes that may occur, it is helpful to have a basic understanding of what a trust is first.
A trust is a fiduciary relationship in which one party holds legal title to property for the benefit of certain individuals. Basically, a trust is created when an individual (the “trustor” or “settlor”) creates a legal relationship by giving another individual (the “trustee”) control over their property or assets for the benefit of a third party known as a “beneficiary.”
Once the trust is formed, the appointed trustee has a fiduciary duty to act in the best interest of the trust and its recipients (i.e., the “beneficiaries”). This is one of the most popular reasons why trusts are created: to ensure the safekeeping of assets or property for the benefit of another person or party.
As previously mentioned, setting up a trust is just one common method that people use to distribute both personal and real property. In a trust, the property is first transferred to a designated trustee, who then holds the property or assets “in trust” for a specified amount of time before transferring it to the intended beneficiary.
Thus, a trust dispute may arise where there are any disagreements regarding the distribution of property as listed in a trust.
In general, trust disputes involving property typically occur because of the fact that there are usually certain conditions attached to how the property might be distributed. For instance, the trust creator may include instructions that the property is to be held in trust until the beneficiary reaches the legal age of inheritance (usually, 18 years old).
Therefore, the more complex the conditions attached to the trust are, the more likely it is that a legal dispute will arise over how the property is being distributed.
There are many different kinds of disputes that might occur when dealing with trusts. Some conflicts concern the construction of a trust, while others relate to how the contents of a trust are administered. The latter is the type that usually involves trust disputes strictly relating to property.
Some common examples of trust disputes regarding property might include:
- Disputes as to which beneficiary is supposed to receive the property;
- Property distributions that are illegal or specifically against trust laws;
- Disputes over the timing of a property transfer;
- Conflicts about either the amount or value of property involved; and
- Disputes regarding the trustee’s management of the property or assets, such as if the trustee sold or distributed the property in violation of the terms of the trust.
Generally speaking, trust disputes involving property are most commonly found in regard to family trusts. One possible reason for this may be because of the kinds of interests involved. These can include savings accounts, jewelry, vacation homes, and so forth, which can give rise to conflicts among the beneficiaries of the family trust.
The contents of a family trust can include cash accounts and certain types of investment accounts. Therefore, the trust property dispute will sometimes involve not only just real or personal property, but also monetary amounts (e.g., bank account contents) as well.
Trust disputes over property are typically resolved by having a court review the actual trust document. In most cases, a judge will attempt to refer to the initial trust document as much as possible. This is so that not only are the original intentions of the creator of the trust honored, but also to ensure that the property dispute is properly settled.
This is one of the reasons why it is extremely important to make sure that the terms of a trust are drafted in a very clear and unambiguous manner. An estate attorney is someone who can assist in drafting a trust that meets these requirements.
If a situation occurs where using the actual trust document does not help to resolve the matter, a court may look to several other factors, such as:
- Any prior distributions of property conducted between the beneficiary and the creator of the trust;
- The actions and conduct of the parties involved (basically, the court will try to interpret the intentions of the parties through their behavior); and
- Review various documents for relevant evidence (including, but not limited to receipts, personal letters, or electronic documents).
As far as remedies go, a trust dispute can result in large damages awards for the plaintiff. Additionally, a court may issue an order that requires the property to be transferred in a certain way.
Trust property disputes can pose potential challenges for a variety of reasons. For one, they sometimes involve fairly technical legal issues and terminology, which can make resolving a dispute quite complicated.
In addition, these matters can become even more stressful and confusing when it is connected to an emotional element, such as conflicts over property or assets being held in a family trust.
Thus, if you need assistance with filing a legal claim involving a trust property issue, you should strongly consider hiring a local estate attorney who has experience with trust and estate laws.
An attorney who is both qualified and located in your area will be able to provide guidance regarding the particular trust laws that are applied in your state. They can also be readily available to help you file your paperwork, negotiate on your behalf during settlement agreements, and, if necessary, provide you with representation in court.
Finally, it might be in your best interest to contact an attorney before a trust dispute even arises. Whether you are the trustor, trustee, or a beneficiary of the trust, an attorney can help you draft and review the terms of a trust document to ensure that it is fair and legally enforceable.