Trusts are designed to accomplish a number of estate planning goals, such as providing funds for the support of beneficiaries. Trustees are responsible for administering funds in accordance with both the trust itself and the law. Although trustees enjoy broad authority in carrying out their duties, they don’t always do so faithfully. When trustees act in a manner that is contrary to the trust instrument or the law, or questions arise about the trust itself, beneficiaries can take action in the form of trust litigation.
SederLaw’s Estates & Trusts attorneys have experience handling complex trust disputes and litigation. We have represented both trustees and beneficiaries, and we can review your legal issue today to advise you of your rights.
The Fiduciary Duties Of Trustees & Trust Litigation in Worcester
A trustee has the obligation to manage trust funds as set forth by the trust instrument and in line with certain legal duties. Those duties are known as fiduciary duties because trustees are considered to have a fiduciary relationship with beneficiaries. This means the law imposes a high standard of care upon the trustee. Disagreements with the trustee’s actions are a major source of trust litigation.
These are some of the specific fiduciary duties of trustees:
- Good faith and loyalty to beneficiaries
- Acting impartially toward all beneficiaries
- Reasonable skill and diligence in administering the trust
- Maintaining complete, accurate, and regular accounting records
- Where certain tasks are permitted to be delegated to a third party, carefully selecting said party and overseeing his or her work
- Making prudent investment decisions
- Keeping trust assets separate from his or her own property
- Protecting the privacy of beneficiaries and the trust instrument
- Preparing and filing tax returns and other necessary forms and documents
- Distributing property in accordance with the trust
Why Does Litigation Happen?
Beneficiaries and others with an interest in the trust may decide to initiate litigation if they believe something is wrong with the trust instrument or the trustee’s actions. It’s important to note, however, that simply disliking what one receives under a trust (or being upset that one was not named as a beneficiary) is not sufficient grounds to file a lawsuit. Neither is disagreeing with the trustee’s decisions.
These are a few common reasons people litigate over trusts:
Breach of fiduciary duties. As mentioned above, the law imposes important responsibilities upon trustees. Failure to adhere to these duties could risk depletion or misappropriation of trust assets. If you suspect the trustee has been negligent in carrying out his or her obligations, or you’re a trustee who has been accused of this, contact a lawyer right away.
Questions about the validity of the trust. A beneficiary, or someone who was not named as one, may dispute whether the trust is genuine. To challenge a trust, there must be strong evidence that there is something inherently wrong with the instrument. Examples include:
- Undue influence. It may be proven that the trust was executed under circumstances evidencing improper pressure or coercion put upon the settlor (the individual who executed the trust instrument). Sudden or unusual changes to a trust document, including those made just before the passing of the settlor, could evidence undue influence.
- Lack of testamentary capacity. To execute a trust, an individual must be of sound mind. If there is evidence of dementia, mental illness, or that the settlor was under the influence of drugs at the time the trust was executed, there may be legitimate questions of testamentary capacity.
- Lack of formality. By law, trusts must meet certain requirements to be valid. Absence of one of these elements may invalidate the trust.
- Fraud. Any evidence of fraud, such as a forged signature, a fake notary seal, or missing or replaced pages, could be proof the trust is a fraud.
Improperly titled trust property. In order to place certain items in the trust, such as a house or car, the property must be retitled to reflect that the trust (and not an individual) owns it. Disputes sometimes arise over whether property was intended to be held in a trust or passed on to heirs by some other means, such as a last will and testament.
Problems with trustee accounting. This is a specific issue that invokes the trustee’s fiduciary responsibilities mentioned above. The accounting may not have been done, or it could raise issues of malfeasance and waste. An audit may uncover more information about how trust assets are being spent.
Distribution issues. The trustee is obligated to distribute funds in accordance with the directions in the trust. Failure to do so could be a problem. Some trusts require the beneficiaries to meet certain conditions before receiving a distribution. The beneficiaries and trustees may not agree on whether said conditions have been met.
Remedies For Trust Litigation
Whether you have valid grounds to challenge a trust is something you need to discuss with an attorney. Many of the above bases for trust litigation are difficult to establish. For instance, it’s not easy to prove that a settlor was mentally incompetent at the time of creating the trust. A beneficiary or other person with standing to sue will need compelling evidence.
If you are able to make your case, the court may apply one of the following remedies, among other possible forms of relief:
- Order the trustee to perform his or her duties
- Prevent the trustee from committing a breach of trust
- Compel the trustee to correct a breach of trust by paying money, restoring property, or taking some other action
- Require the trustee to produce an accounting
- Appoint someone to take possession of the trust property and administer the trust
- Suspend or remove the trustee
- Reduce or deny compensation to the trustee
- Void an act of the trustee
- Recover trust property or proceeds that were misappropriated
Contact Our Worcester Trust Litigation Attorney Today!
Whether you’re the plaintiff or defendant in a trust litigation matter, SederLaw is ready to serve you. It may be possible to settle your case out of court using mediation or another alternative dispute resolution method. Call today to connect with our Estates & Trusts team.