Disputes are not uncommon during the administration of a trust. But they can grow into something devastating both financially and emotionally.
Such disputes can become so fierce they can tear a family apart. But if you know of some of the more common trust disputes and how you may prevent them, you’ll go a long way toward ensuring a relatively smooth trust-administration process.
Disputes over trusts arise rise from three basic issues:
- Trustee mismanagement. It is not uncommon for a trustee to make mistakes when administering a trust—these mistakes may be intentional or unintentional. A trustee has a fiduciary duty to act in the interest of the trust and the beneficiaries.
- Improper trust creation or amendment due to settlor capacity or undue influence. A settlor is the legal term for a person who settles property, through trust, for the benefit of beneficiaries. Settlor capacity refers to whether the settlor was of sound mind and legal age when creating the trust (which can lead to a dispute about improper trust creation). Undue influence occurs when a relative or other party manipulates the settlor to change asset distribution in a trust or will.
- Disagreement over how a trust was written. Sometimes a beneficiary wants or needs assets to be distributed differently from what was specified in the trust. Perhaps the trust requires that the funds be held in a trust rather than being distributed outright. A disagreement over disbursement can lead to disputes.
Depending on the nature of a trust dispute, you have a few options. One is to go to court. This might be best when the other parties involved are unwilling to compromise or work together to find a peaceful resolution. Going to court can be time-consuming and expensive, as well as emotionally draining.
Another way to resolve trust disputes is to negotiate a settlement. Negotiation requires that both parties being willing to work together to find a mutually beneficial solution.
This can be challenging in situations where emotions are running high. But in my work with trusts, I’ve applied some basic principles that help clients neutralize conflict in order to avoid a lengthy court battle:
- Hire an attorney upfront. This seems self-evident, but many people are afraid of what they see as the cost of an attorney. But a qualified attorney can help parties prevent a loss of funds and an escalation of tension. It may be necessary to hire a lawyer to protect your inheritance. But hiring an attorney for assistance in trust disputes can be vital to preventing further trust mismanagement or other compromises to assets. Be aware that this can change the dynamics of your relationship with the other party involved in the dispute. But you will also have someone who can act on your behalf, and spare you the emotional interchanges that might arise with others in the dispute.
- Realize that the person with whom you’re in conflict is also human. Even someone who may have abused trust, failed to perform his or her fiduciary duties or even has broken the law is, after all, human. This person likely feels justified in his or her position. It helps to try to have a conversation to understand the other person and resolve difficulties.
- Change your perspective. Consider for a moment the other person and view the situation from his or her perspective. How does that change the way you will make decisions?
At our firm, we approach settling disputes by presenting facts and letting the facts win the case. We have no interest in litigating for the sake of gamesmanship or bravado. It’s not necessary and it’s not in the best interests of our clients.
If you or your family needs assistance with resolving trust disputes or other probate issues, we’d love to help. Give us a call.