While trusts provide several benefits unavailable through a will alone, they are not immune to disputes that sometimes lead to litigation.
Unfortunately, trust disputes can be emotionally burdensome for all involved. Knowing the common issues that can ignite a dispute can help you navigate them effectively, whether you are a trustee or a trust beneficiary.
Ambiguous trust language
Vague terms and language have no place in trust documents and are a frequent cause of disputes. When the language is unclear, it can lead to differing interpretations and conflicts among beneficiaries and trustees. These ambiguities often require court intervention to resolve, regardless of your status (trustee or beneficiary).
Breach of fiduciary duty
Trustees must act in the best interests of the trust and its beneficiaries. Allegations of a breach of fiduciary duty, such as mismanagement of trust assets or self-dealing, can trigger disputes. Beneficiaries should explore remedies (trustee removal, financial recovery) – trustees should prepare to defend themselves against these allegations.
Undue influence and lack of capacity
Disputes may also arise amid claims that the grantor (settlor, trust maker, etc.) was unduly influenced or lacked the necessary mental capacity to create or amend the trust. Beneficiaries may challenge the validity of the trust or its amendments, arguing duress or lack of grantor understanding.
Conflicting interpretations of terms or amendments
While amending a trust is a common practice, it can also spark conflict. Amendments that significantly alter asset distribution terms or the responsibilities of the trustee are common culprits. It may take the wisdom of the court to deal with any conflicting interpretations.
If a trust dispute threatens litigation, guidance from a seasoned representative can lead to a favorable outcome. Zealous representation can help to protect trustees, beneficiaries and the decedent’s final wishes.