Disputes often arise in the administration of a trust, especially when there are substantial amounts of money involved, or when family conflict is present or both. These disputes can arise between beneficiaries, between a trustee or other fiduciary and beneficiaries, or from third parties.
These disputes, which often turn into litigation disputes, may include:
- Breach of fiduciary duty
- Will contests
- Power of attorney challenges
- Removals of trustees, executors, representatives or conservators
- Probate appeals
- Trust disputes
- Contested conservatorship or guardianship
- Business and asset valuation disagreements
- Undue influence claims
- Testamentary capacity or lack of capacity
- Investment result challenges
- Charitable trusts and foundations disputes
BREACH OF FIDUCIARY DUTY
A person who administers an estate is known either as an executor or an administrator. An executor is appointed in a Will; if there is no Will, then an administrator must be appointed by the Court. When a loved one dies, we all hope that their intentions are being carried out according to their wishes. Unfortunately, this is not always the case.
In some instances, the executor of the Will does not follow the deceased person’s known intentions. Or, it’s possible that the deceased was somehow unduly influenced or coerced by the executor or to make certain decisions that benefit themselves.
This self-interest is known as a breach of fiduciary duty and can take many forms, including:
- Acting in their own self-interest and disregarding the beneficiaries’ intent
- Failing to take action or respond to beneficiaries’ requests
- Misappropriating money or assets from the trust or estate
- Failing to comply with laws and regulations regarding the administration of the trust or estate
- Ignoring deadlines for court documents, creditors and other time-sensitive actions
- Paying themselves large fees to act as executor
- Selling assets at prices unfavorable to the estate
CONTESTING A TRUST
Contesting a trust should be considered in four types of circumstances:
- Fraud or Undue Influence: Any person taking advantage of an elderly or sick person for advantageous trust terms can and should be held accountable. Forgery also falls into this category.
- Capacity: Generally, anyone over age 18 can create a trust. If someone has dementia, Alzheimer’s, or a substance abuse issue, it is possible to question the person’s capacity to create a legally binding document.
- Violating Provisions: To be valid, the trust must be written or typed and signed by the creator in the presence of two witnesses. Each of the witnesses must also sign the trust or will. Further, neither of those witnesses maybe someone who is named in the document.
- Multiple Wills Exist: When a person mistakenly creates more than one simultaneous Will, in many cases, the courts will consider the new trust or Will to be the legal document rather than the old trust or Will.
TRUST REFORMATION AND MODIFICATION
When the terms of a trust no longer reflect the intent of the person who created it, it may be possible to simply amend or revoke the trust if the settlor of the trust is still alive. After the settlor has passed, the trust typically becomes irrevocable. Still, a trust reformation or trust modification may be an option. Each of these actions requires the approval and guidance of the court, and there are some key differences between the two:
- A trust reformation re-writes the trust and the trust is treated as if it had been written that way since the beginning. In contrast, a trust modification changes the trust on an ongoing basis.
- A trust reformation is designed to correct an inaccuracy caused by mistakes or fraud. Whereas a trust modification is designed to modify the terms of a trust to address an ambiguity within the trust or circumstances that have changed since the time the trust was written.
- All beneficiaries of a trust must consent to a trust modification.
- The aggrieved party must present evidence that there was an error caused by mistake or fraud in order to obtain a trust reformation.
LET US HELP YOU IN YOUR TIME OF NEED
Shortly after losing a loved one is a particularly hard time for arguing and litigating. It takes a special type of law firm, like Hollander & Hollander, P.C., to treat clients with compassion, empathy and respect even while treating their clients’ opponents’ litigation claims with aggressiveness and confidence. Contact the experienced team at Hollander & Hollander, P.C. today to set up a no-obligation, free initial consultation and get the estate planning process started.