Whenever there is money involved, there can be conflict. Trust disputes happen when people are not happy with the terms of the trust or how the trustee carries out the duties of the position. Sometimes the person objecting to the trust has a legitimate complaint. Some people challenge trusts hoping to get “free money” or make things difficult for the trust beneficiaries. A California trust attorney can advise you on whether you have a valid case against a trust and explain how trust disputes arise.
Complaints Against the Trustee
One of the most frequent sources of trust disputes is that the trustee does not perform the duties properly. The trustee has a fiduciary duty to act in the best interests of the trust beneficiaries. If the trustee puts his own interests ahead of the beneficiaries, he violates the fiduciary duty.
When you set up your trust, you should exercise extreme caution when selecting the trustee. People often choose a trustee because of personal feelings rather than an unbiased assessment of that person’s appropriateness for the position.
You might want to reconsider naming someone to serve as the trustee of your trust if any of these factors are true about the person:
- Has ever filed bankruptcy
- Causes you any doubts about his honesty, integrity, or character
- Has a conviction for any crime involving fraud, theft, or a related offense
- Has addiction or mental health issues
- Dislikes any of the beneficiaries
- Does not have financial stability
- Has a history of making unwise investments or has little experience handling large sums of money and assets
It is always better to avoid a problem than to try to repair the damage afterward. You do not have to name a friend or family member to serve as the trustee. You could have a professional person or company serve as the trustee, like an accountant, attorney, or trust department of a bank. It is better to pay fees to a professional who will do the job right than to have your loved ones lose everything you left to them because the trustee breached the fiduciary.
Allegations that the Settlor Did Not Have Legal Capacity
When a person of advance years or cognitive impairment from Alzheimer’s disease or some other cause creates a trust or makes significant changes to a trust agreement, there will likely be allegations that the settlor (the person whose assets went into the trust) did not have the legal capacity to write or modify the legal document. Often, accusations that someone unduly influenced the settlor will accompany the “lack of capacity” challenge to the trust.
One way to avoid this issue or defend against such claims is to get a cognitive assessment from your doctor at the time that you make or change the terms of your trust. Make sure that your lawyer has the letter from the doctor that says you were competent at that time.
Rolling the Dice
A person with nothing to lose might dispute a trust on the chance that the judge will award him something or the trustee will offer him money to dismiss the challenge. Even if you are upset with someone who might expect to inherit from you, like one of your adult children, you might want to consider leaving enough assets to this person to make him think twice about challenging the trust.
Contact our office today. A California trust attorney can talk with you about your family dynamics and help you develop a strategy to protect your loved ones and your estate.