What is Trust Litigation?
A trust can be an essential estate planning tool. They are often used to minimize estate tax consequences when passing property to a beneficiary and avoid the public probate process. But regardless of the many advantages they offer, there are certain instances in which a trust may be contested. Although a person will usually create a trust to help avoid estate disputes, trust litigation can arise for several different reasons.
Common Reasons for Trust Litigation
Trust litigation is the court process that can be used to resolve a dispute related to a trust. Critically, disputes can arise in connection with a wide range of issues, including trustee performance, disagreements between beneficiaries regarding the distribution of the assets, or even contests regarding the validity of the instrument itself. Common reasons for trust litigation can include the following:
If a trustee engages in wrongdoing, a court may have the authority to provide a legal remedy for their actions. Examples of trustee wrongdoing can include refusing to give an accounting, failure to keep beneficiaries reasonably informed, mismanaging trust assets, and being careless when it comes to protecting the trust property. Litigation may also be necessary to resolve disputes related to a trustee’s failure to keep proper records, make prudent investments, or treat the beneficiaries impartially.
Trustee Breach of Fiduciary Duty
Trustees owe a fiduciary duty to the beneficiaries. This includes the duty of good faith and loyalty. In the event a trustee places their own interests above those of the beneficiaries, they may be held accountable for breaching their fiduciary duty. For instance, a trust beneficiary may consider litigation in cases where a trustee has engaged in self-dealing, negligently managed the trust assets, or committed fraud.
Disputing the Validity of the Trust
If the legitimacy of a trust or the provisions of the instrument are questionable, a beneficiary may commence an action to dispute the trust in court. Under Minnesota law, a trust can be contested in specific situations. The statute permits courts to hear trust contests based on the following grounds:
- Undue influence — Undue influence can occur when a person is induced by another to execute or make changes to a trust that do not reflect their actual wishes. If a beneficiary believes that the trust grantor was deprived of their free will when creating the trust, they may contest its validity.
- Lack of capacity — In order to create a trust, an individual must be at least 18 years old and of sound mind. If the trust creator does not have the ability to comprehend the implications or effects of the trust, a beneficiary may contest it on the grounds of lack of capacity.
- Duress — A trust may be contested based on the grounds of duress if a beneficiary can show that the grantor was placed under extreme pressure to create the trust or distribute their assets in a certain way.
- Fraud — In the event an individual engaged in fraud, tampered with the trust instrument, or forged the grantor’s name, a claim of fraud or forgery may be raised.
- Faulty execution — Minnesota law provides specific requirements for the execution of a trust. If errors were made in the paperwork or witnessing of the trust, a beneficiary may have grounds to contest it.
- Ambiguity — If the terms of the trust are unclear or ambiguous, beneficiaries may seek clarification by filing an action in court.
There is only a limited amount of time to resolve a trust dispute in Minnesota. For example, a legal action to contest a revocable trust must be brought in the probate court within three years, unless the timeframe has been shortened by the trustee to 120 days. It’s vital to discuss your specific case with an experienced trust litigation attorney who can help ensure you do not miss the statute of limitations regarding your particular trust dispute.
Is Litigation Always Necessary to Resolve a Trust Dispute?
Trust litigation is not always necessary to resolve a conflict. Instead of pursuing the lengthy and expensive court process, mediation can offer many benefits when it comes to resolving trust disputes. Mediation can be non-adversarial, private, cost-effective, and efficient. Rather than allow a judge to determine the outcome, the parties to the trust dispute can work together to find a creative solution — and enter into a settlement agreement on their own terms. In addition, while litigation can often leave both parties hostile toward one another, mediation can help to preserve family relationships.
However, if mediation attempts fail and the parties cannot reach a resolution, litigation may be the only option. The litigation process commences by filing a petition with the probate court and serving it on all interested parties who can then respond. Once the initial pleadings stage has concluded, the discovery process will begin. At this time, parties exchange information to learn more about the other’s position.
A settlement can be entered into at any time before the judge hands down their decision in the case. If the case does not reach a resolution before trial, the parties may file motions to address various matters in the case. During trial, parties will present their arguments and evidence, including any witness testimony, for the judge to consider. At the end of the trial, a judge will issue their decision in the case, which will be binding on both parties.
Contact an Experienced Minnesota Trust Litigation Attorney
If you are facing a trust litigation matter, it’s crucial to have a skillful attorney by your side who can protect your rights and guide you through the court process. At Dave Burns Law Office, I provide committed counsel for a variety of probate and estate litigation matters, including those involving trusts.
If you would like to discuss your trust dispute, I welcome you to contact me at (612) 677-8351 or by emailing email@example.com. I represent clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer