Trust disputes that occur between trustees and beneficiaries concern the management and distribution of a trust. Many issues can spark these disagreements, such as contract breaches or financial mismanagement.
It can be stressful to deal with trust disputes, which is why hiring a lawyer can help. ContractsCounsel connects you with professional, reliable, and experienced lawyers on its online legal marketplace. They have years of experience in helping clients handle trust disputes with ease.
In this article, we explore trust disputes and how to navigate them properly. We also look at how to prevent disputes and when hiring a lawyer for a trust disagreement is in your best interest.
What are Common Trust Disputes?
There’s a range of trust disputes that can arise between parties, but the most common involve the following:
- Breaches of Fiduciary Duty. This can include conflicts of interest, favoritism among beneficiaries, and not keeping accurate records.
- Vague Contracts. It’s easy for conflict to arise when parties argue over ambiguous or confusing terms in their documents. Some terms might also be open to different interpretations, causing disagreements.
- Mismanagement of Funds. One party might make unapproved financial transfers or there could be excessive fees to pay that don’t sit right with the other parties.
- Excluded Beneficiaries. It could happen that some beneficiaries don’t feel like they’re being included in the trust and want to argue this decision.
What are Signs That a Trust Dispute is Brewing?
You can sometimes tell that a trust dispute is on the cards by noticing signs such as the following:
- Delays in trust distributions.
- Inaccurate or incomplete financial records.
- Trust terms that have suddenly changed without notice.
The above are red flags that you’re headed for conflict and should take action to prevent it.
How Can You Prevent a Trust Dispute?
Since it’s common for trust disputes to end up in court, you want to prevent them as much as possible.
Have Clear Documents
You want to draft trust documents that contain clear, specific, and legally-sound terms. This is where a lawyer can help you.
On ContractsCounsel, you can connect with vetted lawyers experienced in drafting and reviewing trust documents. It will give you peace of mind knowing that your documents are watertight and drafted by a lawyer with expertise.
Keep Communication Open
It’s essential to maintain healthy relationships with your trustees and beneficiaries. This will make it easy to express and address any concerns that arise, before they become worse.
Maintain Detailed Records
You should ensure your documents and agreements are organized should you require them. If a concern is raised, you’ll be able to refer to these documents and resolve small misunderstandings or disagreements in a timely fashion.
Review the Trust Regularly
It’s important to review and update your trust from time to time, because life events can affect it. Examples include marriages, deaths, and financial changes.
What Should You Do During a Trust Dispute?
If you find yourself in a trust dispute, you should deal with it calmly and promptly. Here are the steps to follow.
Request Important Documents
As a beneficiary, you have the right to view all trust documents and you’re entitled to know how the trust is being managed.
Write Down Your Concerns
Express your concerns in writing for the other party and listen to what they have to say. Make sure you keep a written document of your interactions and if you reach an agreement so that you have evidence of it.
Engage in ADR (Alternative Dispute Resolution) Methods
You want to keep your trust dispute out of court, so consider effective ADRs. These include negotiation, mediation, and arbitration. Here’s how they work.
Negotiation
This is when you and the other party discuss the concern and listen to each other so that you can reach an agreement. This is less formal than other ADR processes, but it’s a good starting point when a conflict arises.
Mediation
This involves a third party mediator who listens to your concerns and facilitates communication so that it’s constructive and supportive. You and the other party will still be able to reach an agreement on your own, based on collaboration.
Mediation is an effective way to handle disputes in a bit more of a formal setting than negotiation. It encourages a professional tone and avoids heated emotions.
Arbitration
Arbitration is more formal than negotiation and mediation. How it works is that you hire an arbitrator. They will listen to both parties’ cases and evidence, then come up with a final, binding decision on how they can resolve the dispute.
It’s effective because you can choose an arbitrator with experience in trust law. It’s more collaborative than litigation, which is usually considered a last resort in disputes.
How Should You Deal with Trust Mismanagement?
In cases of trust mismanagement by a trustee, it’s common for them to be removed and replaced with a new person. In court, a judge might order a constructive trust to restore a healthier setup. If the removed trustee has mismanaged assets or benefited from them, they will be ordered to reimburse the beneficiaries.
A trustee can be removed in instances such as the following:
- Breach of trust. This is when the trustee fails to complete their duties or is involved in misconduct.
- Incapacity. The trustee should be removed if they are unable to complete their responsibilities, such as if they are mentally or physically incapable.
- Failure to act. Disputes can arise if the trustee doesn’t take action. In this case, it’s common for the court to remove them.
- Beneficiary request. The beneficiaries of a trust might agree on removing a trustee, but it’s usually up to the court to decide if this is a valid request.
Should You Contact a Lawyer for a Trust Dispute?
Hiring a lawyer for a trust dispute is a good move as they will provide the expertise and experience you need to avoid litigation. Here’s a rundown of their benefits.
- They’ll review all the trust documents. They can also explain any vague or confusing terms to you so that you can proceed with an effective dispute resolution method.
- They’ll provide in-depth legal information. Since they understand all the state laws and regulations, they’ll provide greater clarity on your rights and situation.
- They’ll represent you if your case does go to litigation, while being present during mediation and arbitration so that you can have a favorable outcome.
- They’ll work with other professionals, such as financial advisors, involved in your case.
Do you need a lawyer for a trust dispute?
Connect with a vetted, experienced lawyer on ContractsCounsel. They’ll be able to help you through every stage of the trust dispute so that you protect your interests and ensure all actions are within the law. They can even assist you before a dispute arises, such as by drafting clear, legally-enforceable documents.