These types of conflicts are often called trust disputes, trust litigation, or fiduciary litigation. Typically, the situation will involve one or more beneficiaries of a trust who are dissatisfied with the actions or inactions of the trustee. Sometimes, the beneficiaries will be concerned with years of conduct by the trustee because it is often difficult for beneficiaries to quickly determine when a trustee is acting improperly.
There are a number of ways that a trust dispute can begin. Below are a few of the most common scenarios that our trust and probate lawyers see.
Common Ways that Trust Disputes Begin
1. Lack of communication by trustee. Trust disputes often start as a result of the trustee not communicating with the trust beneficiaries about the status of the trust, or responding to inquiries by beneficiaries. Sometimes this involves the trustee failing to make reports to the beneficiaries at the times that the trust requires, while other times it involves a trustee who refuses to communicate or provide information even after the beneficiaries have specifically requested it.
2. Reports do not look right. Sometimes the trustee will produce a report to the beneficiaries, and it will look odd, or have numbers that do not make sense. When the beneficiaries inquire further about it, the trustee may not communicate at all or the response may not make any sense.
3. Distributions decrease or stop altogether. When the amount of a distribution changes unexpectedly, or the trustee does not provide funds for a special expenditure, a beneficiary may become upset or suspicious about the trustee’s activities, which can sometimes lead to conflict. In addition, an unexpected halt or decrease to the amount of regular distributions can serve as an early warning sign to beneficiaries that something odd is happening with the trust.
4. Belief that Trustee is treating some beneficiaries differently than others. This type of conflict tends to arise when the trust has current beneficiaries, who receive distributions from the trust now, and future (sometimes called contingent) beneficiaries, who will receive something from the trust later (which is often what is left over after the current beneficiaries pass away). The trustee has a duty to balance the interest of the different beneficiaries in accordance with the instructions contained in the trust. If one set of beneficiaries believes that the trustee is inappropriately putting the interests of some beneficiaries over others, a dispute will often ensue.
5. Property missing. An obvious way that a trust dispute can start is if a beneficiary finds out that property that is supposed to be owned by the trust has been transferred improperly by the trustee. Sometimes beneficiaries may not know for certain that property has been taken, but may suspect it based other behavior by the trustee.
6. The death of a beneficiary. A trust dispute sometimes breaks out after a beneficiary has died. This is most common in situations where the trust was created by the now deceased beneficiary, and someone else managed it, typically an elderly parent. After the elderly parent passes away, the family and other beneficiaries find out that the trust was being mismanaged or that trust assets were being syphoned by the trustee.
Most of the time, the complaint raised by the beneficiary will involve allegations that the trustee has breached a fiduciary duty.
The trustee’s fiduciary duties require that the trustee always act in the best interests of the trust and the trust beneficiaries.
Except in the most extreme cases, the trustee will often believe that he or she has done everything properly. In those cases, the trustee must defend the allegations brought by the beneficiaries because if the trustee is found at fault, then the court can impose numerous penalties that range from removing the trustee and appointing a new trustee, to requiring the trustee to use personal funds to pay money into the trust.
Regardless of what causes the conflict, there are many different options available to work it out. Sometimes careful negotiation is appropriate and can resolve the situation quickly. Other times, active, aggressive litigation is necessary. Which solution will work best for your situation will depend on your particular circumstances and what you want to achieve at the end of the case.
If you are a beneficiary, that may involve getting an accounting of all trust assets or having the trustee removed and a new trustee appointed. If you are a trustee, it may involve helping beneficiaries understand your decisions and defending allegations of improper actions.
Whatever your situation looks like now, our experienced trust and probate lawyers will help you analyze your situation, and give you the best options to achieve your goals.
If you would like to speak with our experienced Georgia probate team about your particular situation, please contact our office to set up a private, confidential consultation.