When someone grants a trust, they do so with the expectation that some individual or organization will benefit. However, there are times when beneficiaries lose out, and that often leads to litigation. Folks who are wondering whether they should hire a trust litigation attorney should consider it for these three reasons.
Trustee Negligence
Most trusts are organized to be as financially stable as possible. For example, a grantor might connect a trust to the proceeds from several large bonds to ensure the beneficiary will always have access to money. This is a common arrangement when someone establishes a trust to handle medical needs for a spouse or child. When the grantor appoints a trustee, they expect the continued financial stability of the trust to be almost automatic.
What happens if the trustee makes a few financial mistakes with the trust? Depending on the nature of the mistakes and the reasons for them, a beneficiary may sue for recovery of damages due to the financial losses.
Fraud
The conduct of a trustee could be worse than negligence. Someone with control of a trust might defraud it or the beneficiary. If a trust primarily uses real estate for funding, for example, a trustee could direct funds toward properties or services that benefit them rather than the beneficiary.
A trustee has a fiduciary duty to preserve as much value as possible to fund the trust and make payments to the beneficiary. Failure to do so represents a breach of the trust. Consequently, losses through this sort of fraud would be compensable.
Undue Influence or Mental Unfitness
Individuals who aren't the beneficiaries of a trust may sue based on some notion of undue influence or mental unfitness. An undue influence claim centers on the idea that someone took advantage of the grantor to benefit from the trust.
It may sound like something from a soap opera, but there are cases where somebody marries a wealthy but mentally unwell person to take advantage of their finances. The new spouse might direct the unwell person to create a trust and name them as a beneficiary, allowing them to fund their lifestyle using the grantor's money and assets.
Other parties that might otherwise have benefited may have cause to sue. If they can show that the trust was granted by a person who was mentally unfit, a court may either revise the terms of the trust or even dissolve it. Upon dissolution, the court will then have to determine what becomes of the money and assets contained in the trust.
Contact a local trust litigation attorney to learn more.
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