Trust Litigation

Trusts are used in estate planning, elder care planning and other forms of financial management as a means of establishing clear control of how assets are dispensed. It’s a fiduciary arrangement that gives a third-party authority to hold assets on behalf of a beneficiary or multiple beneficiaries.

The Fort Lauderdale trust litigation lawyers at The Ansara Law Firm can assist you in:

• Choosing a trust type;
• Establishing a trust;
• Altering a trust;
• Challenging a trust;
• Alleging breach of fiduciary duty of trustee;
• Alleging undue influence over grantor (maker of the trust).

Trusts can be an excellent tool in estate planning, but they may still be subject to litigation (referred to as “trust contests”). There is no absolute guarantee an estate or assets managed by a trust won’t end up in court. There are cases wherein beneficiaries – or others with some type of interest in the trust – will seek to challenge the validity of the trust on certain grounds.

Some of the benefits of a trust include:

• Less chance of estate ending up in court;
• Reduction of gift and estate taxes;
• Easy distribution of assets to heirs without delay, cost and publicity of probate court (which can cost between 5 percent and 7 percent of your estate);
• Helps to shield your assets from creditors and litigation.

Because trusts are so varied, complex and flexible – each with its own advantages and disadvantages – it’s important to discuss this carefully with an estate planning lawyer when you are first setting one up. You also need to consult with an experienced trust litigation attorney in the Fort Lauderdale area if you are thinking of amending or challenging a trust.

Our legal strategy will depend not only your goals, but also on the kind of trust.

The construct and purpose of the trust will dictate its designation – and thus your legal options. What follows is merely a snapshot, and is not intended as an exhaustive list.

With respect to estate planning trusts, some include:

• Revocable Living Trust – Also sometimes referred to as an inter vivos trust, it is a means to avoid the probate process and ensure assets go the grantor (creator of the trust) to the recipients intended without a lengthy court battle after grantor dies. A revocable living trust may contain numerous other trusts within it. This is a trust where income is distributed to the grantor, until such time as grantor dies, and only then are those assets distributed to beneficiaries. Grantor is able to alter or terminate the trust at any time.

• Irrevocable living trust. This is a trust that can’t be modified or terminated without the permission of the beneficiary. The grantor transfers all assets into the trust and effectively removes all his rights of ownership to the assets and the trust.

• Minor’s trust. This would involve assets passed to a minor child, providing for the management of assets until the child reaches a certain age, as specified by the grantor. This can help individuals avoid guardianship proceedings, which can be costly. The full scope of this type of trust can be found in the Florida Uniform Transfers to Minors Act.

• Testamentary trust. This is created with explicit instructions in the will of decedent. It takes effect upon the grantor’s death, and requires probate.

• Grantor trust. This is available to those who want to transfer property to another business or person while also avoiding taxes, probate and other complications that can arise from disposing of assets.

• Spendthrift trust. This can be a full trust, or it may just be a clause in another trust. Per F.S. 736.0502, a spendthrift provision or trust can protect the trust from the unwise spending of the beneficiary or their creditors. These are trusts that are intended for the maintenance of someone else.

• Blind trust. A blind trust gives the right to the trustee or anyone else holding power of attorney to handle the assets of that trust without any knowledge or input from the beneficiaries. This can be a good tool in cases where beneficiaries should best be kept unaware of what is in the trust to avoid potential conflicts of interest.

• Discretionary trusts. As noted in F.S. 736.0504, a discretionary trusts gives the trustee the discretion to assign/ distribute the trust income to and among beneficiaries.

These are the main types of trusts our Fort Lauderdale trust litigation attorneys deal with, though we can also assist with elder care planning trusts, such as those the third-party special needs trust, first-party special needs trust and Medicaid trust.

A large portion of trust contests can be traced directly to language that is unclear or ambiguous, which is why it’s so important that the trust is properly prepared and the language is clear.

Beneficiaries as well as those outside the trust may file a claim challenging the legality and validity of a trust.

Some of the grounds on which a trust might be deemed unenforceable:

• Failure to conform to F.S. 737.111. This spells out the requirements for testamentary express (written) trusts. If a trust does not meet Florida trust law requirements, it can be considered invalid. An example would be a lack of settlor’s signature or failure to ensure/ document two witnesses to the trust.

• Undue influence. A claim of undue influence would mean the person making the trust did so under the coercion or influence of someone who was in a position of control and/ or confidence.

• Lack of capacity. This could be the result of the natural aging process, or it could be that a person is a known user/ abuser or narcotics or alcohol or it could be the result of a medical condition. A person who lacks capacity lacks the mental ability to understand the amount and nature of the property, the relationship of those who would receive it and how the will/ trust disposes of it.

• Improper accounting. Those who are beneficiaries of a trust have the right to proper accounting. If it is not provided, a beneficiary can ask the court to compel the trustee to account for trust assets. If it is provided but is not satisfactory, beneficiary can object to the accounting and seek to intervene.

In addition to these challenges, one might also directly challenge the trustee, arguing a breach of fiduciary duty (trustee failed to meet their statutory duties).

There are a few alternatives to trust litigation, which might include modification of the trust, a nonjudicial settlement agreement, trustee removal or trust reformation (per F.S. 736.0415).

If you are weighing the possibility of trust litigation, contact the trust litigation lawyers at our Fort Lauderdale firm for more information on how we may be able to help.

Contact the Probate Litigation Lawyers at The Ansara Law Firm at (954) 761-3641 or by email. Serving Broward, Miami-Dade and Palm Beach Counties.