When disputes related to a trust arise, you may not know where to turn for help. You could be dealing with a major communication problem, a breakdown in a family relationship, or a financial issue. Here are some suggested first steps.
Know Your Rights
When a conflict or issue arises with a trust, your first step is to find out more about your rights. If you are a beneficiary of a trust, then you have the right to ask the trustee for more information about the trust. He or she should already be providing you with an accounting once a year. You can ask to see a copy of the most recent trust document and any amendments. Also, you can seek legal advice about your entitlement to any distributions of income, interest, dividends, or principal from the trust.
If you are a trustee of a trust, then you should familiarize yourself with the requirements for being a trustee as soon as possible. You have a duty of loyalty and a duty of care to the trust beneficiaries that you need to follow. Also, you must make distributions to the beneficiaries as permitted by the trust document, invest trust assets, and do taxes and accountings. Some trusts allow the trustees wide discretion in making distributions, so make sure you understand the obligations and rights you have.
Try to Resolve the Dispute Informally
Try to resolve trust disputes informally if you can. Maybe the trustee can provide a satisfactory explanation for a decision if asked politely, or maybe the beneficiary will provide information supporting his need for a discretionary distribution if he knows why the trustee is asking.
Trustees should keep in mind that they have a duty of confidentiality regarding the trust. They should not share information about the trust with non-beneficiaries except as necessary to keep the trust running. For example, they may need to talk to lawyers, accountants, and other professionals about the trust.
Consider placing your communications in writing or memorializing phone calls immediately afterward. This will provide you with a record of what was said in case you cannot resolve the dispute amicably.
Ask a Judge or Mediator for Help
If you cannot resolve a dispute informally, then you should talk to a lawyer about your options. The lawyer may recommend filing a lawsuit or arranging for a private mediation. A lawsuit would proceed before the probate court or possibly the civil court, and some trust information would become public knowledge. A private mediation would keep your dispute confidential. You should consider the pros and cons of escalating the dispute to court and speak to a lawyer familiar with trust laws in your area first.
Planning your estate or need help with a current trust issue? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.