When Does Trust Litigation Become Necessary?

The trust litigation process is reserved for cases where the integrity of trust is in question. Like other examples of litigation, trust litigation requires thorough research and a lengthy, at times expensive discovery process to prove ill intent or wrongdoing and justify damages or some other compensation for the petitioner.

There are times when trust litigation is necessary to protect your loved one or their memory or ensure that your inheritance is not stolen. But there are also times where trust litigation might seem like an attractive option in the heat of the moment but could easily end up costing you much more than it is worth.

When the trust contents are significant, and the evidence is in your hands, seeking litigation may be your best chance at justice. But without a sufficient potential reward or a lack of concrete proof, trust litigation, like litigation of any other kind, could spell financial doom for you. Be sure to discuss all your options with an experienced trust litigation attorney before making any hasty decisions.

What Is Trust Litigation?

Trust litigation involves filing a petition or complaint in response to an issue of illegitimacy, suspected fraud, or even a breach of fiduciary duty. Unlike a will, a trust is an entity that holds assets and property “in trust” on behalf of a living or deceased grantor for a set of beneficiaries.

After the grantor passes away, the person manages the trust as the successor trustee who has a fiduciary obligation to act in the beneficiary's best interest and follow the instructions left behind by the trust’s grantor.

When a trust was suspiciously amended by a coerced or confused grantor, or when a trustee is acting purely out of self-interest, trust litigation may be your best chance at pursuing justice. The most common reasons to pursue trust litigation as an option include:

Lack of Capacity

When the grantor of a trust (the person writing the trust) isn’t fully capable of doing so, usually due to cognitive decline, conditions like dementia, or some other form of mental incapacity, a petition may be filed to argue that the trust was amended unjustly, as the grantor lacked the mental capacity to understand what they were doing fully.

For example, if a man writes his biological children into his trust as beneficiaries, then eventually remarries, struggles with Alzheimer’s in his last days, and amends his trust to disown his biological children without cause or warning, they could argue that his final amendment should be ignored and that they were improperly removed from the trust because of their father’s lack of capacity.

Undue Influence

Like the previous example, another reason to consider litigation is undue influence. This is described as any form of influence or force that causes the grantor to act in a matter outside of their free will.

They might have been coerced or threatened into making a change before they died or were manipulated into doing so because of their incapacity. The key to defining an undue influence in the amendment or creating a trust is establishing that one party held power over the other and exerted it for their own interests.

Non-Transparent or Unclear Accounting

The threat of litigation can be used to coerce the truth in cases where beneficiaries have a reason to believe that the trustee is hiding something and is not being forthcome with the paperwork to back their accounting.

Trustees have a fiduciary duty to their beneficiaries and the grantor’s wishes. If they act out of their own self-interest to the detriment of the trust beneficiaries, they would be in breach of that fiduciary obligation.

Trust litigation requires all parties to answer truthfully under penalty of perjury. The discovery process may be a good chance to investigate the trustee’s actions and ensure that they did their job to the best of their abilities, without ill intent.

Incompetent Trustee

If you have reason to believe that the trustee isn’t doing an excellent job (not out of malice, but out of incompetence), you as the beneficiary of the trust have the option of calling them out on their actions and getting someone else to do the job.

Do note that under such circumstances, jumping straight to litigation is usually a terrible idea. Instead, talk to the trustee about their problems and ask them to consider giving up the position for the next trustee in the trust document or someone who agrees to do the work needed to execute the trust.

Trusts can be complicated and require several administrative and accounting skills for a process that can take months or years. Some trustees find out later than others that they are not up to the task. If they refuse to step down, and you have the evidence to prove their incompetence, litigation may be an option.

What Does Trust Litigation Look Like?

Much like any other form of litigation, one side must start a petition to begin the process and gather evidence via research and discovery to make their case. In the absence of a settlement, the process ultimately ends in probate court, where both sides are heard.

A judge makes a final ruling, which may entail damages paid out by the responder or objector to the petitioner. Other examples of trust litigation could play out include a conservatorship (if the grantor of the trust is alive and evidence of undue influence, incapacity, or abuse was found).

The litigation process can also end in a mistrial or an outcome you had neither wanted nor expected, in which case appeals are possible through a California Court of Appeal for your respective district. Trust litigation may be a necessary step towards protecting the rights and memory of your loved one as well as your inheritance in cases of fraud or abuse.

But be careful about pursuing litigation as an option without a wealth of evidence. Not only can the attorney fees and associated costs be enormous, but it is often sure to be a painful and emotional experience, and one where keeping yourself calm and collected is nearly impossible. Be sure to consult a legal professional before you decide to do anything concrete.