A Palm Beach County Trust Dispute Attorney Explains the Valid Grounds for Disputing a Trust in Florida
Trustees are charged with protecting the settlor’s (known frequently as a trustor or grantor) assets. However, trustees are not immune from mistakes, whether intentional, through negligence or even naivete. Fiduciary misconduct is a driving force behind many types of trust disputes. Disputing a trustee’s actions or inactions, may be necessary when there is a breach of trust. Separately, disputing the validity of a trust may also be necessary if it was procured through undue influence or purportedly executed at a time when the settlor lacked capacity to execute the trust.
Primary Reasons Trust Disputes Arise
Some main types of challenges to trusts are listed below to provide context, followed by a number of specific challenges for reference.
- Breach of Fiduciary Duty. A trustee of a Florida trust is held to the highest standard of care, acting only for the benefit of the trust and its beneficiaries with competence, integrity, and diligence. Failure by a trustee to do so is a breach of fiduciary duty, and a the trustee risks removal, among other remedies available under the Florida Trust Code.
- Trust Construction. These challenges revolve around the language or interpretation of the trust documents. There may be mistakes in the language or the language may be too complex for simple interpretation. For the trust to operate efficiently, it must be unambiguous.
- Trust Contests. Trust contests challenge the validity of the trust as a whole. A trust may be invalid based upon mistakes of fact or law in the trust documents. In other cases, the trust may be challenged based upon flaws in how the trust was created, such as undue influence, incapacity, etc., or how it fails to comply with the law; for example, placing illegal assets into the trust, failure to pay taxes, etc.
- Trust Accounting Disputes. Trustees are required to account to all qualified beneficiaries no less than annually in order to satisfy their fiduciary duties to provide an “accounting;” i.e., account for their actions. How, when, and what is reported may give rise to scrutiny and could be challenged in a Florida lawsuit.
- Removal of a Fiduciary or Agent. When trustees ignore their trust duties or carry out their duties in a negligent manner, legal intervention is required to have the trustee removed from their role as trustee.
What to Look For
Ultimately, even though other people or entities acting as trustees and are responsible that the trust is administered properly, there are certain red flags that may indicate the need for a trust challenge, including:
- Assets missing from the trust. As fiduciaries, trustees have a duty to act only in the best interests of the trust or its beneficiaries and to follow the directions laid out in the trust. If assets are inexplicably missing from the trust, you have reason to suspect a trustee has been mismanaging or downright stealing trust assets. In this case, trustees can be compelled to provide accounting information to the beneficiaries or be considered in breach of the trust.
- Sudden changes in the trust. If the trust settlor suddenly and without valid reasons changes the terms in a third party or trustee’s favor (known as self-dealing), you should consider that the third party or trustee may be unlawfully coercing the settlor to make these changes. This may amount to not only a breach of the trust, but may also amount to elder abuse. Similarly, although admittedly rare, if any documents were forged, the trustee could face other punitive measures.
- Disputes involving disagreements over the construction of the trust and/or the settlor’s intent. These disputes are red flags that there is clear confusion of the documents and often, in our experience, lead to a trust dispute.
- Disputes regarding whether the settlor had the legal capacity to create the trust. In the applicable contest, the word “capacity” means to be aware of, know, and understand the estate planning terms and conditions. To create a trust, a settlor must be fully aware of their financial situation and the family dynamics to be able to decide who gets what. Failing to do so, the trust may be subject to a challenge because of the settlor’s purported lack of capacity.
- Discussions regarding whether the settlor was unduly influenced in creating the trust. A trust may be contested if the settlor was coerced or manipulated into creating the trust. A close companion, or someone with a confidential relationship with the settlor, who may have improper or nefarious intentions can compel the settlor to actually act against their true will and create a trust to benefit that individual.
- Whether some type of fraud was involved; for example, if the settlor’s signature was forged.
- Disputes regarding how the trustee is handling and administering the property or assets assigned to the trust. These signs of mistrust can lead to the development of other red flags that cause a dispute.
- Simple misunderstandings. People are protective about their assets, even those they do not even have yet. Many people try to influence asset distribution when the documents are being created. This fixation may cause them to focus on simple misunderstandings because the documents have not been finished yet. A clear, unambiguous estate plan will minimize this possibility.
- Simple mistakes. Everybody makes mistakes, and these do not mean you are being cheated. Mistakes should be taken in context: Does the mistake change the trust in any critical way? Are there a small number of mistakes as you would expect on any document? How easily can the mistake be rectified? Is the mistake made in conjunction with any other mistakes that, when taken together, serve to cheat the trust in any significant way? Is the person drafting the trust documents known for making insignificant mistakes?
Perhaps the most important thing to remember is that if something feels wrong, it may be your intuition trying to tell you something. Let a Florida and Palm Beach County trust litigation lawyer go over the trust documents with you.
Get Advice from a Florida and Palm Beach County Trust Dispute Attorney
A Florida and Palm Beach County trust dispute attorney at Comiter, Singer, Baseman & Braun can examine the trust documentation to see if there are any unusual clauses or red flags raised. When we find any type of suspicious terms or conditions, we can conduct a thorough, independent investigation to see if everything lines up with the various settlor expectations. We can also draft the trust documents and implement the trust in the proper way.
Let an Experienced Florida and Palm Beach County Trust Dispute Attorney Help You Avoid or Win Your Trust Litigation
Our attorneys have years of experience with trust litigation, and we can help you, too. Contact us today for your initial consultation.