PARTIES IN TRUST LITIGATION
SETTLORS OF TRUST: Settlors of the trust are the parties that created the trust, and have transferred their assets into the trust.
Most trusts are revocable trusts and the settlors may revoke the trust if any fraud is involved against the settlors. However, certain trusts are irrevocable. If the trust is irrevocable, and the setters have been defrauded by certain individuals pertaining to the trust, then the settlors may need to file a lawsuit to terminate the trust. The lawsuit is filed by the settlors because they were defrauded, because they were unduly influenced by certain parties, or because they have unintended parties as beneficiaries of the trust.
The fraud may be due to settlors’ age, their lack of capacity, or undue influence by certain individuals that are named as beneficiaries of the trust.
Settlors may file a lawsuit against trustee of the trust for his or her breach of fiduciary duties, for misappropriation of assets of trust by the trustee, or to compel the trustee to account.
Lawsuits may also be filed against third parties for taking settlors’ personal or real properties, or against settlors’ attorneys for committing malpractice.
BENEFICIARIES OF TRUST: Beneficiaries of the trust may need to file lawsuits against certain individuals to protect their rights and to receive the benefits conferred to them under the trust.
Lawsuits by the beneficiaries of the trust are mainly against the trustees of the trust for the trustee’s breach of fiduciary duties, for trustee’s failure to protect rights of the beneficiaries, for commingling the assets of trust with his or her own assets, for misappropriated the assets of trust, or for their failure to give accounting. Courts have the right to remove the trustee and appoint a successor trustee.
A named beneficiary of trust may also file a lawsuit to contest the validity of trust, or to file a lawsuit because his or her benefit is less than what he or she would have received as an heir of settlors’ estate. A trust may contain a “no contest clause” that may prevent a beneficiary of trust to contest the validity of trust, or to contest the amount of his or her benefit from the trust. A beneficiary of trust may lose all benefits conferred to him or her in the trust if the named beneficiary files a lawsuit to contest the validity of trust, or for the amount of benefit conferred to the beneficiary in the trust. To lose the rights, courts must determine that the lawsuit by the named beneficiary of trust has no merit.
In certain circumstances, a beneficiary of the trust may file a lawsuit against a third party on behalf of the trust if the trust has a valid claim against a third party for possession or ownership of real property that was owned by the settlors.
TRUSTEES OF TRUST: Trustees of living trusts have been normally given powers to administer the trust, to file lawsuits on behalf of trust, and to litigate the lawsuits filed against the trust. Trustees of living trusts may need to file lawsuits against certain individuals or entities pertaining to validity of the trust, and to receive or to maintain personal or real properties that belong to the trust.
Trustees are also fiduciaries. As a fiduciary, they have duties to protect the assets of trust, to prevent commingling of the assets of trust with their own assets, to protect the rights of beneficiaries of the trust, to give accounting for their work performed as the trustee of trust, to defend improper claims against the trust, require prior trustees of living trust to account, and to file claims against co-trustee of trust.
HEIRS OF ESTATE: A party that should have benefited from the settlor’s estate, and his or her rights has been terminated, may file an action to contest the trust.
The lawsuit is often against a third party for defrauding the settlor, due to the settlor’s lack of capacity, or undue influence by the third party that is receiving benefit from the trust. In certain circumstances, the lawsuit may entirely disqualify a named beneficiary from receiving any benefit from the trust.
THIRD PARTIES: A third party may file a lawsuit against the trust for claims against the trust, for claims against the settlors of trust, or for claims against the beneficiaries of trust. The action may be based on fraud, tort (action as the result of negligence or an intentional act), or for breach of contract. A third party may also bring an action for ownership of real property or personal property owned by the living trust.
The trustee may accept the claim of the third party if he or she determines that the claim is valid. On the other hand, the trustee may be required to litigate the lawsuit filed by a third party if the claim has no validity. In either case, the trustee has a duty to act properly, and his decision is subject to scrutiny by settlors and beneficiaries of the trust.
For more information call us at (310)553-5562.
SETTLORS OF TRUST: Settlors of the trust are the parties that created the trust, and have transferred their assets into the trust.
Most trusts are revocable trusts and the settlors may revoke the trust if any fraud is involved against the settlors. However, certain trusts are irrevocable. If the trust is irrevocable, and the setters have been defrauded by certain individuals pertaining to the trust, then the settlors may need to file a lawsuit to terminate the trust. The lawsuit is filed by the settlors because they were defrauded, because they were unduly influenced by certain parties, or because they have unintended parties as beneficiaries of the trust.
The fraud may be due to settlors’ age, their lack of capacity, or undue influence by certain individuals that are named as beneficiaries of the trust.
Settlors may file a lawsuit against trustee of the trust for his or her breach of fiduciary duties, for misappropriation of assets of trust by the trustee, or to compel the trustee to account.
Lawsuits may also be filed against third parties for taking settlors’ personal or real properties, or against settlors’ attorneys for committing malpractice.
BENEFICIARIES OF TRUST: Beneficiaries of the trust may need to file lawsuits against certain individuals to protect their rights and to receive the benefits conferred to them under the trust.
Lawsuits by the beneficiaries of the trust are mainly against the trustees of the trust for the trustee’s breach of fiduciary duties, for trustee’s failure to protect rights of the beneficiaries, for commingling the assets of trust with his or her own assets, for misappropriated the assets of trust, or for their failure to give accounting. Courts have the right to remove the trustee and appoint a successor trustee.
A named beneficiary of trust may also file a lawsuit to contest the validity of trust, or to file a lawsuit because his or her benefit is less than what he or she would have received as an heir of settlors’ estate. A trust may contain a “no contest clause” that may prevent a beneficiary of trust to contest the validity of trust, or to contest the amount of his or her benefit from the trust. A beneficiary of trust may lose all benefits conferred to him or her in the trust if the named beneficiary files a lawsuit to contest the validity of trust, or for the amount of benefit conferred to the beneficiary in the trust. To lose the rights, courts must determine that the lawsuit by the named beneficiary of trust has no merit.
In certain circumstances, a beneficiary of the trust may file a lawsuit against a third party on behalf of the trust if the trust has a valid claim against a third party for possession or ownership of real property that was owned by the settlors.
TRUSTEES OF TRUST: Trustees of living trusts have been normally given powers to administer the trust, to file lawsuits on behalf of trust, and to litigate the lawsuits filed against the trust. Trustees of living trusts may need to file lawsuits against certain individuals or entities pertaining to validity of the trust, and to receive or to maintain personal or real properties that belong to the trust.
Trustees are also fiduciaries. As a fiduciary, they have duties to protect the assets of trust, to prevent commingling of the assets of trust with their own assets, to protect the rights of beneficiaries of the trust, to give accounting for their work performed as the trustee of trust, to defend improper claims against the trust, require prior trustees of living trust to account, and to file claims against co-trustee of trust.
HEIRS OF ESTATE: A party that should have benefited from the settlor’s estate, and his or her rights has been terminated, may file an action to contest the trust.
The lawsuit is often against a third party for defrauding the settlor, due to the settlor’s lack of capacity, or undue influence by the third party that is receiving benefit from the trust. In certain circumstances, the lawsuit may entirely disqualify a named beneficiary from receiving any benefit from the trust.
THIRD PARTIES: A third party may file a lawsuit against the trust for claims against the trust, for claims against the settlors of trust, or for claims against the beneficiaries of trust. The action may be based on fraud, tort (action as the result of negligence or an intentional act), or for breach of contract. A third party may also bring an action for ownership of real property or personal property owned by the living trust.
The trustee may accept the claim of the third party if he or she determines that the claim is valid. On the other hand, the trustee may be required to litigate the lawsuit filed by a third party if the claim has no validity. In either case, the trustee has a duty to act properly, and his decision is subject to scrutiny by settlors and beneficiaries of the trust.
For more information call us at (310)553-5562.