Trusts are legally binding arrangements allowing a third-party trustee to hold and manage someone’s property, financial investments, and additional assets. The trustee is bound to safeguard the assets of the trust with the beneficiary’s best interests and the legal terms affirmed by the trust in mind. These complex agreements usually require legal assistance to properly set up, and a highly trained expert Palm Springs trust litigation attorney is pivotal for both preparing and contesting a trust.
There are many reasons a Palm Springs, California resident may choose to augment their estate planning with a living trust. Trusts can serve as an outline to bridge between generations, determining the division of property from an estate to the heirs. A trust allows assets to be conveyed to the beneficiary without many of the trappings of a formal probate process, reducing the time needed to settle the estate, avoiding court fees, and lowering estate taxes.
Trusts are structured in a variety of ways and are subject to the laws in the state they are instituted. When issues arise, whether you are the trustor, the trustee, or a beneficiary, litigation is often necessary. You will need an expert attorney who understands California’s trust laws.
The Three Roles in a Palm Spring Trust
Every California trust has three roles once it has been established:
The trustor, sometimes called a grantor, is the party who has created the trust by placing their money, property, or assets in the care of a separate legal entity. The trustee is the entrusted party, either a person or an entity, holding the assets and administering the trust. A beneficiary is the party designated in the terms of the trust agreement to receive the assets of the trust.
The three roles are not mutually exclusive. A trustor can be their own trustee or be the beneficiary of their own trust arrangement. In many cases, the trustor serves as the trustee while living, with a replacement trustee designated to administer the terms of the trust after the trustor has passed away.
When Can a Case Be Filed for California Trust Litigation
There is not one overriding statute of limitations that applies to every possible California trust-related matter. If you are a party to a trust and believe you have been wronged, it may be possible to file a case years later. That can work in the opposite direction, though, as you may also be vulnerable to legal action from another party who believes they haven’t been properly served by the trust.
Trusts May Be Revocable or Irrevocable
There are numerous types of trusts with varying purposes, terms, and legal complexities. The broadest method for sorting trusts is assessing whether one is revocable or irrevocable. Revocable trusts are living trusts. If the Trustor’s intentions or financial needs change throughout their lifetime, there are flexible terms to adjust or terminate the trust agreement. An irrevocable trust can’t be altered once it has been executed.
A revocable trust remains under the trustor’s control as long as they are living. Assets can be disbursed to a beneficiary, including to the trustor themselves. A trustee would be designated to take over management of the trust if the trustor passes away or becomes otherwise incapacitated. In most cases, a revocable trust becomes irrevocable once the grantor is deceased.
Irrevocable trusts are a good workaround to avoid hefty estate taxes. Assets in an irrevocable trust are not legally a part of the estate any longer and thus aren’t subject to estate taxes.
Reasons Trust Litigation May Be Necessary
Trust litigation is a complicated matter and requires expertise and specialization from the lawyers tasked with these cases. Often, the issue that leads to the initiation of trust litigation uncovers additional legal issues. For example, a questionable trust with an elderly grantor may lead to the discovery of elder abuse used as an illegal means of influencing the establishment of the trust.
Disagreement by a beneficiary on the trust’s contents is a common reason litigation may begin when it pertains to a trust. The trustee’s management of the trust could also be called into question. Additional reasons to file suit against a trust include:
- Determining whether the trustor was legally capable of executing the trust. The trustor must be of sound mind and have the capacity to understand the ramifications of the trust they are establishing.
- Pressure in the form of threats or deceit being used to unduly influence the trustor would be a reason to void the trust agreement.
- Forged documents or other fraudulent activity being used to enact the trust improperly.
Palm Springs trust disputes usually are litigated in probate court. The petitioner filing the suit must have the standing to do so. A beneficiary of the trust could file a suit to seek the removal and replacement of a trustee they deem to have failed to fulfill their duties. A neutral party can’t challenge a trust to have the trustee removed because of a lack of standing.
Trials in Probate Court
The trial process in a Palm Springs probate court isn’t much different than you would find in a criminal or civil trial court. The petitioner files a lawsuit, and it is served to the trustee, who must make a formal response, usually through their own legal counsel. The processes of discovery, evidence presentation, and legal arguments proceed. The judge makes the final ruling.
A trustee who is sued by a beneficiary can request that funds from the trust be used to cover legal defense costs. If the petitioner is successful in the case, the judge may order the legal defense funds to be reimbursed to the trust.
Trustees Have Fiduciary Responsibility
A breach of fiduciary responsibility by a trustee is the most common accusation a beneficiary levies when filing litigation. A skilled trust attorney with the connections to hire expert witnesses can play a critical role in the case’s outcome. Proving that the trustee failed to uphold their fiduciary obligations involves an examination of the trust’s funds and can extend to include the personal finances of the trustee.
Choose an Attorney You Can Trust
Bochnewich Law Offices offer top-notch trust litigation services in Palm Springs. If you have questions about your own estate plan and want to explore creating a trust, or you want to bring litigation against an existing trust, we have the experience and resources to take your case. Contact us for a consultation today.