Trust Litigation

While some view trusts as something that is created only by wealthy families. This is not at all true. The use of trusts has become an increasingly common estate planning strategy that is used by families at all economic levels. Not only can trusts provide tax benefits, they can also help estates avoid probate and help protect the assets of minors, those with special needs, and others. However, as an experienced Maine trust litigation lawyer can explain, if a trust is not drafted and executed carefully or if it is not managed properly, disputes can develop among the parties involved, leading to litigation.

Common Reasons for Trust Disputes in Maine

The most common reasons for trust disputes include allegations of breach of fiduciary duty, allegations that the trust is invalid, and vague language.

• Breach of fiduciary duty. As fiduciaries, trustees are required to perform their duties in an honest and skilled manner. They are supposed to do what is in the best interests of the beneficiaries. Even negligent actions that have unintentional bad consequences for the trust may be the basis for a successful breach of fiduciary duty action. For example, a trustee decided to manage investing trust assets himself. Because of his lack of experience, the trust suffered investment losses. The beneficiary was upset and believed that the trustee breached their fiduciary duty by not hiring an experienced financial advisor to manage the investments. The beneficiary could file a breach of fiduciary duty action in an attempt to recoup the losses from the trustee or have the trustee removed.
• Invalid trust. If someone feels that the trust is not valid, they can petition the court to have it declared invalid. For example, a family member who is a legal heir of the trust creator but who was not a beneficiary of the trust would have legal standing to challenge the will. Grounds for challenging the validity of a will include lack of capacity, undue influence, coercion, fraud, and improper execution.
• Vague language. Another common reason for trust litigation in Maine is confusing or vague language in the trust agreement. This type of lawsuit is generally brought by the trustee seeking to ensure that they are following the instructions of the trust creator as memorialized in the trust agreement. The court’s job would be to figure out the intent of the trust creator by considering other language in the trust agreement, and, if necessary, considering extrinsic evidence offered by the litigants in the case.

Legal Standing to Initiate Trust Litigation in Maine

As an experienced trust litigation attorney in Maine will explain, trust litigation cannot be initiated by everyone who feels that there is a problem, even if that person has incontrovertible evidence. To initiate trust litigation the petitioner must have legal standing. This means that they must have an interest, generally financial, in the proceeding. If the litigation is based on a challenge to the actions of the trustee such as a breach of fiduciary duty action, then generally only beneficiaries would have standing because a trustee’s fiduciary duty is owed to beneficiaries. If the litigation is related to interpreting vague language, the trustee would have standing because it is their job to managing the trust according to the trust agreement and Maine law.

Consequences of Trust Litigation in Maine

Just like any litigation, trust litigation can have an impact on the value of the trust. The court may require that attorney’s fees and other costs related to the litigation are to be paid out of the assets of the trust. Depending on the size of the trust and the length of the litigation, this can be a financial drain on the trust. Further, if it is determined that there were improprieties or illegalities in setting up the trust, the court my dissolve and the assets may revert to the estate of the creator. To learn about the potential consequences of the trust dispute that you are a party to, contact an experienced trust litigation attorney serving Maine.