Trust Disputes and How to Prevent Them
When you sign a trust instrument, you might do so with a smug smile, thinking that you are a classy person who has done a classy thing. While the nouveau riche drag their relatives’ reputations through the mud in probate court as they fight over their newly acquired fortune, you keep your generational wealth out of the public eye and out of the reach of the court and the IRS. It is possible to transfer substantial amounts of money and property without the court knowing about it if the property belongs to a trust. When everything goes according to plan, the rich indeed get richer. When things go wrong, though, trust fund babies and the trustees who cater to their fantasies of generational wealth are in the same boat as everyone else. The worst-case scenario is that the trust can disappear into thin air, making it virtually impossible to prove that the trust exists and that you are entitled to its property. A far more likely scenario is that there will be ambiguities and disagreements regarding the trust, and as with almost any contractual matter between two private entities, including but not limited to individuals, it is the courts that can issue a legally binding decision on the matter. If you are planning to set up a trust and you want to ensure that it accomplishes its purposes while flying under the radar, contact a Bronx estate planning lawyer.
Be as Specific as Possible in the Trust Instrument
As with any legal document, the best way to draft a dispute-proof trust instrument is to include as much detail as possible, just like you would do with a will, marital settlement agreement, business contract, or any other document that could give rise to disputes and misinterpretations. For example, disputes often arise when trustees invest trust assets and lose money. When this happens, the beneficiaries might sue the trustee for breach of fiduciary duty. If the court rules against the trustee, it might order the trustee to repay the trust out of his or her personal assets. New York law requires trustees to apply the prudent investor standard when investing trust assets, and there is room for disagreement about whether a trustee’s actions conform to the prudent investor standard. The more detail the trust instrument includes about when and where the trustee should invest trust assets, the less likely the beneficiaries are to object, even if the investment turns out to be unprofitable.
Seek Legal Advice When You Need It
As a trustee, you always have the right to hire a lawyer to represent you in your trustee duties or to seek legal counsel on an as-needed basis. If you are unsure whether the investment you are considering aligns with the trust instrument or with the prudent investor standard, you should ask a lawyer.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you draft a dispute-proof trust instrument. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
law.justia.com/codes/new-york/ept/article-11/part-2/11-2-3/