An Orderly Transition

When a new President steps into office, we depend upon an orderly transition of power. We all pay a price if that does not happen. When an untrustworthy Trustee steps in, the estate litigation and stress exacts a price on the elder and families because of power struggles.  

A Trustee named by a Trust Settlor or by the courts, has the responsibility to hold the Settlor’s assets while working for the settlor and beneficiaries’ interests.  This can lead to power struggles. This transition of power is most often worked out in our courts. 

A neutral fiduciary (one who does not receive any distributions from the trust) can be named as Trustee in these situations.

A legally named Trustee has the authority to act. It is usually best for trust beneficiaries to go slow into estate litigation. Observe carefully. Request information. Seek competent counsel that can help you get the information you are entitled to have. Many times, there are other options rather than starting a control battle with a Trustee. 

Professionals who work in this arena regularly have seen estates decimated by a single or small group of disgruntled family members or beneficiaries.  Estate planning must take into account the possibility of a court battle at some point.  If a “friendly” boyfriend or an out of work family member or an unhappy beneficiary starts the legal train rolling, it can be difficult to stop.  Costs can mount up quickly.

For example, in one matter, legal fees more than tripled after a large firm litigation hungry attorney got involved. The Conservatee was unhappy and refused to cooperate with court appointed counsel and Temporary Conservator. After numerous flimsy legal battles, the settling decision by the judge was the same as one agreed to earlier by family and Conservatee (with all professionals representing Conservatee).

The Pricetag? $600,000.00 in unnecessary legal fees and a family in turmoil while the case followed the legal process for over three years while various parties attempted to control the outcome.

Always seek competent legal counsel and get more than one opinion before entering into costly legal battles.  Often, the best and cheapest way to deal with suspicions is to bring in a new, neutral Trustee and then let them do the job.

If you are updating your estate plan and have any concerns that beneficiaries might get rowdy, you might want to use the “poison pill” clause to shift the cost of litigation out of your estate’s pockets, whenever possible. Some litigation sensitive estate planning attorneys use this regularly in the estate plans they draft and can give you solid advice as to the effectiveness of stopping frivolous beneficiary litigation. 

A neutral Trustee is one the best defenses against continued in-fighting between beneficiaries. Please see our website for more information or call our office (877) 906-1882 to schedule an educational consultation.

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Loren Emmanuel