Preventing Trust Disputes – Key Considerations

In the past, we have touched on trust litigation, which can be an emotionally frustrating and costly process. That said, what can someone do to help prevent that litigation from happening in the first place? Proactive steps can be taken during the creation of a trust, updates of a trust, and administration of a trust. Some, if not all, of these tips may be obvious to some folks, but can easily be overlooked.

READ MORE: Trust Litigation – The Basics

First – ensure the trust document is clear, comprehensive, and updated regularly. Ambiguities or outdated provisions often spark disagreement among beneficiaries, between beneficiaries and trustees, or even non-interested people or parties.

Ensuring that trust documents are clear, with detailed instructions for handling assets and distributions, will leave little room for misinterpretation and conflict.

READ MORE: Duties of an Executor of a Will

Another critical decision is selecting a proper trustee. This role should be filled by someone who is organized, impartial, and capable of handling financial and legal responsibilities. That’s not to say that a trustee should be a CPA or attorney, but this person should be willing to act in accordance with the trust. Sometimes, the most damaging type of trustee is an inactive trustee.

Open communication during the grantor’s lifetime is also important. Sometimes, discussing the purpose and terms of the trust with beneficiaries can set expectations and address concerns early on. We want to try and avoid the infamous “Well, dad would have wanted me to have…”

READ MORE: Retitling a Property to a Trust

Sometimes, a simple, non-binding note can explain why dad didn’t leave something to a particular person.

It’s impossible to eliminate every source of conflict, but careful planning and clear communication can go a long way in minimizing disputes. Taking time to address the issues early on can lead to a smoother administration and better outcome for all involved.