The terms, distribution, and management of a trust can be contentious, particularly if the person who established the trust dies. Litigation might be necessary to interpret the trust, alter its terms, or resolve management issues. But what is the process of trust litigation in Texas?
Texas Trust Basics
To understand the process of trust litigation in Texas, you must first understand some basic trust terms. A trust is an arrangement where an intermediary—a trustee—holds property on behalf of a beneficiary. The person who establishes the trust is the settlor. The trustee manages and distributes the trust property to the beneficiaries as the settlor instructs.
What Is Trust Litigation?
Perhaps you’re wondering what is meant by the term trust litigation. Essentially, it means that a person can file a lawsuit when there’s a dispute about a trust, and that dispute needs to be resolved through judicial intervention. For example, a beneficiary may bring a lawsuit in court if there is a dispute about the trust’s management or the settlor’s intentions. Or, a trustee can file a lawsuit if a beneficiary borrowed from the trust or hasn’t turned over property that belongs to the trust.
Why Bring Trust Litigation?
There are many reasons for trust litigation. A common reason is when a beneficiary wants to challenge the settlor’s intent. Reasons to question the settlor’s intent include when:
- The settlor lacked mental capacity;
- Someone excessively pressured the settlor (undue influence);
- Someone threatened the settlor (duress); or
- A person lied to the settlor when they created the trust (fraud).
If a beneficiary believes the trust doesn’t reflect the settlor’s true intentions, they can challenge the trust in court.
Another reason for trust litigation is if the beneficiaries believe the trustee has done something wrong. A trustee has a fiduciary duty to the beneficiaries. A trustee breaches their fiduciary duty if they don’t act in the best interest of the beneficiaries.
The following are examples of a trustee’s breach of fiduciary duty:
- The trustee makes improper distributions;
- The trustee commingles trust funds with their own money;
- The trustee used the trust for their personal benefit; or
- The trustee failed to provide a proper accounting of the trust.
A beneficiary can bring trust litigation if the trustee acts in their own interests or doesn’t follow the settlor’s instructions.
The Trust Litigation Process
The process of trust litigation in Texas can be short or long, depending on each case. Generally, there are several stages of trust and estate litigation.
First, the person challenging the trust must file a petition describing all of the complaints about the trust. They’ll file the petition in a Texas district court. They’ll then serve all of the parties to the trust, including the trustee and beneficiaries. Then the parties, particularly the trustee, if the case is against them, will have 20 days to file an answer.
The court will set a first appearance date. This is typically where the parties set up deadlines for steps in the case. After this, the case will go into the discovery period, where all parties exchange documents. A beneficiary’s attorney will ask for detailed financial information about the trust. Depositions are also a part of the discovery process. A beneficiary’s attorney may ask the trustee questions under oath.
Often a court will refer a case to mediation. In mediation, a neutral third party (the mediator) tries to help the parties settle the matter. The case will proceed to trial if the parties do not resolve the dispute. In a trial, the court hears evidence and witness testimony. The judge or a jury will then make a final decision about the dispute.
Costs of Trust Litigation
You may wonder, What is the cost of going to litigation on a trust? The costs of trust litigation depend on the facts of each case. Some trust litigation costs include:
- Court filing fees;
- Fees involved in taking depositions;
- Expert witness fees; and
- Attorney’s fees and expenses.
Trust litigation costs are significantly less if a case settles quickly than if a case has to go to trial.
Contact Our Attorneys for Trust Litigation Questions
Robbins Estate Law is here to answer your questions about the process of trust litigation in Texas. We have experienced trusts and estates attorneys who can advise you on the viability of trust litigation. Our attorneys are top-notch and graduated from the best schools in the country. Contact us today.