Trust Disputes

Houston & Fort Worth Trust Dispute Lawyer

High-Performance Legal Counsel for Trust Issues in Texas

A trust dispute consists of a conflict between various parties that involves the terms of the trust or how a trust is administrated. These disputes can lead to lawsuits that must be handled in civil court although they may be settled outside of court. Many individuals and families in Texas and throughout the U.S. have created various types of trusts for many different purposes.

These trusts consist of fiduciary relationships where the property or assets of one party are held by a trustee. The trustee manages those assets and passes them on to the heirs and beneficiaries named in the trust document once the trust creator has passed away. Many different kinds of trusts exist, including revocable “living” trusts which are probably the most common, irrevocable trusts, special needs trusts, charitable trusts, and more. They are widely used in estate planning. If you need to dispute the terms or administration of a trust or are the trustee of a trust that is being disputed, you can turn to Keith Morris & Stacy Kelly, Attorneys at Law for superior legal representation throughout all phases of this legal matter. 

Learn more about how we can help. Contact us at (713) 636-5339 in Houston or (817) 442-2048 in Fort Worth today. 

Types of Trusts in Texas and Their Purposes

In Texas, several types of trusts can be created to meet specific estate planning goals. Each type of trust serves a unique purpose, and it’s important to understand the differences between them when planning for the future.

Revocable Trusts:

• Purpose: A revocable trust is one of the most common types of trusts. The creator (also called the grantor) can alter or revoke the trust during their lifetime.
• Benefits: Offers flexibility and control since the grantor can change the terms or dissolve the trust as needed. It also helps avoid probate.
• Drawbacks: Assets in a revocable trust are still considered part of the grantor’s estate for tax purposes, so it doesn’t offer estate tax protection.

Irrevocable Trusts:

• Purpose: Once established, an irrevocable trust cannot be altered or revoked by the grantor.
• Benefits: Provides asset protection and can help reduce estate taxes, as assets transferred into an irrevocable trust are no longer considered part of the grantor’s estate.
• Drawbacks: The grantor loses control over the assets once they are transferred into the trust.

Special Needs Trusts:

• Purpose: This type of trust is designed to provide financial support for individuals with disabilities without affecting their eligibility for government benefits like Medicaid or Supplemental Security Income (SSI).
• Benefits: Ensures that individuals with special needs are cared for without disqualifying them from essential public assistance programs.
• Drawbacks: The trust must be carefully managed to comply with government regulations, and it may involve more complex administration.

Charitable Trusts:

• Purpose: Charitable trusts are created to benefit a charitable organization or cause. The grantor specifies how the trust assets will be used for charitable purposes.
• Benefits: Charitable contributions can offer significant tax deductions. This trust allows the grantor to leave a lasting legacy.
• Drawbacks: Once assets are donated to a charitable trust, they cannot be redirected to other purposes, even if the grantor’s financial situation changes.

How Trust Disputes are Resolved in Texas

Trust disputes can arise when disagreements occur over the interpretation or administration of a trust. In Texas, there are several steps involved in resolving these disputes:

Mediation:

• Mediation is a voluntary process where a neutral third-party mediator helps the disputing parties reach an agreement. It’s often quicker and less expensive than litigation.
• Benefits: Can resolve disputes without going to court and preserves relationships between family members or beneficiaries.

Arbitration:

• Arbitration involves a neutral arbitrator who makes a binding decision on the dispute. This process is less formal than court and may be faster.
• Benefits: Offers a quicker resolution than litigation and provides more privacy.

Litigation:

• If mediation or arbitration fails, the dispute may go to court. The court will make the final decision based on the evidence presented.
• Drawbacks: Litigation can be costly, time-consuming, and public.

Role of Trustees and Their Legal Responsibilities

Trustees hold an essential role in managing a trust. They are legally obligated to act in the best interests of the beneficiaries and adhere to the terms of the trust.

Fiduciary Duties:

• Duty of Loyalty: The trustee must act in the best interest of the beneficiaries and avoid any conflicts of interest.
• Duty of Care: The trustee must manage the trust assets prudently and responsibly, taking appropriate action to protect the trust.
• Duty to Act in the Best Interests of Beneficiaries: The trustee must ensure the trust is administered in a manner that benefits the beneficiaries, not the trustee’s own interests.

Breach of Duty:

• If a trustee fails to fulfill their fiduciary duties, such as mismanaging trust assets, neglecting to follow the terms of the trust, or engaging in self-dealing, they may be held liable.
• Consequences: A trustee who breaches their duties may be removed from their position, required to compensate the beneficiaries for losses, or even face legal action for damages.

Understanding the roles and responsibilities involved in trusts can help ensure that the process runs smoothly and that disputes, if they arise, are handled appropriately. Whether acting as a trustee or a beneficiary, it's crucial to know your rights and obligations under Texas trust law.

Disputing a Trust in Texas

Like wills, the terms or administration of a trust can be disputed for several reasons. If proven in court, the trust could be rendered invalid and a former will or trust (if one exists) may be substituted. Absent those documents, the estate will then have to be decided and settled according to state law.

In order to dispute a trust, you must have “grounds” for the dispute, which would consist of some type of improper behavior or procedure connected with its creation. Common grounds for trust disputes can include:

• Incompetence on the part of the trust creator (called the grantor or trustor), such as the person suffered from dementia, Alzheimer’s or some other incapacity that meant insufficient mental ability at the time he or she wrote its terms.
• Undue influence placed on the trust creator; this is commonly refers to pressure applied to the trustor from some other party. This is generally a party seeking to obtain financial gain by being named in the trust as a beneficiary.
• Some type of fraud involved in the making of the trust.
• Defects in the trust document that would make it invalid according to Texas law; this could include that it was not signed in the presence of witnesses or was not actually signed by the trustor (forged).
• Discrepancies or conflicts concerning the accounting of a trust’s income, assets, liabilities and how they have been distributed. If you suspect mismanagement, self-dealing, excessively high fees paid to the trustee, or other issues, you can dispute the trustee’s actions or have the trustee replaced.

FAQ - Houston & Fort Worth Trust Dispute Lawyer

1. What is a trust dispute?
   A trust dispute occurs when there is a disagreement over the terms or administration of a trust. This could involve challenges to the trust's validity, disagreements between beneficiaries, or conflicts about the trustee’s actions. Trust disputes can be resolved through mediation, arbitration, or litigation in court. If you're involved in a trust dispute, seeking assistance from a fort worth trust dispute lawyer can help guide you through the complex legal process and ensure your rights are protected during resolution.
2. What are the grounds for contesting a trust in Texas?
   In Texas, a trust can be contested for several reasons, including:

• Incompetence: If the trust creator lacked the mental capacity (due to illness or disability) when creating the trust.
• Undue Influence: If the creator was pressured or manipulated into making certain decisions.
• Fraud: If there is evidence that the trust was created through fraudulent actions.
• Defects in the Trust Document: If the trust was not properly executed (e.g., missing signatures or witnesses).
• Mismanagement: If the trustee has mismanaged the trust’s assets or violated fiduciary duties.

   3. How long do trust disputes take to resolve in Texas?
The timeline for resolving a trust in Texas dispute can vary depending on the complexity of the case and the method of resolution. Mediation may take a few weeks, while litigation in court can take several months or even years, especially if the case is complex or involves multiple parties.

Get the Legal Help You Need with Matters Involving a Texas Trust

At Keith Morris & Stacy Kelly, Attorneys at Law, we have been dealing with legal issues involving trusts and wills for decades. We provide aggressive oversight and litigation skills to all trust matters, starting with a detailed assessment of where you stand and the options that can be used to remedy the situation. Our firm is dedicated to the highest levels of service, as evidenced by the many honors and accolades we have received over the years, including an AV Preeminent® rating by Martindale Hubbell® and listing in Super Lawyers. Let us use our extensive knowledge and legal skills to protect your rights and best interests and to help you achieve your legal objectives.

Learn more about how we can help. Contact us at (713) 636-5339 in Houston or (817) 442-2048 in Fort Worth today.