Knowledgeable Advocacy For All Aspects Of Estate Administration, Trusts And Conservatorship Matters

When can someone sue a trust?

On Behalf of | Nov 30, 2022 | Trusts |

Trusts are an excellent estate planning tool for Californians as they provide asset protection. Although someone generally can’t bring a lawsuit against a trust, filing a claim against the trustee can occur. When creating your estate plan, you should understand the situations when a case can be filed in connection with a trust.

Can a trust protect you from lawsuits?

The situation depends on the type of trust you have. If you have past-due debts, a creditor can still file a lawsuit against you if your trust is revocable because you still own the assets. However, no one can sue you if you have an irrevocable trust, as you surrender ownership of the assets when creating it. Trusts created specifically to protect your assets from creditors are sometimes called asset protection trusts. Creating such trusts can become problematic if the court determines that you created the trust fraudulently.

While one cannot sue a trust directly, plaintiffs can sue trustees under the following circumstances:

  • Not performing their fiduciary duty
  • A conflict of interest that allows the trustee to benefit financially
  • Trustee does not act impartially
  • Assets withheld for no reasonable explanation

What are my options?

When planning your estate, ensure that you evaluate all options to protect assets for beneficiaries. Conversely, if you have questions about how a loved one’s estate has been administered, you can still contest a trust in court. A thorough analysis of the situation could determine whether you have a viable claim.

Misappropriation, elder abuse, and breaches of fiduciary duty are valid reasons to contest a trust. In some cases, trustees need help understanding their responsibilities. If you attempt mediation in such instances, it can lead to a successful resolution.