What You Can Do to Avoid Trust Disputes

By David Hood
Partnership Chair

Many people use trusts as part of their estate plan. Our North Carolina estate planning attorneys assist in developing all types of trust agreements. A trust can avoid probate, reduce estate tax, protect property, and provide for beneficiaries.

However, trust disputes can result in costly trust litigation. Our North Carolina estate litigation attorneys discuss common trust disputes in this blog. We also discuss ways that you can avoid trust disputes when drafting your trust documents. 

Common Trust Disputes in North Carolina

Before discussing trust disputes, it can help to know some of the key terms used when discussing trust agreements:

  • Settlor – The person who created the trust document.
  • Trustee – The person who holds legal title to the trust property and manages the trust.
  • Beneficiary – The individual who has an equitable interest in the trust and benefits from the trust.

Trust disputes can arise for several reasons. Some trust disputes relate to the trust document and/or the execution of the trust agreement. Other trust disputes deal with the terms or administration of the trust. 

Common trust disputes include:

  • Challenges to the settlor’s capacity when executing the trust. In other words, there are allegations that the settlor did not have the capacity to understand what they were doing when they signed the trust document.
  • Allegations of mismanagement of trust assets, including using trust assets for the personal benefit of the trustee.
  • Undue influence over the settlor by the trustee and/or the beneficiaries. 
  • Allegations of potential forgery or fraud in the execution of the trust agreement. 
  • Disputes claiming that a trustee has been negligent in performing their duties as a trustee.
  • Allegations that the trustee has committed illegal or unethical acts while performing their duties, including embezzlement, commingling funds, etc.
  • Disputes related to the execution of the trust agreement (i.e., the document does not meet the requirements for a trust agreement under North Carolina law).
  • Disinheritance of blood relatives by writing them out of the trust following suspicious circumstances, such as undue influence or coercion.
  • Disputes by blended families, such as children from a second marriage contesting a trust written before they were born.

Unfortunately, you cannot know whether someone will challenge or dispute the terms of your trust agreement. If you are a party to a trust dispute contact our office to schedule a consultation with an estate litigation attorney. 

Ways to Avoid Trust Disputes 

There are several ways you can avoid trust disputes and trust litigation. Some things to consider include:

  • Discuss your plans with your trustee and beneficiaries so there is no doubt what you intend to do with your assets.
  • Include a signed letter explaining your reasons for creating the trust. Some individuals prefer to create a video to explain their reasons.
  • Hire an independent trustee to administer the trust, such as an attorney, bank, or other neutral third party, instead of appointing family members or friends as trustees.
  • Update your trust as necessary to address life events and changes in circumstances.
  • Obtain an opinion from a doctor confirming you are of sound mind when executing your trust documents. 

Hiring an experienced North Carolina estate planning attorney to prepare your trust documents is another way to avoid trust disputes. An attorney understands the laws governing trusts in North Carolina and how to draft a trust that will stand up to challenges.

Trusts are an important element of many estate plans. Our North Carolina estate planning attorneys at Patrick, Harper & Dixon have extensive experience with estates and trusts. Contact our office to schedule a consultation with an estate planning attorney.

About the Author
David W. Hood, Partnership Chair of the Firm, is a trial attorney in a wide-ranging civil practice with over 200 jury trials to his credit. His concentrations include Business Disputes, Construction Law, Personal Injury and Collections. He is also a certified mediator, helping to settle cases pending in both state and federal court. He recently finished his term as President of the North Carolina Association of Defense Attorneys, the organization for lawyers representing business interests in civil litigation. Mr. Hood has spoken to lawyers and industry groups on such topics as evidence rules, contractor liens on real estate and contract funds, underinsured and uninsured motorist coverage, litigation ethics, and real estate claims.