Do You Need Trust Litigation Assistance?

A trust is a key estate planning resource for all individuals. Since money, property, and other assets are usually involved, disputes can occur that will often result in litigation. You may need legal representation in various trust litigation matters. These kind of trust litigation matters can include the breach of fiduciary duty, concerns about the trust being legitimate, or the trustee mismanaging the trust.

Since trust litigation can be complicated, you will need to have a trust litigation attorney who has the necessary knowledge and experience to protect your rights. Basic construction of a trust includes:

  • The donor, grantor, or settlor establishing a trust. This can typically be done through trust agreement, a last will and testament, or another kind of legal document.
  • A beneficiary is named. There can be more than one beneficiary.
  • The trustee agrees to hold money, property, or other assets for the benefit of someone else.
  • The trustee holds and manages the principal of the trust.

There are numerous reasons why someone’s estate plan will be held entirely, or partially, in a trust. Many times, a trust’s assets will not pass through probate. A trust can give someone more privacy and discretion. Although there are several other benefits of having a trust, in the end, people may still find themselves having disagreements related to the trust.

Many times a trust can be litigated for the following reasons:

  • There are various estate planning documents that are competing with each other
  • Oral promises were made, but those promises are not shown in the trust
  • The original estate planning documents cannot be found

While honest mistakes can be made, often times less than honest actions take place. Whatever the reasons may be for the disagreements or disputes, we are dedicated to helping you. If you would like to schedule a consultation, contact us for information.

Ways To Avoid Trust Litigation To Keep Peace In The Family

Going through trust litigation after someone they love has passed away is not something that people will look forward to. This process can cause relatives to go at each other’s throats, and this can be highly stressful. No one wants to have to deal with arguments and disagreements, especially when you are going through one of the most difficult times in your life. You are already dealing with a loss; how can you make sure there are no family feuds over an estate?

Have Legal Documents

All of your estate planning and trust documents should be properly prepared. Sometimes a litigation happens because the documents were not prepared and drafted properly. If anyone has any major concerns about someone contesting the documents, then the documents should not be drafted alone. The documents should be customized so there will be no confusion or ambiguity.

Be Sure To Update Your Documents

If you have documents that are old or you have neglected to make significant changes when necessary, you can be setting your family up for major troubles. Your legal documents should be up to date because there will likely not be anything for anyone to contest or be uncertain about. If you need to update the beneficiaries on your life insurance policies, you should do that as soon as possible. If you have divorced and you have not made any updates to your insurance policies, then your ex-husband or ex-wife will still be listed as the beneficiary.

Everyone Needs To Communicate

Litigation typically happens because someone who may have been part of a will or an estate is no longer part of it. People will usually find out that they were either disinherited or they will find out they will not receive what they believed they were supposed to receive. If a family wants to avoid arguments or fights after a death, everything should be talked about ahead of time, before death happens. No one wants to be shocked or surprised by the things they have been told about the trust or estate.

When you take the necessary time to use the advice above, your estate planning can be the difference in keeping your family together or breaking them apart after you have gone. If you would like a consultation to discuss this, contact us.

For People with Firearms: A Look into Gun Trusts in Estate Planning

If you own any firearms, one of the questions you’ll need to address is how to include them legally in your estate.

You might have only one or two guns, or maybe it’s a larger collection. Regardless, there are legal issues with transferring these to your beneficiaries in the event of your incapacitation or death. For example, you might have beneficiaries who can’t legally own or operate firearms. But even if they are eligible, there are still restrictions and a transfer process that need attention and care. You or your beneficiaries could face serious criminal charges if you don’t account for the legal issues.

The role of gun trusts

As discussed in a recent article from Investment News, gun trusts can facilitate the legal transfer of firearms from one individual to another (they might also make the process of purchasing firearms go a little more smoothly, as the trust itself can serve as the entity that buys the firearms). By using the trust, you often don’t need as much paperwork or as many steps towards making the transfer from one gun owner to another.

When it comes to establishing a gun trust, you need to work with attorneys who understand estate law and the relevant state and federal laws for gun ownership, transfers, and sales. For example, even if you live in Texas, you might want to leave one of your guns to a family member who lives in Oregon or Utah. What are the legalities of transferring a gun across state lines? What are the gun laws for those states? (For instance, are certain types of firearms and ammunition illegal in another state?)

The trust document itself can lay out specific guidelines and restrictions for trustees and beneficiaries, so that they’re less likely to accidentally break the law.

Another important point from the Investment News article is that even if you decide not to transfer your firearms, you can make provisions in a trust for their legal sale, with the money going to your beneficiaries.

If you have any questions about this issue, don’t hesitate to contact us. With legal guidance, you can make informed decisions about what to do with your firearms while complying with all the legalities.

The Trouble With Trustees

The November 22-23 weekend investor section of The Wall Street Journal includes  an article entitled “The Trouble with Trustees,” which is a lengthy article discussing how both trustees and beneficiaries of a trust can manage the delicate relationship that can be strained when they clash over how to invest and/or spend the trust’s money.

A Trust is established by one person for the benefit of another person(s), but rather than giving the money outright to the beneficiary, the person creating the trust asks a third party (the trustee) to hold the money or property for the benefit of the beneficiary(ies).  The trust’s creator has considerable flexibility in controlling the terms of the trust and how the trustee should manage, invest, and/or distribute the Trust’s assets and income.

Not surprisingly, the Trust’s beneficiaries can often disagree with the trustee’s decisions.  For instance, when the beneficiary asks the trustee for a new Porsche but the trustee decides that a more economical Honda should suffice, a clash may occur between the beneficiary and the trustee over which car should be purchased.

Ford + Bergner has represented countless clients in disputes over trusts.  Below is a sample of the types of disagreements that arise between trustees and beneficiaries:

1.    Disagreement over the trustee’s accounting for the assets and income.

2.    Disagreement over the way that the trustee has invested the trust’s assets.

3.    Disagreement over how the income is divided between the multiple beneficiaries of the Trust.

4.    Disagreement over how much of the income/assets should be distributed in a particular year.

The Wall Street Journal article encourages trust beneficiaries to regularly review the accounting provided by the trustees.  It also suggests that the beneficiaries should regularly stay in contact with the trustee and keep notes from those conversations.  For trustees, maintaining accurate and complete financial records is important, and the prudent trustee should always treat the trust beneficiaries with respect, regardless of the request.

If you are either the trustee or the beneficiary of a trust and find that you are in a dispute over the Trust, the attorneys at Ford + Bergner will be happy to assist you.

Trust Litigation for Undue Influence: Dealing with Coersion of Kids on a Parent

Trust litigation can be a challenging process when it involves family members attempting to gain a trust without consent of others in the family. This can be a scenario that’s devastating to you if you have a sibling who’s done this without letting you know as means of gaining access to a parent’s assets. It’s a situation we’ve seen many times with our clients at Ford + Bergner LLP, and we can help you through similar situations.

But different scenarios might arise when this happens that could create complex legal territory to tread on. It’s why you should always handle trust litigation through an experienced lawyer who has years of experience dealing with estate issues like guardianship, probate, or trusts.

What Are Typical Scenarios in Undue Influence?

Most typically, it’s a brother, sister, or other relative who happens to be taking care of an aging parent who convinces the parent to execute a trust. They may convince the parent that they deserve complete control of all assets since they’re putting in full-time as a personal caretaker. This may not necessarily be done willfully by the parent if it’s common knowledge that the parent is suffering from senility.

In this scenario, there could be some kind of threat by the sibling against the parent if they don’t start the trust. We’ve seen cases where this is proven, and it’s never pleasant. However, the parent might have done it so they could continue to have the sibling care for them. In those threat instances, the sibling might threaten to walk away as caregiver if the parent doesn’t start a trust in their name.

Proving these cases requires considerable evidence and legal preparation by us. We’ll help determine if that trust in question can be challenged under a specific category. While undue influence is one, we can also challenge a trust based on fraud, ones created while under duress, or based squarely on the parent not being mentally fit.

Contact us at Ford + Bergner LLP so we can help you if you think a trust started by a sibling should be challenged due to undue influence. We’ll help you step by step through the process by acquiring the proper evidence so you have a strong case.

The Advantages of Educational Trusts

Creating a trust when your child or grandchild is small is a good way to build up money for the child’s future educational expenses. But there are a number of other benefits involved with educational trusts, as well. Here are a few.

  • You don’t have to pay a gift tax. If you have a properly set up Crummy Trust, in which each beneficiary has the right to withdraw a certain portion of the gift within thirty days, individuals can give away up to $14,000 per year without paying gift taxes on it. Because the trust can be funded with the gift exclusion amount, you won’t incur any gift taxes on it. The interest and dividends from it are also exempt.
  • Educational trusts can be protected from liability. By including Spendthrift Provisions in the language of the trust agreements, the money can’t be taken by creditors as payment for noneducational expenses.
  •  There are further tax benefits. Contributions to an educational trust are no longer included as part of the grantor’s estate and, therefore, are not subject to estate taxes. In particular, educational trust help those individuals with sizable estates to pass their assets to future generations without an estate tax being involved.

While the main benefit of an educational trust, of course, is raising the money for a child’s educational expenses, this form of trust is often included in a comprehensive estate plan. It is important that your trust be set up in accordance to Spendthrift and Crummy guidelines so that you and your loved ones will receive the maximum benefit. For more information on this and other types of trusts, contact us.

The Most Important Party in Trusts

There are many situations in which a trust would be the best option to leave money and other assets behind for children and other family members. In the case of an accident or sudden death, a trust can protect a grantor’s assets from creditors. In addition, a trustee can later preserve and manage those benefits so that the beneficiary received them in a prudent fashion.

Now, in all the terms mentioned above, which would most likely be the “X factor” in a trust agreement? It’s not the grantor, since he’s the one who chose to open a trust in the first place. And it’s probably not the beneficiary, as he was likely always lined up to receive the grantor’s assets.

All that leaves the trustee to being perhaps the most important party of a trust. The legal definition of “trustee” is: “The person designated in the Trust Agreement to take possession of the trust assets and manage those assets. He must also preserve and manage the assets according to the provisions in the Trust agreement.”

The trustee is so important because he needs to abide by the trust agreement and protect and distribute the assets accordingly. This job can be a bit more time-consuming than people give it credit for. There’s a whole lot of paperwork and billing associated with the task. Throw in familial issues such as physical custody and it could suddenly turn into a full-time job.

And that’s exactly why grantors should consider an impartial trustee out of the family. For one, it would make issues much less complicated concerning the distribution of assets. Grantors typically turn to a family member for a trustee, but there’s no guarantee that he has a family member both willingly and capable to do the job.

Professional consulting can help grantor’s pick a reliable and capable trustee. We understand the process and want to help people leave behind their assets exactly as they wish.

If you would like more information about trusts, contact us.

Protecting your assets from creditors: Trusts and other strategies

Dallas News recently published an article that’s well-worth reading. The article discusses why everyone should undertake estate planning, regardless of their wealth. Estate planning doesn’t only involve writing a will that specifies the distribution of your assets. It also has other important purposes.

Protecting assets

Among the many reasons for estate planning is the need to safeguard assets and protect them from creditors. The assets you’ve worked so hard to save up and pass on to your beneficiaries are vulnerable to future legal claims. If you fall into debt or are sued, they could be taken from you.

It’s important to consider these issues before you’re in financial trouble and need to deal with the demands of creditors. Once you already have a potential creditor with a claim to your assets, any asset protection plan you initiate might be undone by a judge if it’s clear that you’re trying to keep assets away from specific creditors who already may have a claim on them.

Strategies for asset protection

You also need to give careful thought to how you’ll protect your assets. Trusts are one strategy for safeguarding assets. Not all trusts, however, will protect them. For example, a revocable living trust doesn’t shield your assets from people who may have a legal claim on them. Once you form such a trust, you still maintain control over its contents, and as such they’re still considered yours; the trust can be revoked and the assets seized.

One type of trust that may shield your assets is an irrevocable trust. However, with an irrevocable trust, you’re relinquishing control of the assets in the trust. To some people, under some circumstances, this loss of control wouldn’t matter. To other people, it would be a huge price to pay to gain some strong asset protection.

Another possibility is to form a Family Limited Partnership (FLP). This arrangement would pool your family’s assets into a business partnership for which various family members have shares. This arrangement could give you strong asset protection and might also offer some tax advantages. However, it also requires a great deal of forethought to plan properly so as to not jeopardize your best interests.

There are other ways to reduce your personal liability in the event of a lawsuit or to protect assets from creditors. For example, under Texas law, certain assets are already considered exempt from bankruptcy, including a variety of retirement and tax-exempt pension accounts.

When you contact an estate planning attorney, keep these issues in mind. Consider which of your assets might be most vulnerable. And be sure to discuss asset protection as part of your overall estate planning.

Seeing to the needs of your pets: Including pets in trust and wills

Given the bond that forms between many people and their pets, a part of estate planning that’s important not to overlook is what would become of your pet if you were to pass away or become too incapacitated to care for it.

In accordance with Texas law, what provisions could you make for your pet? Can you include them in a trust or will?

Bequeathing them to someone else

In your will, you can specify a beneficiary who would take ownership of your pet upon your death. Once that person becomes a legal owner, he or she can keep your pet or perhaps sell it if they wish to. While writing up your will, you can have a discussion with potential beneficiaries about who might want to obtain ownership of your pet.

If you don’t want your pet to be sold, you should try to select a beneficiary who would keep it and take good care of it; you can also name alternate beneficiaries/caretakers. Furthermore, you could also bequeath your pet, along with some money, to an organization that takes care of them.

Pet trusts

Another possibility is to specifically set up provisions for your pet as part of a trust. Texas law allows you to designate resources to your pet in a trust and specific terms for how they should be cared for (however, you can’t include provisions for any children your pet may have after your death; the animals must be alive when you are). In overseeing the trust, your trustee will ensure that the money set aside for your pet is spent on its care and that it’s being looked after by the caretaker you’ve designated in the event of your incapacitation or death.

Once your pet has passed away, anything remaining from the funds you set aside for its care can then go to human beneficiaries you’ve specifically named (if you name no one, it would go to anyone who is your heir by law). It’s important, when setting aside funds for your pet’s care, that you don’t opt for an excessive amount of money.

The amount must be reasonable and based on what your pet needs. If you set aside too much, your decision is more likely to be challenged in court by beneficiaries who would want the funds in human hands, for human use.

If you want to further discuss how to fit your pet into your estate planning, and if you have any other questions on matters of estate law, contact us. We will work with you to make sure that all details are accounted for in your estate plan, both for your human beneficiaries and for any pets whose needs you may want to see to when you’re no longer able to care for them.

‘Testator Intent’ In Wills, Estates And Trusts Law

When it comes to wills, estate and trust law, testator estate generally rules the day.

“Testator intent” refers to the desires and goals of the person who wrote the will, trust-creation document or other important legal matter. We have laws meant to ensure a reasonably degree of clarity, of course, but when there is a dispute (as there so often is), courts try hard to understand and honor the testator’s wishes.

What brings this all to mind is a recent story we read about a 98-year-old woman died and left all of her considerable fortune to her window cleaner, rather than the adult nephew who cared for her during her old age.

The woman had previous wills drafted that left her estate to her “favorite nephew,” but by the time she died in 2008, she had changed her estate plan to leave almost everything to the window cleaner.

The nephew has now sued, alleging that his aunt lacked capacity to execute her final will and, if she did have capacity, was subject to “undue influence” from the window cleaner.

This lawsuit has just started, so we have no idea how it will turn out. However, we can anticipate that the court will try its best to figure out what the aunt wanted.

The reason we’re sharing this story with our Houston audience is that it seems to provide a good example of a crucial element of wills, estates and trusts law. If you think you need to further your understanding of this legal realm, please feel free to contact us.