The Jensen Litigation Firm, PLLC represents businesses and individuals in trust disputes. People hire us to figure out their rights under a trust and enforce those rights. If you are a beneficiary, trustee, or creditor with a trust dispute, we can help. Contact us now to preserve your rights.
What are the basics of a trust?
There are a wide variety of personal, business, and real estate trusts.
Simply put, a person puts property into a trust to be managed by a trustee for the benefit of beneficiaries. A trust may be created during a person's lifetime or after death.
The creator of the trust should appoint a trustworthy person as trustee. That person will need to honor the trust plan, safeguard trust assets, exercise good judgment, and communicate with trust beneficiaries.
What duties does a Minnesota trustee owe to beneficiaries?
Disputes often arise about trustee performance, supervision of trust assets, and distribution of the trust. In general, trusts are discussed in Chapter 501C of Minnesota Statutes.
Under Minn. Stat. § 501C.0802(a), a trustee owes a duty of loyalty to beneficiaries and shall not place his or her own interests above that of beneficiaries. Trustees must prudently manage and invest trust assets using reasonable care, skill, and caution under Minn. Stat. § 501C.0901, subd. 2.
Under some circumstances, a trust may be terminated by the trustee and the assets distributed according to the trust's terms and any statutes, such as Minn. Stat. §§ 501C.0410-414.
Can beneficiaries remove a trustee?
A beneficiary can remove a trustee under Minn. Stat. § 501C.0706 and similar statutes if the trustee seriously breached the trust or is unfit, unwilling, or persistently fails to effectively administer the trust to best serve the beneficiaries.
If the trustee is removed and there were no co-trustees, then a new trustee must be appointed unless the trust is terminated.
Can trustees use trust assets to pay attorney's fees and court costs?
If a trust dispute leads to a court action under Chapter 501C, parties often argue about recovering costs of the lawsuit. In Minnesota, parties must generally bear their own attorney's fees and costs, with only nominal awards to the prevailing party.
However, there are different rules for trusts. The common-law precedent says that “a trustee is entitled to reasonable attorneys' fees, to be paid out of the trust estate, incurred in good faith in defending his administration of the trust.” In re Freeman's Trust, 247 Minn. 50, 75 N.W.2d 906, 907 (1956).
The statute also says that a trustee may be reimbursed out of trust assets. See Minn. Stat. § 501C.0709.
There is often dispute about whether the trustee acted in good faith and the amount of reasonable fees. The court has broad discretion to apportion costs.
Can trust beneficiaries use trust asset to pay their attorney's fees and court costs?
Beneficiaries may also be able to recover costs from trust assets. Section 501C.1004 says that, “[i]n a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney fees, to any party from the trust that is the subject of the judicial proceeding.”
There is often dispute about whether a beneficiary's action was beneficial to the trust, and the amount of reasonable fees. The court also has broad discretion to decide this issue.
Why is it important to hire an attorney for a trust dispute?
Trust disputes often involve technical legal issues and relationship challenges. If you want to preserve family relationships, it may be useful to have an attorney present the arguments rather than you arguing directly with your family.
We have the knowledge and experience to handle trust disputes. We take our role seriously and carefully develop a strategy with you. Do not hesitate to contact us if:
- You are a trustee and there are problems with beneficiaries, assets, or trust interpretation.
- You are a trust beneficiary and there are problems with how the trust is being managed or distributed.
- You are a trust beneficiary having problems with other beneficiaries.
- You are a creditor, business, or individual owed money by a trust.