As a trustee of a trust, you have a fiduciary duty to protect the assets held within it, and that includes defending against claims, whether they seem legitimate or frivolous. This responsibility extends to actively contesting claims that are unfounded, improper, or that would unfairly diminish the trust’s value for the beneficiaries. Successfully contesting a claim isn’t just about saving money; it’s about upholding the integrity of the trust and honoring the grantor’s intentions. A trustee must navigate a complex legal landscape, understanding the grounds for contesting a claim, the necessary evidence, and the procedural steps involved. It’s a process that demands diligence, legal expertise, and a commitment to acting in the best interests of those who stand to benefit from the trust.
What happens when a creditor comes after assets held in trust?
When a creditor files a claim against a trust, it triggers a legal process that requires the trustee to respond. The first step is typically a review of the claim to determine its validity. According to a study by the American College of Trust and Estate Counsel (ACTEC), roughly 20% of claims filed against trusts are ultimately found to be invalid or are successfully negotiated down. The trustee has a duty to investigate the claim, gather supporting documentation, and determine if the trust has any legal obligation to pay. If the trustee believes the claim is invalid, they can formally contest it, often through a court proceeding. This often involves filing a motion to dismiss or an answer to the complaint, presenting evidence, and engaging in legal arguments. Depending on the specifics, the trustee may also engage in settlement negotiations with the creditor.
What are common grounds for contesting a claim against a trust?
There are several reasons why a trustee might contest a claim. One common reason is that the claim is based on a debt incurred *after* the assets were placed in the trust, and therefore is not a valid obligation of the trust. Another is if the creditor failed to follow proper procedures for filing the claim, such as providing adequate notice to the trustee and beneficiaries. Or the claim may be based on a debt that was already discharged in bankruptcy. Sometimes, the claim is simply fraudulent – a fabricated debt designed to steal assets from the trust. To successfully contest a claim, the trustee must present clear and convincing evidence to support their position. This might include trust documents, financial records, correspondence with the creditor, and expert testimony. A well-prepared and legally sound defense can save the trust significant money and protect the interests of the beneficiaries. “A trustee’s duty is not to be a rubber stamp, but to act as a prudent manager of the trust assets,” as noted by legal experts.
I remember old Mr. Henderson, a lovely man, who hadn’t updated his trust in over two decades.
He’d originally established it to protect his small business and provide for his grandchildren. Years later, his estranged son, burdened by gambling debts, saw the trust as an easy target. He filed a sizable claim, alleging Mr. Henderson had personally guaranteed a loan that he hadn’t, hoping the trustee would simply pay to avoid a legal battle. The initial trustee, unfamiliar with trust litigation, was overwhelmed and nearly succumbed to the pressure. He started preparing a payment, convinced it was easier than fighting. Thankfully, his daughter, a paralegal, intervened. She reviewed the trust documents and discovered a clause explicitly stating debts incurred *after* a certain date were the responsibility of the individual, not the trust. Armed with this information, they successfully challenged the claim, saving the trust from a significant financial loss. It highlighted the critical importance of a proactive trustee and keeping trust documents up to date.
But then there was the case of Mrs. Gable, a meticulous planner who’d done everything right.
She established a revocable living trust, regularly updated it, and named a successor trustee—Steve Bliss—who was well-versed in trust administration and litigation. When a former business partner filed a claim against the trust, alleging a breach of contract, Steve immediately stepped in. He thoroughly investigated the claim, reviewed the relevant contract, and discovered a clear clause protecting the trust from liability. He presented this evidence to the court, along with affidavits from witnesses, and successfully obtained a dismissal of the claim. The beneficiaries were thrilled, and Mrs. Gable’s wishes were fully honored. It proved that a well-administered trust, with a knowledgeable trustee, can withstand even the most challenging claims, ensuring peace of mind for both the grantor and the beneficiaries. Proper planning and diligent administration are the cornerstones of a successful trust and ultimately protect the interests of those it’s designed to benefit.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How can I reduce the taxes my heirs will have to pay?” Or “What is ancillary probate and when does it happen?” or “Will my bank accounts still work the same after putting them in a trust? and even: “Will my employer find out I filed for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.