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Trusts require some administrative legwork

On Behalf of | Dec 13, 2021 | Trusts

Many New Yorkers have probably heard that one of the advantages of using a trust as an estate planning device is that it avoids probate.

This is true in that property which pass through a trust are not subject to a court-approved process. A trust also continues to operate after the death of the person who created it. There is no need for a will in order to distribute property in well-planned trust document.

However, trusts still require many administrative steps. A trustee will have to follow the terms of the trust document exactly. The trustee will also have to make sure to comply with any tax requirements and other laws when administering the trust.

As what the law calls a fiduciary, he or she must always act in the best interest of the trust and those who ultimately benefit from it. Sometimes, this is not as easy as it may seem.

For example, legal doctrines like the prudent investor rule require a trustee to grow the assets in the trust in a reasonable manner. Simply sitting on the trust’s assets will ordinarily not be an acceptable option.

Disputes about the trust can lead to litigation

Just because a trust does not go through probate, this does not mean that there will never be legal disputes over a trust.

As is the case with a will, a person can challenge a trust if there is reason to believe that a person created a trust while legally incompetent or while under fraud or duress or while experiencing what the law calls undue influence. There may be other grounds for challenging a trust as well.

A trustee who is facing a legal challenge to the trust will like one what professional advice and support when responding. Likewise, a person who feels like he or she should challenge a trust document should evaluate his or her legal options carefully.