A trust is an arrangement where a third party holds assets on behalf of another. Parents and grandparents often set up trusts to transfer money to their children with reduced tax burdens and court fees, among other benefits. Trusts are an essential part of estate planning and estate administration, which can provide asset protection, help with estate taxes, and distribute assets to the intended recipient.
Unfortunately, disputes between parties with interests in these assets often arise, requiring litigation. If you have a trust that someone is challenging or wish to challenge a trust and need to litigate, learn how the Virginia Beach estate and trust litigation lawyers at Midgett Preti Olansen can help.
There are many different types of trusts, each with its purposes, benefits, and drawbacks. These include:
Revocable living trusts can be changed or ended at any time during the life of the person who created the trust, known as the settlor, grantor, or trustor. The most significant advantage to placing your estate into a revocable living trust is avoiding probate, maintaining privacy, and minimizing estate taxes. In Virginia, the probate process applies to anyone who dies owning property in their individual name. This process is costly, time-consuming, and public. Transferring assets into a revocable living trust can save your beneficiaries time and money and keep the administration of your estate private.
Revocable living trusts can also offer a way to manage assets during a person’s life if they cannot manage their own affairs, such as if they become incapacitated for medical reasons. Finally, revocable living trusts can provide a means to manage assets for minor or spendthrift children if the parents pass away, specifying at which age and under what circumstances the children come into their full inheritance.
Irrevocable trusts are permanent arrangements that cannot be altered under normal circumstances. Irrevocable trusts are often used as a tool to minimize federal and state estate tax liability. As such, these trusts are typically used by people with significant assets.
A testamentary trust stands out from other types of trusts because it is created as part of the last will and testament of the property owner. Because they are created as part of a will, such trusts are subject to court oversight. They become effective when the settlor dies and cannot be used to manage assets before that time. They are the opposite of revocable living trusts in that their administration is generally prolonged, expensive, and part of the legal system’s public record.
We all love our pets. They are as much a part of our family as our human relatives. People often wish to ensure their pets are protected and cared for in their estate administration. A pet trust allows the settlor to name a caretaker for their pet and set aside money to pay for the animal’s care during their life. Any type of animal can be cared for by a pet trust, so long as it is a legal pet.
Charitable trusts are designed to provide for your heirs and to provide for a charitable cause or help benefit a charitable organization. These trusts have a wide range of benefits. Some support the arts, while others support healthcare organizations or research into specific health conditions. Some aid in educational or cultural pursuits, while others support religious institutions. Those wishing to create a charitable trust are advised to seek legal advice from a Virginia Beach law firm with practice areas in complex estate planning.
A business trust entitles a trustee to hold, manage, invest, control, administer, or operate a business on behalf of those who may become entitled to beneficial interests in the trust property. For example, a business trust may be established for the business succession of a company to the decedent’s minor children when they reach the age of majority.
A qualified personal residence trust (QPRT) enables the settlor to give away real estate, such as a primary home or vacation home, at a significant discount from its fair market value. At the same time, this trust freezes the home’s tax value while the settlor continues to live in residence. The settlor transfers the real estate title into the trust, which provides the right to continue to live there for a specific number of years.
Following the expiration of the trust term, the real estate in the QPRT passes to the trust’s beneficiaries without any additional estate or gift taxes. If the settlor continues to live there after the specified period ends, they must pay rent to the beneficiary at fair market value, or the residence may have to be accounted for as part of their estate.
Special needs trusts are essential to those with family members or loved ones who cannot manage their own affairs, allowing for the care of individuals with disabilities or special needs. These are helpful because they permit those individuals to continue receiving government benefits while allowing them to gain their rightful inheritance.
Typically, if a person receiving government benefits (such as Medicaid or Supplemental Security Income) for special needs receives an inheritance, the inherited assets could disqualify them from public benefits. Special needs trusts allow the trustee to receive the beneficiary’s inheritance, and spend the inheritance on extra expenses above and beyond what government benefits provide for, without jeopardizing the government benefits upon which the beneficiary relies.
If you think a trust is a good idea for you and your family, it is important to have advice from qualified, experienced Virginia Beach estate and trust lawyers. At Midgett Preti Olansen, we have years of experience in both trust and estate litigation and trust administration under Virginia law. Call our law office at 757-687-8888 or use our contact form to speak with a member of our team today.
A fiduciary is an individual or entity who handles the obligations and duties of managing someone else’s assets. This person’s rights and duties are established by the courts or through another legal instrument such as a trust or will. The executor of a will or someone granted conservatorship over another person are examples of fiduciaries.
A fiduciary is someone considered to have a fiduciary or legal duty to properly manage the assets in their charge for the benefit of a beneficiary. This could refer to the beneficiaries of an estate or trust or to an incapacitated or special needs person otherwise unable to manage their own affairs. Fiduciaries are subject to some of the highest standards of conduct under the law and can be subject to harsh penalties for even minor infractions.
Fiduciaries may also commence litigation on behalf of those to whom they have a duty. Trustees, for example, may wish to seek guidance from the courts related to the terms and administration of their trust due to a difficult beneficiary or unclear terms. Executors of a will may need help with unclear or confusing terms drafted by the decedent.
Estate administration issues may involve the rights and responsibilities of personal representatives, judicial modifications, will contests, enforcement of beneficiary rights, or termination of trusts. Fiduciaries have deep rights and responsibilities in these matters, and the court proceedings and legal matters surrounding them differ drastically from other forms of litigation. This is why it is so important to retain legal services from a Virginia Beach law group experienced in all the legal issues surrounding estate law, including business succession, guardianships, medical directives, powers of attorney, and more.
Midgett Preti Olansen is a law firm focused on estate, corporate, fiduciary, and tax matters. We are located in Virginia Beach but serve the entire Hampton Roads area, from Suffolk to Newport News, Norfolk, Portsmouth, and beyond. Our experienced attorneys provide invaluable experience in litigating these matters to give you the peace of mind you need.
Every trust is unique, and your estate planning and trust litigation attorney can help you meet all the steps so that yours is created legally and properly. However, the general steps common to most trusts under Virginia Law are as follows.
You must be of sound mind. This means you have the mental capacity, knowledge, comprehension, and capability to make decisions related to managing the assets you wish to assign to the trust.
The intent to create a trust goes hand-in-hand with having a sound mind. You must understand what you are doing and consciously intend to create a trust. You must not confuse a trust with some other form of asset management.
You must name someone or something as the person or entity that receives the benefits of the trust. This entity must also be capable of receiving trust benefits. It can be a person, a business, a charity, or even an animal. The beneficiary must be identifiable now or in the future to be considered definite. Future beneficiaries may also be limited by state rules against perpetuity, which limit the length of time that you can control assets through your will.
A trustee has a fiduciary duty toward the beneficiary. The same person cannot be both the sole trustee of a trust and the sole beneficiary.
The trustee may be granted the power to select a beneficiary from an indefinite class, meaning they can choose who gains the benefits of the trust aside from those who would normally gain the property. If the trustee does not exercise this power within some reasonable time, they lose the power, and the benefits of the trust pass to those who would otherwise have taken the property.
Creating a trust can be a complicated process. Your Virginia Beach trusts and estate litigation attorney will be able to guide you through the complex process of creating a trust to protect your assets so that your intended beneficiaries receive them as you intend.
Yes, a trust can be disputed. Disagreements regarding how a trust is administered or whether the trust is valid often come up when an heir is unhappy with how they receive their inheritance. Beneficiaries may challenge the trust to try to terminate it or amend it to alter how the assets of the trust are divided and distributed among existing heirs.
Such disputes can be devastating for trustees and beneficiaries if they are allowed to proceed. They can end in broken relationships, broken homes, and financial disasters. This is why trust litigation attorneys are so important.
There is a wide range of reasons why trusts are disputed. Most commonly, however, disputes come down to mismanagement of the trust, misunderstandings of trust instruction, disinheritance, objections about the capacity of the trust maker to establish the trust in the first place, foul play (undue influence or duress), or accusations of fraud and forgery.
If heirs feel that the trustee is not living up to their fiduciary duties, they may challenge the trustee’s control over the property. This often happens when trusts have multiple trustees who challenge each other’s level of control. However, it can also occur if the beneficiary believes that a single trustee is mismanaging the property for their own benefit. Such accusations are serious, and you should always seek help from a trust litigation attorney if they arise.
No matter how well-structured a trust is, beneficiaries and trustees may not understand the instructions given. These can lead to rifts between parties due to a lack of communication. The right Virginia Beach trust lawyer can help draft clear instructions and reaffirm that the trustee is a neutral third party who will take their fiduciary responsibility seriously.
Disinheritance, or removing a loved one or family member from a will or estate, is a difficult issue, even if it is for a good reason. When this happens, those who have been disinherited may challenge the estate or trust to try to claim what they see as their fair share of the property.
Sometimes, heirs or would-be beneficiaries may challenge a trust based on the knowledge and awareness of the settlor. They could claim that the settlor was not of sound mind when they created the trust or did not understand the family dynamics or finances involved.
Foul play (undue influence or duress) refers to a trust that was formed with a nefarious agenda. Heirs may feel that the settlor was beguiled, coerced, or otherwise manipulated into creating the trust. They could accuse the beneficiary of pushing the settlor into creating the trust to benefit them. Trust dispute lawyers are brought in to investigate such accusations, which can be quite serious.
Trustees who engage in fraud or forgery can lead to trust disputes. Fraud and forgery by a trustee include things such as a trustee writing themselves checks out of the trust, forging records to account for money that is not going where it should, or engaging in other acts in violation of their duty to protect the settlor’s assets, can lead to trust disputes. In some serious cases, such issues can also lead to criminal charges.
If you are involved in a trust dispute in Virginia, it is vital to consult with a trust litigation lawyer immediately. Attempting to resolve such complex and contentious issues alone can lead to ruined relationships, destroyed reputations, and financial disaster for beneficiaries and trustees alike.
Our experienced Virginia Beach estate planning lawyers know how estate law, business law, family law, and other aspects of the legal system interact. We know how to draft clear instructions for how trusts are supposed to work. We can also help to remedy trust disputes by working with beneficiaries, engaging in alternative dispute resolution such as bringing in a neutral third party to resolve disputes, or even, if necessary, taking the issue to court.
If you live in Virginia Beach, Norfolk, Chesapeake, or the greater Hampton Roads region and need help with trusts, wills, estate planning, or other legal issues, Midgett Preti Olansen is here to help. We are a boutique estate planning, corporate, and tax law firm with five attorneys selected to Virginia Super Lawyers and Best Lawyers in America, including the Norfolk Trusts and Estates Litigation Lawyer of the Year in 2023, 2019, 2017, 2015, and 2013. We pride ourselves on building long-lasting, trusting client relationships.
We bring decades of combined experience to the table in what we do. We are ready to handle your trust and estate litigation needs. Call us at 757-687-8888 to speak with our office manager, or use our contact form to get in touch today.