Can You Sue a Trust, Whether as a Beneficiary or a Creditor

Asking can you sue a trust can mean several things. You can be a beneficiary suing a trust to pay you more or a person who was left out of the trust. You can be a creditor suing claiming that the trust was created to preclude you from collecting what is due to you. You can be a person who is trying to sue a trust for a number of particular reasons and a based on a number of particular grounds.

Behind every trust, there are people. A trust can be sued, but because it is not a separate legal entity that can respond to actions on its own, the respondent will be the trustee.

Beneficiaries or people who are left out can sue a trust

When a beneficiary or a potential beneficiary is suing a trust, we generally categorize the lawsuit into one of  two categories: (a) cases pertaining to the trust and its provisions; and (b) cases pertaining to the trustee’s actions. Therefore, a trustee can be sued individually and/or in his representative capacity, as trustee of the trust.

Examples of cases pertaining to the trust and its provisions could be a trust contest involving the capacity of a settlor/grantor to establish a trust, or a question involving the validity of a trust provision or the validity of an asset’s inclusion into the trust. These are actions brought against the trustee on a representative capacity as trustee of the trust.

Breach of fiduciary duty

In cases of mismanagement of trust assets, self-dealing, non-distribution of interests or assets, and breaches of fiduciary duties, these claims can be filed both against the trustee in his representative capacity, and individually. Generally, the trustee has discretion in managing the trust assets, and for this reason, any suit against his management is a suit against the trust. However, if one has evidence that the trustee engaged in self-dealing or clearly mismanaged the trust assets, the trustee can be personally liable for his inappropriate actions and his attorney’s fees will not be covered by the trust assets.

Creditors can sue a trust

A creditor may question the inclusion of an asset in an irrevocable trust, claiming that such inclusion was made in fraud of creditors because the remaining assets are insufficient to pay the debts. This suit should generally be filed against the trustee. However, if it is a testamentary trust that was established through will, depending on the state the trust was established, the suit might need to be filed against the estate. It is best to consult with an experienced trust and estates litigation lawyer to ensure that your suit is filed properly.

Legal representation

If you are a distributee who has been left out of a trust, want to contest the validity of the trust’s provisions, or want to sue the trust for any matter, please consult a New York estates lawyer immediately to consult about your rights. We, at the Law Offices of Albert Goodwin, are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].