Trust disputes in Arizona may take many forms. A trust is a document whereby an individual (the trustor or settlor) transfers or designates certain property to be transferred to someone (the trustee). The trustee holds the property for the benefit of the trustor or someone else (the beneficiary). It is one way to avoid probate. Property transferred to a trust generally passes to the named beneficiaries outside of probate. Even though probate may be avoided, trust administration can be involved and complex.
Protections for Beneficiaries
Beneficiaries are entitled to certain protections under trust law. Watch this video to learn more:
For Arizona trusts, the trustee is required to follow the provisions of the trust and the Arizona Trust Code (beginning with Section 14-10101 of the Arizona Revised Statutes). For example, the trustee must hold, administer and disburse the trust property or pay out the trust money to the beneficiaries as directed in the trust. Generally, the trustee must also provide financial reports (accountings) and other information concerning the trust to the beneficiaries.
The trustee’s fiduciary duties to the beneficiaries are set forth in the Arizona Trust Code. In general, the trustee is required to “administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries and in accordance with this chapter.” Arizona Trust Code, A.R.S. § 14-10801. The trustee’s specific duties include, for example:
- Loyalty – The trustee must generally administer the trust solely to advance the interests of the beneficiaries.
- Impartiality – Where there are two or more beneficiaries, the trustee must typically administer the trust evenhandedly and fairly taking into consideration the interests of all beneficiaries.
- Prudent administration – The trustee must act reasonably and efficiently, and exercise due care, skill and caution.
- Keep records – The trustee must keep trust property separate, to the extent possible, and keep adequate records to identify and account for trust property.
- Collect trust property – The trustee must take possession and control over trust property.
- Inform and report to the beneficiaries – A trustee must generally “keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless the trustee determines that it is unreasonable under the circumstances to do so, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust.” A.R.S. § 14-10813.
These duties may sometimes be expanded or reduced by the trust declaration or agreement. If the trustee does not abide by his/her obligations, he/she may be liable for breach of trust or breach of fiduciary duty and may be removed as trustee.
Trustee and Personal Representative Defense
Sometimes, trustees are improperly accused of wrongdoing. Watch this video to learn more about trustee defense:
Types of Arizona Trust Disputes
Trust disputes or disagreements may arise regarding, for example, the following:
- Whether the trustor had legal capacity (was of sound mind) to create the trust
- Whether the trustor was subjected to undue influence in creating the trust
- Whether the trust was affected by fraud, or duress
- Whether the signature on the trust was forged
- Whether the trustee has provided correct and full accountings of the trust’s assets, income, and disbursements
- Whether the trustee has prudently invested and administered the trust’s assets
- Whether the trustee has advanced the interests of certain beneficiaries to the harm of others
- Whether certain assets are subject to creditor claims (For example, some life insurance, is not subject to claims of creditors.)
Contact Our Experienced Arizona Trust Dispute, Litigation and Administration Attorneys
If you have a dispute involving a trust or simply have questions involving trust administration, we may be able to help you. Our experienced trust, estate and contract litigation lawyers will provide timely, compassionate, aggressive, and tenacious representation to pursue or defend virtually all types of trust claims. Call or email us if you have any questions or need experienced legal guidance in any type of Arizona trust dispute.