Estate legal actions may change this year

| Feb 22, 2018 | Estate Administration & Probate |

Usually, estate administration is ignored until there is a fight over a Michigan will or inheritance. But, there are some trends indicating that this legal area is changing, and estate and probate litigation may grow in 2018.

First, America is growing older, more elderly people are dying each year and the potential for more disputes over estates is increasing. And, more money is being transferred to beneficiaries by inheritance than any other time in history.

The increase in litigation that has impacted other legal matters also affects estates and trusts. There are many new laws that create new areas as disputes. These include laws governing the use of trust protectors, the transfer of trust assets and the adoption of the Uniform Trust Code by almost two-thirds of the states.

Like other business and employment contracts, mandatory arbitration clauses are being inserted in wills and trusts. These make beneficiaries participate in binding arbitration for resolving disputes. These may lead to more litigation as trustees and executors seek to enforce them when disputes arise.

Likewise, opponents of mandatory arbitration in these disputes will argue that they are inequitable because these bind beneficiaries who did not consent to their terms, disregard public policy and violate the Uniform Trust Code and other state laws. These clauses have also been criticized as increasing the legal and financial costs of disadvantage beneficiaries and may even lower the ramifications of misconduct by fiduciaries.

There was also an expansion of no contest clauses, which traditionally governed a direct challenge to a will or trust. Over the last 10 years, these clauses have become broader and cover other matters such as contests to beneficiary or joint-account designations, claims of breach of fiduciary duty by a trustee or executor, objections to designations of joint accounts and contesting actions that hamper trust or estate administration.

Opponents may claim that these clauses restrict a beneficiary’s capacity to keep fiduciaries accountable and violate public policy, equity, the Uniform Trust Code and other legal principles. Litigation may grow with the increased scope and creativity of these clauses.

An attorney can help testators prepare for these changes and assist an heir involved in estates and trust lawsuits over these issues. A lawyer may help assure that estate documents are properly drafted to diminish the likelihood of disputes.

Source: Financial Advisor, “4 estate litigation predictions for 2018,” Will Sleeth, Feb. 14, 2018