Probate & Trust Law Section Conference Manual ... - Minnesota CLE

The Beauty and Burden of Trusts
It is widely recognized that we are entering the largest inter-generational transfer of
wealth in this nation’s history. While much of that wealth will undoubtedly be distributed
outright to beneficiaries and younger generations, a very significant amount will be
transferred through the use of trusts and other estate planning entities.
There is perhaps no entity more recognized and, in many situations, more needed, yet
less understood and more confusing than the trust, a basic concept to nearly all estate
planning attorneys, but often foreign to grantors, beneficiaries and, in many cases, even
those that are named to serve as trustees. What began with a fairly simple definition of
a trust as an entity where its creator (the grantor) appoints one party (the trustee) to
hold property for the benefit of another party (the beneficiary) has now morphed into a
complex structure with many additional interested parties named to serve in a variety of
newly created roles. Indeed, it could be argued that modern trust law, while trying to
build in flexibility with tools such as bifurcation, directed trusts, trust protectors and
decanting, has significantly complicated the understanding of trusts. Some would argue
that the result has been more confusion and increased adversity among trust parties,
consequently leading to an exponential growth in trust litigation. To avoid these
negative repercussions, professionals in this field, whether it be attorneys, professional
trustees or other financial advisers, should take the time to educate their clients on the
purpose of the trust and the specific roles of each party integral to the operation of the
trust. This may help to establish reasonable expectations from inception and eliminate
or, at a minimum, mitigate disputes, among the parties and minimize potential fiduciary
liability. This outline is not designed to be an in-depth white paper on all the issues
arising over the life of a trust, but rather as an overview to highlight some of the more
common contentious issues and strategies that might be employed to address them.
Factors Leading to Disputes
The following list is by no means comprehensive, but these are some of the more
common factors contributing to disputes involving trusts and the parties thereto:
--an aging baby-boomer population, where advanced medical technologies have
increased longevity, and with along with it, a widened exposure to dementia and
potential elder abuse, resulting in more claims of incapacity and undue influence;
--the evolving nature of the family unit: more second marriages with children and stepchildren
who often have competing interests;
--more financial distress on the part of individual beneficiaries: as a result of the Great
Recession, the housing meltdown, increased unemployment, chemical dependency and
other financial stressors;
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