Does a Trust Beneficiary Have Standing in a Suit to Determine a Trust Property?

By Maggie Lourdes

All trusts have trustees and beneficiaries. A trustee's job is to manage, hold and distribute trust assets in favor of beneficiaries. Trustees have a legal right, called standing, to make decisions in lawsuits to determine, protect and oversee trust property interests. Generally, trustees, not beneficiaries, are the named plaintiffs or defendants in lawsuits for trusts. However, under certain circumstances, beneficiaries also have standing to directly participate in trust litigation.

Trustee's Standing

Legal standing refers to a person or entity's right to bring or defend a lawsuit. Beneficiaries do not generally play a role in managing trust litigation. Beneficiaries are recipients of whatever a trust's terms give to them. The law charges the trustee with the duty to protect trust property from harm. This includes determining a trust's rights in any property. Although a beneficiary has an interest in trust property, her role is not to be the first line of defense to protect trust property.

Trustee's Neglect

A beneficiary may possess standing in a lawsuit if the trustee fails to act for the trust. For example, if a trustee ignores a lawsuit that will determine a trust's property rights, a court may recognize a beneficiary as having standing in the lawsuit to protect her interest in the trust's potential property. In essence, courts will not allow beneficiaries to suffer because a trustee fails to assert his legal standing for the trust. Courts generally allow beneficiaries to act independently if a trustee is derelict in his duties.

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Conflict of Interest

Beneficiaries also generally have standing in trust lawsuits if a trustee has a conflict of interest. For example, a trustee is the plaintiff for the ABC Trust to determine whether the trust owns an apartment complex. However, a defendant, who also claims ownership in the complex, is a business partner of the trustee. Because of the conflict of interest, a beneficiary may have standing to intervene in the lawsuit to protect her own interests. A trustee always has a duty of loyalty to beneficiaries. Any conflict of interest, fraud or self-dealing by a trustee generally confers standing to a beneficiary to intervene in trust litigation.

Replacing Trustees

In cases where a beneficiary may assert standing to determine a trust's property interests, the court may allow the beneficiary to remain actively part of the litigation through its conclusion. A court may also remove and replace a trustee who is failing his duties to the trust. A new trustee who asserts her standing to zealously represent the trust can return the beneficiaries to their traditional roles -- namely, enjoying the benefits of a properly managed trust, rather than spending time and money acting as the trust's protector.

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Statute of Limitations in Trust Litigation in Texas

A trust is a legal entity created by someone, known as a settlor or donor, who deposits property into a trust, held and managed by a trustee, for the benefit of the trust beneficiaries. On occasion, a beneficiary may take issue with the terms of the trust or may believe the trustee is mismanaging the trust's assets. The question then becomes — what legal options are available to the beneficiary to seek redress, and how long does the beneficiary have to exercise those options? The short answer under Texas law is that the beneficiary can bring suit in a court of law within four years or, in some cases, two years.

Removing a Successor Trustee

A successor trustee is a person or entity who administers a trust after its original trustee dies or is incapacitated. In many cases, the trust grantor who created the trust serves as the original trustee; the successor trustee takes over the trust when the grantor dies. If the beneficiaries do not approve of the actions of the successor trustee, they may attempt to have him removed.

Roles of a Trustee

A trustee manages property for beneficiaries according to the terms of a trust. Generally, a trustee is appointed by a person, called a grantor or settlor, who establishes and funds the trust. The settlor transfers legal title of assets to the trustee so she may manage and distribute them for named beneficiaries. A trustee's role includes responsibly and honestly handling trust assets and ensuring the purpose of the trust is carried out.

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