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.
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.
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.
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.