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.
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.
