This year, Gaslowitz Frankel partners Craig Frankel and LeAnne Gilbert succeeded on a contested petition to modify an irrevocable trust.
Trust disputes tend to surround either how the trust itself was created, or how the trust has been administered. The below case study demonstrates how litigation can be used to modify a trust.
What Are Some Common Reasons for Trust Disputes?
Trust disputes commonly center around the creation or administration of the trust — namely, whether the grantor was coerced or otherwise not in the right state of mind when creating the trust, or whether the trustee is improperly managing the trust through a breach of fiduciary duty.
Trusts can be revocable or irrevocable. Revocable trusts are easier to modify in the case of unforeseen circumstances, but some grantors create irrevocable trusts for their own protection. Irrevocable trusts are more difficult to modify, but beneficiaries can petition the court for a trust modification under certain circumstances, including if modification is necessary due to circumstances not anticipated by the grantor, or because the trust cannot be reliably administered under the current conditions.
Irrevocable Trust Dispute Case Study
Gaslowitz Frankel partners Craig Frankel and LeAnne Gilbert successfully obtained an order granting their clients’ petition to modify an irrevocable trust by adding a provision to permit the beneficiaries to remove the trustee and replace him with a corporate trustee.
The petitioners had previously sought to remove the trustee in an arbitration action alleging that the trustee had breached his fiduciary obligations to the beneficiaries. The arbitrator awarded damages to the petitioners but opted not to remove the trustee.
Several years later, the trustee and beneficiaries were not communicating and the trust was not functioning as the beneficiaries believed their deceased father, the trust grantor, intended. Rather than suing the trustee for breach of duty and seeking his removal a second time, Craig and LeAnne counseled the clients to utilize Georgia’s trust modification statute, Ga. Code § 53-12-61(c), which requires a court to grant a petition to modify a trust if: (1) the grantor is deceased, (2) all of the beneficiaries consent, and (3) the Court finds that the proposed modification is not inconsistent with any material purpose of the trust.
While removing a trustee for cause usually requires a showing that the trustee has breached his duties, the modification statute allows beneficiaries to modify a trust to provide them with a no-fault mechanism for removing and replacing a trustee.
In this case, the trustee objected to the modification, arguing that his service as trustee was a material purpose of the trust. Following an evidentiary hearing, the trial court concluded that there was no indication that having a corporate trustee manage the trust assets would be inconsistent with the trust’s stated purposes and granted the petition to modify. The trustee filed a notice of appeal less than a day after the trial court issued its decision, which he withdrew several weeks later, making the trial court’s order final.
Premier Fiduciary Litigators for the State of Georgia
Trust disputes can occur in many situations, including when the trustee is self-dealing or failing to provide accountings. If you suspect that you are a victim of a breach of fiduciary duties, Gaslowitz Frankel has attorneys with the right knowledge and experience for your case.
Gaslowitz Frankel LLC is the Southeast’s premier fiduciary litigation law firm. Our legal team specializes in all aspects of fiduciary disputes with over 30 years of experience representing individuals, executors, trustees, and more in complex fiduciary disputes involving wills, estates, and trusts.
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