Trust and estate administration cases contain many landmines for disputes among the parties involved. Emotions can run high in these cases as long-standing family dysfunction previously an undercurrent, rises to the surface. If you’re the fiduciary, you worry about properly discharging your obligations under the governing document, statutes and case law and being paid and released for your job performance. If you’re a beneficiary, you worry the fiduciary isn’t investing or administering the assets properly, that you’re not being kept informed of administration happenings or that another beneficiary is receiving an unfair advantage or perhaps shouldn’t be a beneficiary at all. These common worries can quickly deteriorate into an atmosphere of distrust and paranoia. Participants are more likely to litigate when they lack confidence in the administration process. Litigation often isn’t the answer, though. There are no guarantees of outcome in litigation. Additionally, it’s expensive to litigate. The process is protracted and often emotionally all-encompassing for its participants. While litigation can’t always be avoided, there are several strategies for mitigating the likelihood that an administration will devolve into a litigated case.
Get to Know the Parties
Create a chart of the parties involved and their counsel, if any. Also, create a family tree for each of the parties involved that includes spouses, children and any other influencers important in the case. Once you’ve identified the party and those in their respective spheres of influence, find out what you can about their general personality traits and what may be motivating them in the case. Is it a sibling rivalry that’s in play? Is there a history of emotional or physical abuse? Is this a multiple marriage in which the surviving spouse isn’t the parent of the decedent’s surviving children? If you can gather even basic information to put together a general story of how the family functioned prior to the event causing the trust or estate administration, it can be helpful to determine what’s motivating the players and guide you for how to resolve the issues. While money is often a clear motivator for parties, don’t underestimate the importance of control to the parties. Money and control are often top of the list issues in these types of cases. Discovering the other more nuanced motivations will also help you see pathways for resolution that are less obvious.
Create a Timeline
Every case has a history. While you’re doing your background investigations on the parties, it can be helpful to create a timeline of important events. You’ll likely update this tool frequently as the administration progresses. There will be key dates or time frames that give shape to the case. Did the decedent have a stroke on a certain date? Or, a diagnosis of dementia? Did a sibling take over financial management on a date certain or over a time period? Were gifts made on one date but not discovered until a much later date? A timeline is critical to seeing how the family story and the present conflict unfolded. It can also help you identify issues you need to address for liability protection. Whether you eventually end up mediating or litigating the case, it will also give you a good foundation and bring clarity to your necessary offensive and defensive positions.
Consider Opponent’s Perspective
We often get absorbed in our own positions and dismiss outright the other side as irrational and misguided. It can be a helpful exercise, though, to assess the case from the opponent party’s perspective. This can bring insight for future strategic decisions and what efforts can be productive to tone down the conflict. Along these lines, it’s helpful to remember to identify and address the issues while avoiding personal attacks on the opponent party. Administration cases are sufficiently personal by nature such that personal attacks on an opponent serve only to inflame them. An opponent who feels humiliated or disrespected often will further entrench themself in their position. If the objective is to resolve issues, then some common ground must be found, and you need to engage the adversary productively to find it.
Create a dialogue with the opposing party, establish some basic level of trust with them and then build on this trust. While the easiest time to start a dialogue with the other side is when you’re new to the case, you can use this technique at any time. It’s most naturally implemented when the other side wants something from you, like information or documentation. You can say you’ll provide the information at a certain time or on a certain event and then follow through as promised. If you can establish that you’ll carry through with whatever was agreed, it can help to create an environment of trust, even if the trust level is quite fragile initially. You can then build on this trust and refer to these instances when negotiations are strained. Resolution is more likely to transpire when there’s some level of trust than when two parties have no shared trust whatsoever. Resolution can happen incrementally, bit by bit. It can be helpful to start with small issues, resolve those and then work your way into the larger, more complex issues.
Be as transparent as you can, especially when you’re the fiduciary, but safeguard your attorney-client privilege. Have you ever worried about something, lacked the necessary information to put your mind at ease and filled your thoughts with the worst possible outcomes as a result? It’s human nature to consider the worst scenario when there are gaps in information. In estate and trust administration, a beneficiary may erroneously think a fiduciary has committed some wrongdoing only because the fiduciary hasn’t been transparent in a manner that the beneficiary perceives as timely and complete. This perception may have little to do with what’s required under a governing statute or case law. A fiduciary may have the obligation to account to the beneficiary on an annual basis, but it can be a long time in between accountings in the mind of a beneficiary. It can go a long way with a beneficiary if the fiduciary proactively shares information with the beneficiary ahead of schedule. This doesn’t mean that the fiduciary should waive its attorney-client privilege and disclose confidential communications or attorney work product. The fiduciary should confer with counsel on best practices and what information is appropriate for disclosure. Keeping beneficiaries informed along the way with regular, periodic updates can build trust. This trust can be drawn on when something unanticipated transpires during an administration, such as a sudden market dip or unanticipated expense. When a fiduciary habitually goes above and beyond what’s minimally required, over time it will cultivate in the beneficiary a sense of shared objective and peace of mind. Beneficiaries who feel good about their trust administration are far less likely to bring litigation against their fiduciaries.
Finally, mediate early to narrow the issues and be open to a series of mediations. It can seem an overwhelming task to address all the issues in a case when the issues are numerous, complex and interrelated. Nevertheless, if the issues are fairly evaluated, the parties may find the issues can be categorized in such a way that some can be addressed ahead of others. In such a case, it can be helpful to conduct an early mediation in which to address the threshold issues and the smaller side issues in isolation. This type of early mediation can provide a framework for tackling the ongoing negotiations for the more complex, interrelated issues. As negotiations progress, the case may reach a natural point where a second mediation can result in the resolution of additional issues. In large, complex cases, it may take a series of mediations to completely conclude all issues. Parties can control their outcomes more directly through a mediated approach than a litigated approach. While a series of mediations may take some time, litigation is almost always a protracted process and less likely to conclude sooner than a mediated resolution. Additionally, in mediation, the parties are more directly empowered to control their outcome and address not just the large issues but also ancillary issues that may be of a more personal nature and not resolvable in a litigated context.
Chart an Alternative Course
When a trust or estate administration case ends up in litigation, there’s been a failure of some kind along the way. No administration is perfect, and perspectives of what’s an appropriate administrative course can differ depending on whether a party is a fiduciary, beneficiary or third party with some other involvement in the administration. The relationship history of the parties in these cases is critically important as it drives the behavior, and the behavior drives the conflict. It takes patience and an ability to look at a case with a fresh perspective to chart an alternative course to a litigated path. While litigation may be inevitable in some cases, it’s a worthwhile exercise to first think about whether additional strategies can be considered to reset the course of the administration and stave off litigation.