Trust litigation encompasses the full range of legal disputes that arise from the creation, administration, interpretation, and termination of trusts. Unlike will contests, which focus on the validity of a single document, trust litigation can involve dozens of different types of claims and proceedings — from challenges to the trust instrument itself, to disputes over how a trustee has managed trust assets, to actions seeking to modify or terminate a trust that no longer serves its intended purpose.

Mississippi adopted the Uniform Trust Code (UTC), which provides a statutory framework for trust creation, administration, and litigation. However, many trust disputes also involve common law principles, equitable remedies, and provisions of the Mississippi Code that predate the UTC. The interaction between these various sources of law can be complex, and the specific legal standards that apply often depend on when the trust was created, what type of trust it is, and what specific issue is in dispute.

Types of Trust Disputes

Challenges to Trust Validity

A trust, like a will, can be challenged on the grounds that the person who created it (the grantor or settlor) lacked the mental capacity to do so, was subject to undue influence, was defrauded, or was under duress. The legal standards for these challenges are similar to those that apply in will contests, but there are important differences. One significant difference is that trusts are often created years or even decades before the grantor's death, which means that the evidence of the grantor's mental state and the circumstances of the trust's creation may be very different from what is available in a typical will contest.

Another important difference involves revocable trusts. A revocable trust can be amended or revoked by the grantor during their lifetime. This means that the relevant question is often not just whether the trust was validly created, but whether subsequent amendments were validly made. It is not uncommon for a grantor to create a trust when they are clearly competent and then amend it years later when their capacity is in decline, sometimes at the urging of a person who stands to benefit from the amendment. In these situations, the original trust may be valid while one or more amendments are not.

Trust Interpretation and Construction

Trust instruments are drafted by attorneys, and even well-drafted instruments can contain provisions that are ambiguous, internally inconsistent, or unclear in their application to circumstances that arise after the trust is created. When the parties cannot agree on the meaning of a trust provision, they may petition the court for a judicial interpretation or construction of the disputed language.

Trust interpretation disputes can have enormous financial consequences. The meaning of a single word or phrase in a trust instrument can determine who receives millions of dollars in trust assets, whether a beneficiary's interest is subject to creditor claims, whether income is distributable or must be accumulated, or how the trust terminates and its assets are distributed.

Trustee Misconduct

A significant portion of trust litigation involves allegations that a trustee has mismanaged trust assets, engaged in self-dealing, failed to make required distributions, failed to provide accountings, or otherwise breached their fiduciary duties. These claims are discussed in more detail on the Breach of Fiduciary Duty page.

Common examples of trustee misconduct include investing trust assets imprudently or in violation of the trust instrument, using trust assets for the trustee's personal benefit, favoring one beneficiary over another without authorization, failing to diversify trust investments, failing to collect or preserve trust assets, commingling trust assets with the trustee's personal assets, and failing to provide accountings or respond to beneficiary requests for information.

Trustee Removal

When a trustee is not fulfilling their duties, beneficiaries may petition the court to remove the trustee and appoint a successor. Under the Mississippi Uniform Trust Code, a trustee can be removed for a serious breach of trust, lack of cooperation among co-trustees, unfitness or unwillingness to administer the trust effectively, or a substantial change in circumstances. The court also has discretion to remove a trustee if removal is in the best interests of the beneficiaries and not inconsistent with a material purpose of the trust.

Trustee removal proceedings are often contested, particularly when the trustee is a family member who was personally selected by the grantor. The fact that the grantor chose the trustee is a relevant consideration, but it does not make the trustee immune from removal if they are not performing their duties competently and faithfully.

Trust Termination

Trusts can be terminated by their own terms, by agreement of the beneficiaries, by court order, or in some cases by the action of the trustee under authority granted by the trust instrument or by statute. Disputes over trust termination arise when beneficiaries disagree about whether the trust should be terminated, when the terms of the trust are unclear about when or how termination should occur, or when termination would trigger adverse tax consequences that some beneficiaries want to avoid.

Trust termination often intersects with tax law in significant ways. The termination of a trust and the distribution of its assets can trigger income tax, capital gains tax, and potentially generation-skipping transfer tax depending on how the trust is structured and how the termination is handled. An attorney who understands both the legal requirements for termination and the tax consequences can help ensure that the process is handled in the most tax-efficient manner possible.

Trust Busting

The term "trust busting" refers informally to litigation aimed at breaking open a trust — invalidating the trust instrument, removing provisions that restrict beneficiary access to trust assets, or forcing the termination and distribution of trust assets to beneficiaries who are otherwise locked out.

Trust busting cases arise in a variety of contexts. A common scenario involves a trust created by a now-deceased grantor that restricts distributions to the grantor's children or grandchildren, while giving a trustee broad discretion over when and how much to distribute. If the trustee exercises that discretion in a way that the beneficiaries believe is unreasonable, overly conservative, or motivated by self-interest, the beneficiaries may seek to have the trust terminated or modified to give them greater access to the assets.

Another common scenario involves trusts that were created as part of a tax planning strategy that is no longer necessary or beneficial. Estate tax exemptions have increased dramatically over the past two decades. Trusts that were created to minimize estate taxes when the exemption was $600,000 may no longer serve that purpose now that the exemption is over $13 million per person. In these situations, the continued existence of the trust may impose costs, restrictions, and administrative burdens that are no longer justified by the tax savings the trust was designed to produce.

Trust busting is not easy. Courts are generally reluctant to override the expressed wishes of a grantor, and trust instruments often contain "spendthrift" provisions and other protective language that is specifically designed to prevent beneficiaries from accessing trust assets ahead of the schedule the grantor intended. Successful trust busting typically requires demonstrating that the trust no longer serves a material purpose, that circumstances have changed in ways the grantor did not anticipate, or that the trust instrument should be reformed to correct a mistake or achieve the grantor's actual intent.

The Financial Dimension

Trust litigation frequently involves substantial assets. The trusts at the center of these disputes often hold business interests, real estate, investment portfolios, and other assets that require professional valuation. Understanding the value of trust assets is critical not only for determining what is at stake in the litigation, but also for evaluating settlement proposals, structuring resolutions, and understanding the tax consequences of various outcomes.

The firm's background in tax and financial matters is particularly relevant in trust litigation. Many trust disputes involve questions about how assets were invested, whether the trust's investment performance was reasonable, how business interests held in trust should be valued, how income and principal should be allocated, and how distributions should be taxed. These are not purely legal questions — they require financial literacy and tax expertise that most litigators do not have.

If you are involved in a trust dispute or are considering trust litigation in Mississippi, the inquiry form is the best place to start.