Overview of Client’s Family Inheritance Issues

Inheriting a family business can be complicated. For example, what if one family member contributed a significant portion of their time to managing the business? Would it be fair if their sibling, who did not participate in the family business, is provided with an equal share of the company? What if the elderly parent who founded the business is losing competence and making unwise business decisions that could reduce the inheritance their children will receive? Family inheritance issues can create rifts among family members, especially when one or more of them is unwilling to cooperate. But when they are your father and they begin threatening your future inheritance, it’s time to act.

Keystone’s client served as co-trustee — alongside her then-96-year-old father — of a family trust of which she was also a primary beneficiary. The trust held a Limited Liability Company, which owned a profitable commercial property. It was the trust’s most valuable asset, and Keystone’s client was to inherit a majority share of the property upon her father’s passing. But, as the trust’s only living settlor, the father of Keystone’s client wielded substantially more control over the trust, and by extension, the commercial property, than she did.

She was concerned about the possibility that her father’s mental competence was starting to decline. All his life, he had demonstrated a keen business acumen; now, he was trying to sell the trust’s most valuable asset for substantially less than what it was worth. Not only would such a sale give rise to significant tax liabilities, but it would reduce the amount of each beneficiary’s potential inheritance as well as the amount of the father’s own trust fund distributions, which he relied on to pay his bills.

Keystone’s client had spent most of her adult life managing the LLC so she expected to be inheriting the family business once her father died. It’s no surprise, then, that her father’s decision to sell the LLC’s primary asset for below market value was personal to her. Since there were only downsides and no financial benefits to selling the property, the client felt as though her father might be selling the property out of spite over their years of disagreements relating to the company. She wanted Keystone’s help ensuring that she would get her rightful share of the company she helped run for so many years, regardless of whether the father proceeded with selling the property.

TELL US WHAT HAPPENED. WE’LL BE IN TOUCH SOON.

What is Trust Litigation?

A trust is established to protect and hold a settlor’s assets on behalf of beneficiaries. When the settlor dies, trust assets will be distributed to the settlor’s intended beneficiaries in accordance with the provisions of the trust. Unlike wills, trusts do not pass through probate (a court-supervised process) and are generally intended to be private.

Trust litigation can arise in a variety of contexts. Perhaps a client is seeking to challenge the validity of a trust. Perhaps the client is seeking to recover assets that belong to a trust. Perhaps, like in this case, the client is the trustee and is seeking to protect the trust against financial harm by a co-trustee. Trust disputes can be complicated and often require petitions to the probate court. They can be both costly and time-consuming.

An experienced trust litigation attorney who understands the laws that govern trusts and probate court, is necessary to be successful at pursuing or defending trust-related claims. Keystone’s trust litigation attorneys have a proven record in favorably handling trust disputes and providing guidance through every step of the trust administration process.

A Closer Look Into the Client’s Family Inheritance Issues

Keystone’s client had been butting heads with her father over business matters for years, but recently, her father’s behavior had become so turbulent that it was causing her to question whether her father was fit to serve as co-trustee of the family trust. She believed his unfitness was due either to a decline in mental competence or a flagrant disregard for his fiduciary duty to act in the best interests of the trust and its beneficiaries. The breaking point for our client came when her father threatened to sell the trust’s commercial income-producing property, remove her as co-trustee, and strip her of her job as the manager of the LLC for no legitimate reason.

In order to preserve and protect the trust assets for her future inheritance, as well as her father’s own trust fund distributions, Keystone’s client needed to try to have her father removed as a co-trustee. Even though the relationship between our client and her father had been deteriorating for years, taking legal action against her father was profoundly sad for our client.

As was his nature, however, the father wouldn’t concede without a fight. Nevertheless, Keystone helped broker a settlement agreement between its client and her father through mediation in which its client would receive a sizable settlement sum in exchange for stepping down from her role as manager of the LLC and giving up her interest in the trust.

“But then the father changed attorneys and started claiming he didn’t understand the terms of the original settlement and started making other accusations about our client,” says Joshua D. Taylor, a Partner at Keystone who supervised the case.

The process was even further complicated when our client’s sister got involved, claiming she should have been a party to the first mediation and insisting that she participate in the case going forward.

The Results

Our client’s case became a long-fought battle that involved multiple breaches of settlement agreements. But ultimately, Keystone’s trust litigation attorneys were able to resolve the case through a second mediation and a subsequent settlement agreement in which its client became the sole owner of the LLC after buying out her father’s and sister’s shares of the company.

“As a result, our client ended up receiving a lucrative income-producing asset whose value far exceeded the value of her potential future inheritance,” Taylor says.

Keystone’s client merely wanted her rightful share of the family business since she had worked hard managing it for years, but Keystone helped fulfill her wish of inheriting the family business in its entirety. It was a resounding victory, to say the least.

The Takeaway: Family Inheritance Issues Can Be Resolved With Help From a Skilled Trust Attorney

It can be difficult to stand up to a parent when family inheritance issues are involved, especially if the parent defaults to anger and spite. But as our client learned, you can only let someone throw so many stones at you before you pick them all up, put them together, and build a wall to protect yourself. If there is one takeaway to learn from this family inheritance issues case, it is to know when it’s time to take action and quickly seek help from an expert trust litigation attorney.

“Don’t be bullied by anyone, even your own family members,” Taylor says. “And always keep fighting for what is right.”

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Schedule a Free Consultation With Our Trust Litigation Attorneys

If you have a trust matter that you would like resolved in your favor, Keystone’s trust attorneys can help. With years of litigation experience and a singular focus on probate, Keystone attorneys are equipped to help you obtain the best possible outcome for your case. Call us today to schedule your free consultation.