Trust and estate disputes have been in the news as of late due to a Nevada court fight involving Rupert Murdoch’s attempt to alter an irrevocable trust. The case highlights the difficulties families and attorneys face in resolving disputes over estates.
The American College of Trust and Estate Counsel (ACTEC) podcast recently addressed strategies for settling such controversies. Attorneys discussed the importance of preparation, communication, and understanding legal frameworks.
Trust and estate disputes often involve multiple parties with competing interests, creating unique challenges, said David Blickenstaff, an ACTEC Fellow from Chicago.
“There’s usually an emotional component,” he said. “Control is especially important. Emotions can matter more than money, and they make it harder to reach a rational resolution.”
Murdoch’s case reflects these complexities. Irrevocable trusts, by design, cannot be easily altered. Legal experts caution that attempting to modify them can lead to prolonged fights.
Settling those fights can sometimes have unintended consequences, in particular the tax implications of settlements, according to Margaret Sager, an ACTEC Fellow from Philadelphia.
Settlements can trigger estate, gift, income, or generation-skipping transfer taxes. The IRS may view agreements as attempts to gain financial benefits, adding scrutiny to family arrangements, she said.
Experts recommend early planning to set client expectations. Attorneys should explain the risks, including financial and emotional costs, and involve all interested parties. Transparency is critical to building trust and leveling the information playing field.
Timeliness and the right dispute resolution mechanism are essential, Blickenstaff said. Mediation, judicial intervention, or informal negotiation should be chosen based on the case’s needs.
Virtual representation laws play a role in binding all parties, especially minors or unlocated beneficiaries. These laws vary by state, often aligning with the Uniform Trust Code. Attorneys must ensure proper notice is given to all involved, according to Philip Corbo, an ACTEC Fellow from New Jersey.
Legal experts suggest seeking court approval for settlements.
“Generally, court orders approving settlement agreements have the force of a judgment,” Corbo said. “In a litigated matter, the best practice is to have the court approve the settlement which the court can then enforce.”
The podcast highlighted the importance of independent counsel for all parties. Those without attorneys should be informed of their rights and explicitly acknowledge their decision to proceed without representation.
For more on resolving trust and estate disputes, listen to ACTEC’s podcast episode, “Guiding Trust and Estate Disputes to Settlement,” at actecfoundation.org.
