Can an Irrevocable Trust Be Sued?
You cannot sue an irrevocable trust, but you can sue the trustee in charge of running it. The trustee of an irrevocable trust has several specific responsibilities and a fiduciary duty to act in the best interest of the trust at all times. Suing the trustee is essentially the same as suing the trust, as a successful lawsuit could result in removal of the trustee and the appointment of a new person to oversee the trust.
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What is an Irrevocable Trust?
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An irrevocable trust allows the grantor to set aside specific property for the benefit of a beneficiary. Some trusts may later be altered or revoked, but an irrevocable trust cannot be modified, even by the grantor. The trustee is the individual in charge of administering the trust and distributing funds to the beneficiaries.
How to Create an Irrevocable Trust
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To create an irrevocable trust, a grantor must use specific language stating that the trust is not to be amended or altered in any way and that the trust is irrevocable. This language varies in some jurisdictions, so check with an estate attorney. Additionally the grantor must set aside property capable of being held in trust, appoint a trustee and identify beneficiaries of the trust. Once the trust has been created, it does not have the status of a legal entity such as a corporation. Rather, a trust is an instrument capable of protecting property.
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Trustee Duties
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Trustees have several legal duties while maintaining a trust, which is why they can be sued. The trustee must manage trust property in a reasonably prudent manner as if she was managing her own property and act with loyalty and impartiality while managing the trust. Trustees may not use a trust for personal gain and they are required to make distributions to beneficiaries in the manner described in the trust document.
Suing a Trustee
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Because a trust is a non-legal entity, it cannot be sued directly. Instead, you must sue a trustee if he has somehow mismanaged the trust or otherwise breached his fiduciary duty. To sue a trustee, you must determine how he has breached his fiduciary duty, determine what damages have resulted from this breach, file a complaint with the jurisdiction where the trust is based and present your case in court.
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