Trust & Estate Litigation

A trustee owes a set of well-established fiduciary duties under North Carolina law, including: a duty of loyalty — the trustee must act in the interests of the beneficiaries and avoid self-dealing; a duty of care — the trustee must collect and protect trust property, keep it properly identified, and avoid commingling it with personal assets; a duty to delegate — the trustee must recognize when a task requires greater expertise than the trustee possesses and engage appropriate advisors; a duty of impartiality — the trustee must treat all beneficiaries fairly and not favor one class over another; and a duty to inform and account — the trustee must make relevant disclosures to beneficiaries and account for the trust's assets and activities.

Trust disputes most often arise when: one or more interested parties believes the trust instrument itself is invalid; beneficiaries disagree with the trustee about how the trust is being administered or whether it conforms to the trust's terms; changed circumstances the settlor did not anticipate warrant a modification of the trust; or the trustee is accused of breaching one or more fiduciary duties.

The most common grounds for a trust-related lawsuit include: undue influence by a beneficiary or other party over the settlor; the settlor's lack of mental capacity at the time of creation; duress; material mistake; fraud; forgery; and breach of fiduciary duty by the trustee. A challenge to the validity of a will in North Carolina is called a caveat proceeding and is filed in the clerk's office of the Superior Court.

Yes. Under the North Carolina Uniform Trust Code, a court may remove a trustee who has committed a serious breach of trust, is unfit or unwilling to administer the trust effectively, or whose removal otherwise serves the interests of the beneficiaries. Removal is a significant remedy, and courts take it seriously — which means both petitioners and trustees facing removal petitions need experienced counsel.

A trustee can limit personal exposure through carefully drafted exculpatory provisions in the trust instrument, though North Carolina courts will not enforce such provisions where the trustee has acted in bad faith or committed gross negligence. A trustee administering a significant trust should also maintain insurance coverage for fiduciary liability claims. The single most effective protection is rigorous recordkeeping and timely, transparent communication with beneficiaries.