Executive Summary
- Recent legal changes affecting high-value estate and trust litigation include added complexity to trust structures, changing tax exemptions, and others.
- A trustor can prepare for legal developments by having experienced legal guidance, periodically reviewing their estate plans, and drafting a future-proof trust with experienced estate planning advisors.
- Strategies for navigating legal changes in high-value estate and trust litigation include being proactive in understanding and complying with fiduciary duties, frequently reviewing trust documents, and utilizing alternative dispute resolution methods.
- Broader implications of trust litigation changes include a need for trustee awareness and engagement, careful estate planning, and the support of experienced estate and trust litigation attorneys.
Introduction
Estate and trust litigation involves issues such as disputes surrounding trust distributions, contests concerning the validity of a trust, or concerns regarding breaches of fiduciary duty. Although these issues can arise in any case, the way these issues are handled in high-value trust litigation in particular is subject to change based on new laws being passed and new court rulings setting precedents in trust administration.
As trust structures change to become more complex and involve new, diverse assets, the legal landscape around trusts and disputes will have to adapt as well. As a result, it’s essential to stay on top of these legal changes and ensure that trust drafting and administration are centered around these laws.
Understanding the common changes to trust litigation will empower the trustor to take steps to prevent litigation after their death, as well as allow interested parties to preserve the best interests of the trust after the creator has passed. Adapting to change involves having skilled legal representation who is well-versed in the evolving landscape of trust litigation and understands how to navigate it with the best interests of a trust in mind.
Recent Legal Changes Impacting Trust Litigation
New legislation and new legal precedents may impact trust litigation. The following are some of the recent legal changes that have the potential to impact trust litigation.
Complexity of Trust Structures
A common emerging trend is that trusts are becoming more complex and intricate, which leads to trust litigation—this is especially the case for high-value estates with complex, high-value asset portfolios. With more advanced structures, there is increased responsibility placed on trustees, who have a fiduciary duty to act in the best interests of the trust and responsibly manage all assets.
Complex trust structures may include assets in different international jurisdictions, varying distribution terms, or unique asset management terms. There are also a variety of trust types that each have their own benefits, such as life insurance trusts, dynasty trusts, charitable lead trusts, qualified personal residence trusts, and more. It’s the trustee’s responsibility to administer the trust in alignment with the terms.
These complex trust structures and more demanding fiduciary roles are more likely to lead to conflict around an estate and how well it’s managed. Disputes and litigation may arise over the management of the trust and be raised against a trustee if beneficiaries feel as though the trustee is not acting quickly or prudently enough in their management or distribution of the trust.
It’s important to have advanced legal guidance around these trust structures in order to ensure that trusts are established in compliance with state and local laws and accomplish what the trustor is hoping to accomplish.
Estate Tax Exemptions
The federal estate tax exemption and gift tax exclusions change yearly as set by the IRS, so this should be a constant consideration for proactive estate planning and retroactive trust management.
The gift tax exclusion in 2025 increased to $19,000, an increase of $1,000 from 2024. In 2025, the lifetime federal estate tax exemption also increased, rising from $13,610,000 in 2024 to $13,990,000 now.
For 2026, the lifetime exemption is currently set to revert back to $5,000,000, indexed for inflation—around $7,000,000—pending further legal intervention. However, there is speculation that this is likely to change, so it will be important for financial advisors, fiduciaries, and other interested parties to remain vigilant and informed and determine how they should adjust their estate plan in response.
Corporate Transparency Act
The Corporate Transparency Act (CTA) became effective on January 1, 2024, and requires certain entities to disclose beneficial owners in the entity to the Financial Crimes Enforcement Network (FinCEN). This act applies to limited liability companies (LLCs), corporations, and limited partnerships that must meet these requirements.
A beneficial owner is any individual that:
- Owns or controls at least 25% of the company or partnership
- Has notable, substantial control over the entity and decision-making
- Is a trustee or beneficiary of a trust holding at least a 25% ownership interest in the entity
- Is a trustor with the ability to revoke or withdraw assets from a trust holding at least a 25% ownership interest in the entity
For entities created before the CTA went into effect, the initial deadline to file was January 1, 2025. However, a Texas District Court struck down the legality of the act in two separate cases, leading to a nationwide injunction of the act, suspending its requirements. While the Supreme Court stayed the injunction in one case in January 2025, it did not address the other case. Therefore, FinCEN announced that reporting was still not required. That said, the future requirements are uncertain and it’s important that corporate entities with beneficial owners are prepared to meet any newly created deadlines in the event that the requirements are reinstated.
Key Implications for Trustees and Beneficiaries
With changes to trust litigation and administration, it’s vital that interested parties, such as trustees and beneficiaries, are prepared to adapt. Some key implications of these changes include:
- Increased scrutiny of trustees – Potential changes to laws affecting trustees mean that trustees must be as informed as possible regarding their role so that they are best equipped to act within the best interests of the beneficiaries and minimize the chances that their actions are questioned.
- Tensions among beneficiaries – Changing tax exemptions or trust terms can affect a beneficiary’s portion of trust assets, which may lead to confusion or frustration among beneficiaries of the trust.
- Challenges to establishing or changing trusts – Changes to laws and legal precedent may make it more difficult for a trustor or trustee to create or modify a trust, especially irrevocable trusts.
- Importance of communication – Personal representatives should keep beneficiaries well-informed about estate transactions and the reasons for making them to minimize the risk of misunderstandings or disputes.
Beneficiaries, trustees, and other interested parties in an estate should not be hesitant to seek legal support when necessary. The support and guidance of estate and trust administration attorneys will help simplify the process for understanding the impact of a changing legal landscape and how to navigate it.
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Legal Strategies to Adapt to the Changing Landscape
With a changing landscape in trust litigation, it’s important to be proactive and prepared to adapt to the landscape. Interested parties in a trust can take the following steps to adapt to a climate of change and potential uncertainty.
Proactive Compliance with Fiduciary Duties
With a constantly changing landscape in trust administration and litigation, it will be essential that trustees remain on top of their fiduciary duty. Trustees should be extra attentive to their responsibilities and duties and perform due diligence to maintain best practices and align with the most recent legal laws and precedents.
Trustees should follow these steps:
- Maintain meticulous records surrounding estate property transactions
- Seek ongoing legal counsel
- Foster transparent communication with beneficiaries
For the sake of ensuring an airtight trust administration process and minimizing the risks of personal liability, a trustor may consider the use of corporate or professional trustees. Corporate trustees often have an advanced level of scrutiny they must adhere to when managing and administering a trust.
Regardless of whether a trustee is a professional trustee or a close acquaintance to a trustor, a trust administration attorney can provide a valuable resource to ensure that they are acting in compliance with the most up-to-date laws and protecting the integrity of the trust.
Reviewing and Updating Trust Agreements
After establishing a trust agreement, it’s best practice to regularly review and update the document to ensure accuracy and relevance. A trustor should perform a periodic review of the document after its initial creation—it’s a good idea to do this yearly.
Reviewing the trust yearly provides the opportunity to verify that changes in legislation or precedent do not alter the terms of the trust instrument and its implications. If there are any changes that alter the trust terms drastically, then the trustor and their attorneys can consider updating the document to be more favorable.
Reviewing the agreement also ensures that the terms laid out in the instrument continue to align with the interest of the trustor. Life events such as the birth of a child, a new marriage, or a divorce can all alter an individual’s estate plans, especially in complex, high-value estates with a considerable amount of assets to distribute. Reviewing the document gives the trustor a chance to make changes that better align with their interests.
Drafting a Future-Proof Trust
On top of staying up to date with legal changes, it’s also a good idea to make a trust instrument adaptable for the future by developing a trust instrument with flexibility in mind. Trustors and estate planners can consider this by including provisions that allow for versatility in trusts, like decanting clauses or trust protectors that can promote adaptability for future changes. A revocable trust is the most flexible option, as a trustor can change a trust at any point in their lifetime.
Decanting clauses allow a trustee to modify a trust at their discretion if it benefits the trust and its interests—this is a common option in Texas and is now an option in California as of 2018 due to the Uniform Trust Decanting Act. Decanting is a common strategy for offering tax benefits. For example, if tax exemptions are more favorable in a given tax year before reverting back to a lower exemption, decanting provides an option to restructure the trust during a more favorable tax year to increase exemptions for the trust.
Decanting is an especially helpful strategy in cases of irrevocable trusts, which cannot be changed by the trustor unless all interested parties, including a trustee and beneficiaries, agree. Trustees have the discretion to create a trust with more favorable terms for interested parties in the future if legal changes occur.
Utilizing Alternative Dispute Resolution
Alternative dispute resolution is a valuable tool in situations where trust litigation laws have changed, as methods such as arbitration, mediation, or negotiation can help you avoid trust litigation altogether. Alternative dispute resolution may be beneficial for keeping disagreements out of the courts and allowing the parties interested in the dispute to come to a resolution on their own.
Alternative dispute resolution methods can offer several benefits, such as avoiding the spending of exorbitant amounts of money on legal fees and litigation. Negotiation and mediation may also help to bring about a more favorable result than an all-or-nothing decision as well as preserve the family relationships of those involved.
A trustor may consider establishing an alternative dispute resolution clause in their trust in order to preempt contentious litigation and protect the interests of the trust while minimizing the burden of time and distress on all parties.
Case Scenario: Lessons from Recent Trust Litigation
The following case scenario demonstrates an example of recent trust litigation and the implications of legal changes for future cases.
Murdoch Family Trust
A popular case of trust litigation affecting public conversation is the case of popular media magnate Rupert Murdoch. In December 2024, Murdoch was attempting to amend his irrevocable trust in order to ensure that his son, Lachlan, would assume full control of his father’s media holdings upon his death.
A Nevada probate commissioner denied the claim, emphasizing that the two parties, Rupert and Lachlan, were acting in bad faith by attempting to alter control and making changes that violated the fundamental principles of the trust. In particular, the modifications did not protect the equitable treatment of all beneficiaries.
The probate commissioner also cited that the trust was set up as an irrevocable trust, which means that the arrangement features limited ability to be changed and can only be altered with the approval of all beneficiaries or unless the standard for modification has been met. Murdoch likely will attempt to appeal the ruling but is likely to run into continued roadblocks.
This case highlights the importance of structuring a trust in a way that makes sense for your estate and your possible goals. It’s important to build flexibility into an estate plan in case you may find yourself looking to alter the trust in the future. It also highlights, no matter how high-value the estate, there is no circumventing trust or estate administration laws based on wealth or status. A probate court will always strive to act with objectivity, regardless of the status or value of an estate.
Broader Implications for the Future of Trust Litigation
Recent legal changes feature the following implications for trust litigation today and well into the future.
Legal Developments
The evergrowing complexity of trusts, changing tax exemption thresholds, and other legal developments offer a few key implications for the future of trust litigation. The key implication in these legal developments is that trustors must be meticulous to ensure that their estate planning takes potential legal or tax exemption changes into account.
Tax exemption thresholds will continue to be a reality in the world of trust administration and litigation, so it’s essential that estate planners remain aware of their impacts. Despite its current status, the initial introduction of the Corporate Transparency Act also demonstrates the potential for future advanced scrutiny and rigidity for high-value estates.
In both cases, it’s important to understand your options for maximizing the transfer of assets from the trust or estate to the beneficiaries. Consulting estate planning attorneys, financial advisors, and tax experts can help a trustor develop a favorable estate plan that maximizes benefits and minimizes liabilities.
Trustees must also be prepared for greater scrutiny of their management of a trust, must understand the scope of their duties and responsibilities, and must be able to justify their actions to beneficiaries and interested parties. Retaining an estate or trust administration attorney is valuable for ensuring that they understand their responsibilities and that they can carry them out effectively.
It’s also critical that interested parties in a trust or estate consult an experienced trust litigation attorney with experience in high-value trust litigation so they can avoid leaving prominent holes in their estate plan or missing steps during administration.
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The Role of Technology
Technology like artificial intelligence (AI) is making its way into every corner of our lives, and that includes trust and estate administration and litigation. Artificial intelligence tools in the field may be used to speed up the process of drafting estate planning documents, reviewing previous documents, or summarizing documents.
If AI is used to draft or review legal documents, then it’s crucial that there is a high level of scrutiny involved in reviewing and analyzing these documents and the information they contain. It’s important that interested parties maintain a level of caution while ensuring these tools are used only as tools and not as a replacement for the due diligence of an attorney or trustee.
Technologies that are tangential to the process, like digital assets and cryptocurrencies, also have substantial potential impacts on trust structures and may lead to litigation over how to manage these assets. With the evergrowing presence of digital assets, attorneys are increasingly informed on how they affect trust and estate administration and can provide guidance in the process.
The Evolving Role of Attorneys and Advisors
With the potential for change in trust and estate administration and litigation, the role of trust attorneys and estate advisors becomes even more crucial and overall essential. Keeping up with these legal changes on one’s own is incredibly difficult. Attorneys will be responsible for providing guidance to clients, which means staying up to date with legal changes to trust litigation.
With changes to trust administration and litigation, whether this includes more complex trust structures and assets an attorney becomes a valuable resource.
Take Action to Protect Your Trust and Estate
Legal and social changes can have profound impacts on high-value estate and trust litigation. If you are a beneficiary, trustee, or other interested party in an estate, it’s important that you are well-equipped to handle the potential difficulties. A skilled trust litigation attorney can help you understand relevant legal changes and any recent changes that may affect your trust or estate administration or litigation cases.
Our attorneys at RMO can offer guidance, compassion, and advanced legal knowledge to provide you with peace of mind throughout the process. With decades of experience in trust and estate litigation, we understand the ins and outs of state and local laws and are constantly staying updated on the most recent adjustments to trust administration and litigation. Using their advanced skillsets, our attorneys will help you navigate the complexities of trust litigation in order to preserve the best interests of a trust. Schedule a consultation with our trust litigation attorneys at RMO to discuss your case and how it may be affected by recent trust or estate litigation.