Corporate entities, trusts, and partnerships all have one thing in common: fiduciary duties. A corporation’s officers owe fiduciary duties to its stockholders; a trustee owes fiduciary duties to the trust’s beneficiaries; and managing partners owe fiduciary duties to the other partners. The duties of a fiduciary are extensive, and can be summarized as “putting the other person’s interests above your own.” Fiduciary relationships tend to be close even beyond what the law requires, with siblings, parents and children, or close colleagues managing property through a holding company or trust. The creators of these relationships believe that they will always stand by each other – and, all too often, these same relationships collapse into in-fighting when circumstances change.
When a family’s trust holds property that will slowly deplete – like oil and gas wells – conflicts between beneficiaries can erupt that will break families apart. Frequently, beneficiaries entitled to the trust’s income demand that the trust make payments – while beneficiaries entitled to the principal or “corpus” of the trust demand that the trust reinvest its funds into new assets. When one of those beneficiaries is also the trustee, conflicts of interest can arise – and can be claimed – from otherwise innocent acts. Couple these financial incentives with the long-hidden grudges that can emerge when strong personalities clash, and the results are predictable: emotionally-charged litigation that ruins relationships, and may even destroy the very trust that was the subject of the struggle.
The same applies to closely-held and family-run businesses, which often depend on the specific people running them to survive and have no easy exit clauses. The unspoken agreements that allow a business to operate sometimes conflict with the documents that govern that business, and many small businesses operate that way. This works while the company stands united – but when times change and tempers flare, practices that were once acceptable suddenly become suspicious and require proof. By the same token, these businesses require trust among managers and owners to operate – trust that can be abused through mismanagement, self-dealing, and even outright theft. And if the close relationship between a business’ owners or managers ever breaks down, finding a way out of the company trap – through a buy-out, liquidation, or other settlement – may be the only way to head off a prolonged struggle.
The Spencer Law Firm has seen and fought intense fiduciary litigations on multiple occasions, both on behalf of beneficiaries and fiduciaries. From disputes over the control of small businesses to conflicts over the management and distribution of family assets, we know what happens when fiduciaries go to war. Through our experience, we know how to respond to and prepare accountings of estates, trusts, and businesses; to investigate and respond to claims of wrongdoing by fiduciaries; and to bring these conflicts to a close, either through settlement or at trial. If you believe you may be involved in a fiduciary dispute – either as a fiduciary or a beneficiary – do not hesitate to contact us today at our toll-free number: (888) 237-4529.