So, are they frozen?
No, trust assets are not automatically frozen when you file a trust contest lawsuit (or any other type of trust lawsuit).
In order to freeze trust assets, you must file for a temporary restraining order and preliminary injunction. These are rarely granted but can be obtained in certain cases. Freezing assets prior to trial is referred to as pre-trial relief. In essence, a party seeking pre-trial relief is asking the court to make a decision before each side has been given a chance to present admissible evidence to the court. The presenting of admissible evidence to the court occurs at time of trial. Thus, asking the court to issue an order restraining an action is asking the court to act prior to the presentation of evidence by all parties. Most judges are reluctant to grant pretrial relief without a compelling reason to do so.
The most common fact scenarios where pretrial relief is granted is where there is a showing of immediate harm. For example, if a house is about to go into foreclosure because the trustee refuses to pay the mortgage payment. Another example could be when a trustee is actively stealing money from the trust. The party seeking the injunction must also show that they have a reasonable likelihood of success on the merits come time of trial.
Imagine that your father dies and you learn for the first time that the trust was changed a week before his death. You were supposed to receive an equal one-third share of the trust along with your brother and sister. But with the trust change, you now are completely disinherited and your two siblings are each set to receive fifty percent. You are upset and confused and decide to hire a trust litigation law firm to file a trust contest lawsuit to try to restore your one-third share of the trust.
But what happens to the trust assets while your lawsuit is working its way through the court system? The answer is that nothing changes. The trustee has all the rights and powers that they had before you filed your trust contest lawsuit.
Why aren’t the trust assets automatically frozen?
It comes down to something called due process of law. In our legal system, a court typically cannot take any action until each party has been given a fair chance to present evidence at trial. But it can take a year, two, three, or more for your case to reach trial. In the meantime, the trust goes on as business as usual.
There are exceptions referred to as prejudgment remedies. In other words, you are asking the court to take an action that prejudices some parties before a fair hearing of the evidence at trial. In order to obtain prejudgment relief, you must show a reasonable likelihood of success on the merits and irreparable harm. Now, your idea of irreparable harm and the judge’s idea of irreparable harm are probably very different. You might think that your brother, who is the acting trustee, might do something to harm your interest in the trust because of the lawsuit and so you would think that is immediate and irreparable harm. It is not. You must be more specific.
The judge wants to see something far more specific and more likely to lead to irreparable harm. For example, shares of stock in a company that looks like it is about to go bankrupt need to be sold immediately, but the trustee refuses to sell. Or the trust owns three houses all of which are about to be lost to foreclosure even though the houses produce rental income, and the trust has plenty of money to make the mortgage payments and bring the mortgages current, but the trustee refuses to act. Those are specific examples of harm that are unlikely to be repairable.
It can be frustrating when a judge disagrees with your view of irreparable harm, but the laws allowing a judge to act are strict. Most judges would rather not take prejudgment action if they can avoid it. So, the best thing you can do is to prosecute your case as timely as you can.
Don’t be an abused beneficiary
Our attorneys have taken action against hundreds of trustees for abusing their beneficiaries. We’ve also recovered more than $300 million and helped hundreds and hundreds of clients regain their dignity as a trust or will beneficiary through litigation – if you believe you’ve been the victim of inheritance abuse, tell us your story to see if your case qualifies for a free consultation. We’re here to stand, fight and win for you.
Call (877) 408-3813 or reach out online to consult a trust contest lawyer.
