Fiduciary Litigation: What It Is and How to Avoid It

When it comes to estate planning, a well-crafted trust can provide peace of mind for families, ensuring that assets are properly managed and distributed. But even the best-laid plans can go wrong if the trustee—the person responsible for carrying out the terms of the trust—doesn’t fulfill their duties. This is where fiduciary litigation arises.

At Kennedy Berkley, we frequently work with families and individuals navigating both the creation of trusts and the disputes that sometimes follow. Understanding fiduciary responsibilities—and how to avoid litigation—can save time, money, and family relationships.

What Is Fiduciary Litigation?

A fiduciary is a person entrusted to manage the trust assets for the benefit of others. In estate planning, the most common fiduciary role is the trustee of a trust. Trustees have a legal and ethical obligation to manage the trust’s assets according to the terms of the trust and in the best interests of the beneficiaries.

When a trustee fails to fulfill these duties, beneficiaries may bring legal action—known as fiduciary litigation.

Common Duties of a Trustee

Trustees carry significant responsibilities, including:

• Maintaining accurate financial records

• Preparing trust accountings

• Filing tax returns for the trust

• Managing and protecting trust assets

• Paying bills and taxes related to the trust

• Distributing assets according to the trust terms

When these obligations are not handled correctly, disputes begin to loom.

Why Fiduciary Disputes Happen

Fiduciary disputes often stem from one of the following issues:

• Poor record keeping – When there’s no clear accounting, beneficiaries may suspect mismanagement.

• Failure to communicate – Trustees who don’t keep beneficiaries informed often cause distrust.

• Mismanagement of assets – From late bill payments to risky investments, financial mistakes can quickly escalate.

• Self-dealing or conflicts of interest – A trustee who puts personal interests ahead of the beneficiaries’ interests is violating their fiduciary duty.

  
  

These situations can result in lawsuits against the trustee, prolonged family conflict, and depletion of the very assets the trust was meant to protect.

“Nothing pains me more than watching a dispute drain the very assets the family worked so hard to build. When that type of conflict happens, no one wins.” - Paige Harding, Attorney

How to Avoid Fiduciary Litigation

The best way to prevent fiduciary litigation is with two layers of protection:

1. A strong estate plan. A well-drafted trust makes a trustee’s responsibilities clear, reducing the risk of confusion or error.

2. Experienced legal guidance. Trustees often don’t realize how complex their role can be. Working with an attorney to administer the trust ensures compliance with the law, timely filings, and accurate communication with beneficiaries.

At Kennedy Berkley, we don’t just help clients set up trusts—we also guide trustees through the ongoing administration process. This proactive approach significantly reduces the chances of disputes arising in the first place.

Why It Matters

Fiduciary litigation is costly, stressful, and damaging to families. The goal of an estate plan is to bring clarity and security—not conflict. By partnering with an experienced legal team, you can:

• Protect beneficiaries’ interests

• Ensure assets are distributed properly

• Avoid unnecessary court battles

• Preserve family relationships

How Kennedy Berkley Can Help

Whether you’re creating a trust, serving as a trustee, or dealing with a dispute, the attorneys at Kennedy Berkley are here to help. Our team has decades of experience in estate planning and fiduciary litigation, and we work with clients across Kansas and beyond.

If you’re facing questions about fiduciary duties or trust disputes, don’t wait until small issues become lawsuits. Contact Kennedy Berkley today to schedule a consultation.

This article is general information, not legal or tax advice. Facts matter. Work with counsel and your tax advisor to structure and document your operation under the new rules.