USA Law and Practice Contributed by: Christopher Boyett, David Scott Sloan, Max Angel and Eric Bracy, Holland & Knight LLP
tures. One major trend is the exclusion or unequal treatment of heirs in wills or trusts, which often leads to litigation. While some states enforce in terrorem (or “no contest”) clauses that discourage challenges by penalising beneficiaries who contest an estate, others do not. In jurisdictions where such clauses are unen - forceable, disinherited or disadvantaged heirs – such as children from prior marriages or estranged family members – may be more inclined to initiate litigation. Another common source of conflict arises from blend - ed families and multiple marriages. Disputes frequent - ly occur between surviving spouses and children from earlier relationships, particularly when estate plans are unclear or perceived as unfair. These cases often involve claims of undue influence, lack of capacity, or breach of fiduciary duty by trustees or personal representatives. Additionally, the use of discretionary trusts, where trustees have broad authority to make unequal distri - butions, can lead to disagreements among beneficiar - ies. While these structures offer flexibility and tax effi - ciency, they can also create perceptions of favouritism or mismanagement, especially when communication is poor or expectations are not managed. Finally, the increasing use of complex planning tools – such as dynasty trusts, decanting, and directed trusts – has introduced new legal and administrative challenges. These mechanisms, while powerful for tax and asset protection purposes, can also become flash points for litigation if beneficiaries feel excluded from decision-making or if fiduciaries fail to meet their duties. As wealth planning becomes more sophisti - cated, so too do the disputes that arise from it. 5.2 Mechanism for Compensation In the US, aggrieved parties in wealth disputes or dis - putes involving trusts, foundations, or similar entities may seek compensation through various legal rem - edies. These include injunctions to prevent certain actions, monetary damages to compensate for losses, and trust reformation to correct or modify the terms of a trust. In certain circumstances, the courts may also award attorney’s fees to the prevailing party.
The rationale behind these damages is to restore the injured party to the position they would have been in had the wrongdoing not occurred, to discourage mis - conduct, and to ensure fairness in the administration of estates and trusts. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The use of corporate fiduciaries is prevalent in the US. Trust companies and banking institutions are com - monly appointed to serve as corporate fiduciaries, including as trustees and personal representatives of estates. Generally, these entities are authorised to exercise fiduciary powers and are often selected for their professional expertise, administrative capacity, and perceived neutrality in managing complex or high- value estates and trusts. Corporate fiduciaries and other professional fiduciar - ies in the US are generally held to a higher standard of conduct. They are expected to act with the care, skill and diligence that someone in their professional role would reasonably be expected to exercise. This includes adhering to fiduciary duties such as loyalty, impartiality and prudence. For example, a fiduciary must manage investments in accordance with the prudent investor rule, which requires a thoughtful and diversified investment strategy tailored to the trust’s objectives and the beneficiaries’ interests. Failure to meet these standards can result in personal liability for losses caused by breaches of duty. 6.2 Fiduciary Liabilities In the US, it is possible under certain circumstances, albeit rare, to pierce the veil of a trust or similar entity to hold fiduciaries personally liable for the liabilities of the entity itself. Trusts are treated as separate legal arrangements, and fiduciaries are not automatically responsible for the trust’s obligations unless they breach their fiduciary duties. However, if a fiduciary engages in misconduct – such as self-dealing, bad faith, or gross negligence – they can be held person - ally liable for the resulting damages.
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