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Federal Court May Be the Answer When Suing a Trust

Published January 11, 2017 by Brady Cobin Law Group, PLLC

Because of potential prejudice by state courts in a suit against a trust, it may be beneficial to head to federal court.

If a plaintiff is from out of state, it is sometimes wiser to sue an estate plan in federal court, according to the Wills, Trusts & Estates Prof Blog in “Trustee Citizenship Regulates Federal Diversity Jurisdiction.”

Since trusts are ordinarily a matter of state law and created under the laws of a state, it is sometimes prudent to head to federal court, according to the article.

The plaintiff in the article was a citizen of Taiwan suing a trust that her ex-spouse set up. She was seeking to recover assets from it. While it is not clear why she did not want to sue in state court, she did choose to file suit in federal court.

One way to get jurisdiction in federal court is called diversity jurisdiction. For it to apply, the plaintiff and the defendants have to be residents of different states or countries. In this case, the court decided that diversity jurisdiction was appropriate because the trust was a traditional trust not capable of suing or being sued on its own.

The citizenship of the defendants was thus the home states of the trustees.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 14, 2016) “Trustee Citizenship Regulates Federal Diversity Jurisdiction.”

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