When litigation arises relating to administration of a trust, the procedural law of the forum state can have a profound effect on the proceeding. Likewise, the substantive law that would govern a trust’s administration may vary significantly from state to state. As our society becomes more mobile, we are no longer so committed to one particular jurisdiction when creating a trust. But in determining where a trust will be administered or in the selection of a trust’s situs or governing law, estate planners tend to limit their focus on issues other than the potential for litigation—for example, the creditor protection available in a particular jurisdiction, or the taxes that a particular state would impose on the trust’s income.
In some cases, it could serve the grantor well to also consider the possibility of litigation and how a dispute might play out before the courts of one jurisdiction versus another. This can be particularly true where a grantor has specific concerns regarding a litigious beneficiary or family member.
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