Preventing Trust Disputes Before They Start
Megan Tepas
Megan Tepas is a dedicated litigator with a passion for navigating complex disputes. Her practice focuses on family trust, estate, and fiduciary litigation, as well as commercial matters involving family-owned and closely held businesses. Known for her strategic and creative approach, Megan works diligently to advocate for her clients, exploring every angle to achieve strong outcomes.
While she is a tenacious advocate, Megan is equally committed to professionalism and integrity. She believes that effective lawyering is grounded not only in skill, but in ethical practice and respect for the legal process.
Megan is admitted to practice in both Illinois and Indiana and collaborates with colleagues across the country on matters spanning multiple jurisdictions.
Kirby Rosplock
Welcome to the Tamarind Learning Podcast. I'm your host, Dr. Kirby Rosplock, and today I am delighted to, to welcome Megan Tepas. Um, you know, This show is all about highlighting interesting topics, and Megan is a seasoned trust and estate litigator based in Chicago, and her work is really fascinating because it is at the intersection of the trustee responsibility, beneficiary rights, family conflicts. These are all the types of issues that Megan is seeing on a daily basis. She represents both trustees and beneficiaries in some of the most complex and emotionally charged trust disputes. So I know that this is something everybody wants to avoid if they are a trustee, if they're a beneficiary, if they're a family with multi-generational wealth. But I think it's so important that you also advise families and fiduciaries before, right, disputes erupt. And Megan brings a rare combination of this legal rigor, real-world family enterprise insight, and a deep appreciation for kind of the human dynamics behind wealth governance and legacy. So, Today we're talking about this very interesting topic of trustee beneficiary relationships and when they get sticky, why disputes happen, how education communication might help with this or governance.
Kirby Rosplock
And tell us, Megan, what— tell us a little bit more about how you came to do this work.
Megan Tepas
Sure. And thank you so much for having me, Kirby. I'm really excited to be here. As you know, I love talking about this topic. It is something that I've been practicing for several years and really do love this area. Of law, particularly because it touches on these family dynamics. I mean, law and contract can be quite dry sometimes. And when you have more personal relationships behind it, it's more nuanced, it's more interesting. And I can bring a lot more help to a situation, I think, in that context.
Kirby Rosplock
Amazing. So you spend— okay, back to this whole trust dispute area. You spend a lot of time here. And from your vantage point, What are the most common early warning signs that a trustee-beneficiary relationship is headed towards conflict?
Megan Tepas
Yeah, I mean, when I get a call from a trustee or a beneficiary, typically it's already well on the road to a conflict. Unfortunately, often they don't call kind of quite soon enough to avoid conflict. Not always, but you know, when I get a call from, you know, a beneficiary and they're telling me things like, Trustee's refusing to give me X, Y, and Z, and X, Y, and Z seems fairly reasonable. That's obviously a, you know, sort of a red flag. You know, beneficiaries saying things like, if the trustee won't give me this, they must be hiding something. I hear that a lot. That is a huge red flag because sometimes there may be a very legitimate reason why the trustee is not providing that, but that shows a communication breakdown. Right up front. If there is a legitimate reason not to give something and the beneficiary is interpreting that as they must be hiding something, that's a huge problem. And I do get a lot of calls that, that sound similar to that.
Kirby Rosplock
Oh, so let's go from the other lens. Why might a trustee perceive some of these things as threatening or feel like adversarial? What's happening beneath the surface, do you think? You mentioned the family dynamic side. Do you have an example?
Megan Tepas
Yeah, so I guess to answer your first question, beneficiaries are entitled to information about trusts, right? I mean, we all know that instinctively, but trustees can often feel sort of cornered when beneficiaries ask for information. Not saying that that is justified or they should feel that way, but we're humans, right? Beneficiaries, trustees, they're still just people. And so often trustees can feel like they're being second-guessed. Or questioned or, you know, accused of wrongdoing implicitly when beneficiaries are really just trying to get information. So again, that's kind of a communication breakdown. But trying to understand each perspective, it can feel— trustees can feel defensive when they're, when they're getting peppered with questions. And that can be tempered by kind of the way questions are, are being asked. And it also can go the other way if you're asking them in a certain way that could increase defensiveness. So there's ways to kind of mitigate some of this. But that is one reason why I think some of these trustees kind of get their back up against a wall when, you know, questions are coming from beneficiaries.
Kirby Rosplock
So like a request to see a trust document, do you think that would get the hackles up of a trustee potentially?
Megan Tepas
So of course the context of that question is probably no. A trustee should absolutely— I shouldn't say absolutely. The Trustee most likely should provide that. It, it does depend. Every state law is different. You know, if you're a beneficiary who just gets a specific request, bequest in a trust, you may not be entitled to the entire trust document. So there is nuances to all that. But just asking for the trust document, that seems like a reasonable question the way you posed it. I'll leave it at that. That is a fairly reasonable question, and you should, you know, expect a trustee to provide that.
Kirby Rosplock
Okay. How much of what you see in disputes is really about money, and how much do you think is really about trust, power, and communication?
Megan Tepas
Um, it's a good question. I mean, obviously trusts are about money, um, but they are much more than that. And I would say most of these disputes, yes, there's a money element involved, but really it, it's a dispute over Transparency, communication, personal relationships. That's really what's driving most of these disputes.
Kirby Rosplock
Okay, so that's a great segue. So from a legal and practical standpoint, what are beneficiaries actually entitled to know? I mean, back to this transparency, where do families tend to misunderstand these boundaries?
Megan Tepas
Yeah, and again, you know, like I said, what beneficiaries are entitled to know will vary state by state. It will also vary by trust documents. Trust documents can, you know, expand or contract what the otherwise state law would provide. But generally the standard is beneficiaries should be reasonably informed about the administration of the trust.
Kirby Rosplock
Okay.
Megan Tepas
And where a lot of misunderstanding comes in is the fact that is so almost circular and vague, and there just are not bright-line rules about what is reasonably informed and what that means. And it is just absolutely going to vary in every circumstance. So that can be very frustrating and very difficult to navigate. You know, there's, there's an example, a pretty famous case here in Illinois where it's several years old now. And if I'm remembering all the facts correctly, the trustee did not inform the beneficiary of a reorganization of a family business that the beneficiaries were shareholders of. The trustee had an explanation for it, saying, had I told you, you might delay the closing and you wouldn't end up benefiting from these tax breaks that otherwise you would be able to get if I just went ahead and did this. Seems like a reasonable explanation, but courts found no, that you can't not tell the beneficiaries something that what it will affect their interests, even if you have maybe a good reason to do so. So that's an example where, you know, beneficiary or trustees really should have provided that information up front.
Kirby Rosplock
That's so insightful. So what advice do you give beneficiaries who want to be more informed and engaged without escalating tensions or being labeled as difficult or entitled? So how do you handle that?
Megan Tepas
Yeah, again, that kind of goes to the relationships between the beneficiary and the trustee, and you, you need to make sure that that relationship is well maintained. You know, kind of early on in the process, if the beneficiary wants to be, you know, more involved or wants to be informed, they should approach the trustee and tell them that and say, hey, this is what I would like to be involved. I'd like information. How do we want to go about doing this? And come up with kind of a protocol. And that may sound somewhat formal, but it really does help to kind of keep tensions down when everyone knows what to expect. And so when I say protocol, things like, you know, suggesting, hey, can we have a quarterly meeting in person? Or how about every month I send you an email with questions I have? And that can just sort of set the tone so you know what to expect and avoid things like, You know, beneficiary emailing a trustee every single day with a new question, even if every one of those questions is reasonable, is going to be irritating, frustrating, and it's, it's going to go off the tracks pretty quickly.
Megan Tepas
So setting that kind of, um, cadence and that protocol upfront is really helpful.
Kirby Rosplock
So that's something that you think the trustee would do and set the cadence, or do you think it's really asking the beneficiary, hey, let's talk about like co-create it together? Where, how do you see that happening mostly?
Megan Tepas
Yeah, I think it could definitely be co-created. It should be something in the long lines of, hey, this is what I'm thinking, whether it's monthly, quarterly, every communications via email, whatever it is. I see nothing wrong with a beneficiary proposing that. And if a trustee says no, that's not going to work, here's what I can do, and kind of work on that together, that, that should be totally fine. I don't think that's That's something the trustee needs to dictate the process. But ultimately, the trustee will have the kind of final say on what the process should be. But in order for it to be most effective, it should be kind of co-created, I would say.
Kirby Rosplock
Yeah. So let's just talk about those instances on the trustee side. How can they respond to questions in ways that de-escalate rather than inflame if they feel like, hey, maybe our communication's going off the rails? Or if they feel like they're being scrutinized and under a microscope, what do you— what are some best practices?
Megan Tepas
From the trustee's perspective, you know, one thing I really try to advise trustees on is to not come to the table with the mentality of, do I absolutely have to give you this? I see that a lot, and I understand where it comes from. But the guiding principle, if you want to keep things on a good track, is to be, should I give this to you? Not necessarily, do I have to? So I think that's kind of one thing the trustee can keep in mind. And obviously being aware of the fact that you don't want to set a precedent if it's not something you can follow or that you can give to every beneficiary. I'm mindful of that. But that doesn't necessarily mean that you should still stick with that kind of, is this the bare minimum of what I have to give? That's just not going to go well. So that's kind of number 1. You know, other things that I would suggest a trustee do is to try to, you know, keep legalese to a minimum, you know, speak in plain language. Again, you know, kind of making sure you're providing information at regular cadences helps, things like that.
Megan Tepas
And you know, when there's going to be instances where beneficiaries ask for things that trustees just can't give or they're not entitled to, or there's you know, good reasons not to, explain that, you know, instead of just saying no, or I don't have to, try to, try to explain why that's not a reasonable request and tell the beneficiary, educate the beneficiary. I think that really can go a long way too.
Kirby Rosplock
Well, that's a great segue to sort of the next bunch of questions I want to ask you about really how does that trustee beneficiary relationship inform and prepare a beneficiary, because, right, so much of the authority is at one level, and, you know, the beneficial owner or, you know, party that will receive may, may or may not know all the responsibilities of that trustee. Let's just talk about, like, releases, for example. Can you explain what they are, why they might come up in a beneficiary-trustee relationship, and why it's so important to understand how they're used so that the beneficiary doesn't get like freaked out or upset.
Megan Tepas
Mm-hmm. You know, releases are a critical point of trustee and beneficiary communications, I think. And you know, when we talk about releases, it's really a document that does release a trustee from liability, meaning that, you know, beneficiary can't later sue the trustee. So it's kind of a scary thing sometimes for beneficiaries. You know, you're giving up your right to sue a trustee. And so releases really come into play with, you know, annual accountings. Often they will be requested at the time of an annual accounting or when a trustee provides a distribution. Those are two periods of trust administration where trustees will often ask for releases. And I'll note that, you know, when the trustee is a corporate trustee like a bank, you can almost always expect a release request to come with a distribution request for an annual accounting. It's not necessarily the case with all individual trustees. I think it's probably more of 50/50. I know I have a lot of individual trustees that do not request releases in those regular cadences like that. You know, but banks have standard protocols that they follow, and request for releases is absolutely one of them. So a little, little tangent on the side there.
Megan Tepas
But yeah, going back to kind of what they are, you know, they do release a trustee from liability. That is beneficiary saying, I'm not going to sue you for conduct later down the road. So when, when a trustee is asking a beneficiary to sign one of those, you know, I think it's really incumbent upon the trustee to make sure the beneficiary understands what it is. It will help it be enforceable down the road. And because it is a document that a beneficiary is signing to give up rights, it's important that they understand it.
Kirby Rosplock
Yeah, and it sounds like you're also talking about they come in connection to a trigger event, so like a distribution or a trust termination or, you know, a judicial settlement. So something that's happening, and then if the beneficiary is not really clear— and prior to our earlier conversation about if you don't have good communication and they're like distrusting, they could totally take that the wrong way. And I could see this being a flashpoint getting to a dispute. Do you see that happening?
Megan Tepas
Yeah, no, absolutely. I think this may be kind of one of the number one areas where tensions can start to rise and beneficiaries can really start getting suspicious of trustees. And it's unfortunate because I do think this is an area where education helps kind of illuminate what these are and why maybe they're not as scary as they initially appear. But, you know, going back to what I said, I think in the first question, when beneficiaries call, often they say the trustee must be hiding something. That inclination and suspicion starts to grow when a trustee puts a piece of paper in front of you that says, sign this, you're releasing me from any and all wrongdoing. Immediately, if you don't know what that is and kind of the law behind it, like, your spidey sense is going to go up. It's understandable.
Kirby Rosplock
So it sounds like the trustees really, it behooves them to do a lot of education before. What have you seen really good trustees do in terms of communicating, preparing so that that release isn't a surprise and it doesn't set somebody off?
Megan Tepas
Yeah. And you know, I, I would caveat that a little bit with when trustees are asking a beneficiary to sign a release, they absolutely should explain what they are. But this is an area where technically the beneficiary and trustee are sort of adverse to each other. So this is a good time and opportunity for beneficiaries to get independent counsel and have them review the release. It doesn't relieve the trustee from its obligation to kind of tell beneficiaries what this is and make sure that they're comfortable with it. But it's not necessarily incumbent on the trustee to sit down and explain, hey, this is everything you're going to be releasing me from. And this is the legal implication of this. Those are questions more for an attorney that represents the beneficiary. So it's a little bit of a gray area there, but that definitely is kind of where an area where I think beneficiaries can benefit from talking to counsel.
Kirby Rosplock
So what if they're not comfortable and they're like, I don't want to sign this release. I got counsel from a third party and I'm uncomfortable. What, what happens then?
Megan Tepas
Yeah, so if a, if a beneficiary just did not want to sign the release, um, you know, there must be a reason. If they've obtained independent counsel and the counsel's advising not to sign it, at that point the primary alternative is to go to court and to ask the court to, you know, look at whatever the trustee may be asking to be released from, whether it's an accounting whether it's, you know, distribution, and have a court look at it. And the court will either sign off on it or say, no, there's something going on here. So unfortunately, that, you know, that can be a, you know, an expensive alternative, and it can be an alternative that escalates tensions. I mean, you're getting lawyers involved, you know, upfront, and you are, you know, taking things to court, putting things in public filings. So it's not a great alternative. But, you know, to be honest, that is the primary alternative to signing releases. A trustee who wants one is not going to just let it go. You know, there are some potential other options, things like getting an independent accounting firm to kind of look at something if it's about accounting, and that may give the beneficiary some more comfort that a third party, a private third party, has looked at it.
Megan Tepas
And if they say, yeah, everything looks good here, maybe that will give the beneficiary comfort to sign a release without having to go a public route into the court system.
Kirby Rosplock
So I know a lot of your practice is not just in the courtroom. It's actually trying to mitigate, you know, escalating disputes. Tell us about what you've seen about how to effectively pre-dispute counsel some trustees or beneficiaries if you think they're headed in that courtroom direction and What are you helping them? How do you help them at that stage?
Megan Tepas
So when I do get calls kind of before litigation is triggered or really on the cusp of litigation, often, you know, I guess that's the first point. When disputes start brewing, I do think it is advisable to bring in counsel. But what I tell beneficiaries or trustees who call me at that point is bring counsel in kind of behind the scenes. Threatening litigation or threatening to bring in your lawyer to the other side is really not a good play. It escalates things. So you can hire counsel, but you don't need to email the trustee saying, I'm going to sue you and I'm going to bring in counsel. Leave that aside. Call counsel, get independent advice, and have someone helping you and guiding you. But don't necessarily broadcast that because that really can escalate tensions. And you know where I think it can really be helpful? It sounds so simple, but often it's, hey, you want to write a letter to the trustee complaining about X, Y, and Z? Sure, go ahead and write it, send it to me, and let me edit it and let me tone down some of the rhetoric. Uh, let me, you know, take out the name-calling and, you know, let me make sure you're not saying things that if it does get into litigation is going to come back to bite you.
Megan Tepas
And in the inverse, let me make sure we're saying the right things to protect our rights. And you can flip that. I do the same thing for trustees. You know, it's like I said, trustees are people too, and beneficiaries are people too. So it's just wild, but understandable how much personal emotions get into trust documents and trust correspondence and, and all that needs to be pulled back. And sometimes it does take counsel getting involved and sort of just kind of being the neutral party in the room again, like from behind the scenes. But to say, hey, you know, I think you're letting your emotions get in the way a little bit here. We don't need to be so aggressive with the beneficiary in our response, you know. And I do think that's where good counsel can really help. Um, you know, lawyers are not— good lawyers are not hired just to like do everything that the client wants and, and, you know, go full aggressive on the other side. Sometimes good counsel means advising the client that, hey, yeah, I think your personal feelings are getting in the way here. Let's talk about this. And just kind of that process of ghostwriting correspondence can really de-escalate in a really effective manner.
Kirby Rosplock
That's so powerful. I know that obviously I'm very focused around the education front, but have you seen an example where that extra education around fiduciary duty, governance, the trust mechanics has really changed the long-term trajectory of a family's wealth transfer plans or their legacy? And, and can you give us an example of like what you've seen that's really moved the needle?
Megan Tepas
Yeah, so I think generally, um, what's important to realize is trust law is complicated. Mm-hmm. And not only is it complicated, it's relatively new. And there are not a lot of black and white rules. There's state laws, there's state case law, there's the trust documents. So there's a lot of different pieces to it. And I say all that because what that means is it's not surprising that beneficiaries and trustees may have a different understanding of what they should be doing or what is required. Frankly, lawyers have a different understanding from each other often. It's just the nature of this type of law. So just even understanding and being educated on the fact that that is true, and there's a lot of gray area here and there's a lot of nuance. I think just having that understanding can really help because, you know, sometimes beneficiaries have an attitude of, hey, this is my money. You're— you trustee work for me, therefore you do what I tell you. And when I ask something, you give it to me. And when I say jump, you say how high. And that's just not the law. You know, the whole trust corpus may ultimately go to beneficiary, but the trustee has a job to do, and there are parameters that that trustee has to work within.
Megan Tepas
So just even understanding kind of that nuance of things, I think, can be really helpful. You know, there's also kind of on the education, on the planning side, you know, that's a little bit outside my zone. I don't plan. I don't draft wills, I don't draft trusts, um, but I do obviously litigate them, and I see them often. And I'm always surprised how, um, there will be provisions in those documents that, from a litigation perspective, had a family sat down and been a little bit more educated on where disputes arise, could really kind of be avoided. Um, I think I've had, I've had several trust documents that say things like Here's the allocations, and this is going to be effectuated in order to treat them all equally. And I understand where that impulse comes from. You want to broadcast to your children you're treating everyone equally, but that, that type of terminology can call— can wreak havoc and cause such problems. Because if the distributions that you just laid out actually are not equal, and then you followed by the sentence saying they're all going to be equal, all of a sudden you have an ambiguity in the trust.
Megan Tepas
Um, so that's a, that kind of education piece I think can really be helpful too. Um, and that just involves reviewing the documents with your family kind of earlier on in the process, discussing inheritance, discussing succession. Uh, that type of education I think is, you know, invaluable.
Kirby Rosplock
Yeah, I'm so on page with you, and I can imagine it is those family dynamics, it is those expectations, it is some level of entitlement that I think this is what I should be getting. Mm-hmm. Um, and then if it's not really clearly aligned and the paper and the conversations don't line up, that would be a recipe for a lot of family turmoil. You've seen those family dynamics up close. You know, how do old family roles, sibling patterns, generational baggage show up in these trust disputes?
Megan Tepas
Yep, they are always there is the short answer. They are absolutely always there whether people recognize it or not. And, you know, I, you know, a couple examples come to mind. I have one case where a one sibling was named trustee over the other sibling, and it was quickly, quickly apparent that the trustee sibling very much kind of felt like second fiddle growing up to the other sibling. The other sibling was involved in the family business. The trustee sibling was not. And those dynamics so quickly came to the surface. And the way it sort of came out was that the trustee sibling, whether intentionally or not, was using this kind of now power dynamic to kind of get back at sibling, you know, the beneficiary sibling. It just— it's exactly what happened. It just unfolded like that. From a third party's perspective, it was very obvious. So that sort of dispute sibling dispute, sibling rivalry prior to the trust becoming irrevocable and the trustee becoming that position really kind of took that power dynamic and abused it, I would say. And I've also seen examples where it's not so malicious, but the sibling relationship still comes out in other ways.
Megan Tepas
I had this one matter. It was so interesting to me because one of the trustees was just closer to some of the siblings than others for no, you know, no malintent, no, you know, no turmoil, but they were just closer. And so that ended up being a recipe for those siblings who were those— yeah, those siblings who were closer to each other getting more information about the trust just by virtue of more discussions with the trustee. And the other siblings who just weren't close weren't getting that. And ultimately that didn't end up into a big dispute. But if it had become a dispute, that could be something very easily to point to. The beneficiary could say, look, that trustee is violating the duty of— blanking on the term here— the duty of impartiality. Sorry. And there was no ill intent there, right? But it is a breach of the trust code to treat some beneficiaries better than others. So that's another example where sibling relationships can show themselves in the trustee and beneficiary relationship and ultimately, you know, show themselves in a bad light.
Kirby Rosplock
So fascinating. This is such a rich conversation and I could talk to you for so long. I want to switch gears. And just do a quick lightning round of some quick question-answer responses. And just let me know what comes to mind. One mistake beneficiaries make that unintentionally escalates conflict.
Megan Tepas
Uh, name-calling and accusing the trustee of wrongdoing, you know, too early on. Yeah. Yeah.
Kirby Rosplock
Name-calling, not so good.
Megan Tepas
No, adults still do it, if you can believe that.
Kirby Rosplock
I know, it's crazy. One thing trustees wish beneficiaries understood about their role?
Megan Tepas
That the trustee role is a job. You know, it's, it really is. It's a task that takes a lot of time and skill and energy. And, you know, that's why it comes with compensation, because it really is a job. And I sometimes— beneficiaries think that the job is just to cater to them, and that's not it. It is a lot more difficult than that.
Kirby Rosplock
And what's one document every beneficiary should actually read but often don't?
Megan Tepas
Can I say every document that the trust provides? No, really, if the trustee is giving reports, you should read them. But absolutely the annual report, the annual accounting, that, that's a must-read. Absolutely have to look at that.
Kirby Rosplock
This has been such a wonderful conversation. I'm so grateful. Thank you for joining. The Tamarind Learning Podcast. And thank you to all the listeners who are out there. Um, this topic might come up in your life, so you might need to call Megan. If you enjoyed what you've heard today, please like this podcast, subscribe. We are on Apple, Spotify, Amazon, and YouTube. And share it with your friends and colleagues on social media. And, and, you know, to explore more conversations, there's a lot more on our Tamarind Learning Podcast page. But Megan, thank you again for being here today. You're a wonderful guest. So many interesting conversations that we've had, and I hope you'll come back.
Megan Tepas
Yeah, thank you so much. I love being here.
