Funding Your Estate or Trust Contest

Understanding the Cost of Litigation — and the Options That Make It Possible

If you have been disinherited under suspicious circumstances, watched a caregiver or recent acquaintance become the primary beneficiary of a parent's will or trust, or discovered that a trustee has been mismanaging or self-dealing with family assets, you may have a legitimate claim worth hundreds of thousands or millions of dollars. You may also be wondering how you could possibly afford to pursue it. This page is intended to explain, in plain terms, why estate and trust litigation is expensive, what funding options exist, and how the process generally works.

The Reality of Estate and Trust Litigation Costs

Contested estate and trust matters — will contests, trust contests, claims for undue influence, lack of testamentary capacity, fraud, or breach of fiduciary duty by a trustee or personal representative — are among the most document-intensive and witness-heavy cases in civil litigation. They typically require medical record review, expert testimony from physicians and forensic accountants, depositions of family members and professional advisors, and often a full bench trial in probate court. In Hawaii, these matters routinely take two to three years from filing to resolution.

Realistic fee and cost estimates for a typical contested estate or trust matter in our experience:

Retainers to begin a contested matter in this practice area typically range from $15,000 to $25,000, with monthly billing thereafter against the engagement.

Why Traditional Hourly Billing Does Not Work for Many Clients

The clients who call our office every week with serious, meritorious claims are almost never people with $100,000 of liquid funds available to pay legal fees as they accrue. They are typically working professionals, retirees, or family members of a deceased parent whose wealth was concentrated in the very real estate or trust assets now in dispute. The recovery they are seeking is often substantial — frequently between $400,000 and $2 million — but it sits inside the contested estate and is unavailable to fund the very litigation required to claim it.

This is the central paradox of estate and trust litigation: the very assets that justify the fight are the ones the client cannot access until the fight is over. For decades, this paradox simply meant that most legitimate claims went unprosecuted because clients could not afford to pursue them. That is no longer the case.

A Real Alternative: Third-Party Litigation Funding

Over the last decade, an entirely new category of finance has emerged to address this problem. Third-party litigation funding — sometimes called litigation finance or commercial litigation funding — is now a $15-billion-plus industry globally, with established, well-capitalized firms specifically focused on funding meritorious civil cases that clients cannot or do not wish to fund out of pocket.

The basic mechanics are straightforward. A litigation funder reviews the merits and economics of a case and, if approved, advances the legal fees and costs necessary to prosecute it through resolution. The funder is repaid only out of the eventual settlement or judgment — typically a multiple of the capital advanced, or an agreed percentage of the recovery, whichever is greater. If the case is lost, the funder loses its investment and the client owes nothing. The arrangement is non-recourse.

Estate and trust contests are particularly well-suited to this kind of funding for a simple reason: the assets at stake are sitting in a trust or estate under court supervision. They are not going anywhere. The collectibility concerns that make funders cautious about ordinary commercial disputes — will the defendant be solvent if we win? — largely disappear when the recovery comes from a known res held by a fiduciary.

A Second Option: Inheritance Advance Funding

Distinct from case finance, a separate category of companies offers “inheritance advances” directly to heirs and beneficiaries. These are advances against an expected distribution from a probate estate or trust, typically structured at fixed discount rates and repaid from the eventual distribution. They are useful for clients who need living expenses or working capital during a long probate or contest, rather than for funding the litigation itself. We can discuss both options with you depending on your needs.

How the Process Generally Works

While each funder runs its own underwriting, the typical process for obtaining case finance follows a predictable sequence:

1. Initial case assessment. We meet with you to evaluate the merits, identify the assets at issue, and develop a preliminary view of likely fees, costs, duration, and recovery.
2. Referral to a funder or broker. If your case is a candidate for third-party funding, we provide you with the names and contact information of established litigation funders or, more commonly, an independent broker who shops your case to multiple funders to secure competitive terms. We do not negotiate on your behalf with the funder, and we do not accept any referral fee from any funder.
3. Underwriting. The funder reviews case materials — the will or trust at issue, medical records, witness statements, an outline of the legal theory, and a litigation budget. This typically takes three to six weeks. Funders evaluate the strength of the claim, the size of the likely recovery, the duration to resolution, and the structure of the estate or trust.
4. Term sheet and funding agreement. If approved, the funder issues a term sheet outlining the amount of capital available, the return formula, and the conditions of funding. We strongly recommend you retain independent counsel to review the funding agreement itself, since it is a separate financial transaction between you and the funder.
5. Capital deployment. Once executed, the funder advances capital into a designated account. Our firm bills you monthly on our standard retainer agreement, and those invoices are paid from the funded account. Our attorney-client relationship and obligations remain entirely with you — not with the funder.
6. Resolution and waterfall. When the case is resolved, the proceeds are distributed in an agreed priority: case costs first, then attorney fees per our engagement letter, then the funder’s return, then the balance to you. The structure should never compromise your settlement authority or our independent professional judgment.
   

What to Watch For

Litigation funding is a legitimate and increasingly mainstream tool, but not all funders or funding agreements are equal. A handful of provisions and practices warrant particular scrutiny:

• Settlement-control or veto provisions. A reputable funder receives information rights and a right to be heard on settlement, but never the right to override your settlement decision. Any provision giving a funder settlement consent is a problem and a sign to walk away.
• Fee waterfall priority. The standard structure pays case costs first, then attorney fees, then funder return, then client. Funders who insist on priority over attorney fees create misaligned incentives and should be avoided.
• Excessive return multiples. Pricing varies, but for a well-pled estate or trust contest with clear merits, you should expect to see proposals in the range of 1.5 to three times of invested capital, depending on duration. Multiples of four times or more are appropriate only for materially riskier cases and are negotiable.
• Inadequate disclosure on confidentiality. Your communications with our firm remain protected by attorney-client privilege. Documents shared with a funder are typically protected under the work-product doctrine and common-interest principles, but the funding agreement should address this expressly.
• Independent counsel. The funding agreement itself is a separate financial contract between you and the funder. We can describe the landscape, but you should retain separate counsel to review and negotiate the funding agreement itself. We do not represent you in that negotiation, and any funder who suggests otherwise is not the right partner.
• Inheritance-advance products. Inheritance advance companies (as distinct from case funders) charge what can be steep effective discount rates for short-term advances against an expected distribution. They have a legitimate role, particularly when a client needs immediate living expenses, but the client should always run the math on the cost of the advance against the expected timing of distribution.
  

MacDonald Rudy’s Role in the Funding Process

Our role in any funding arrangement is deliberately limited and clearly defined. We will:

• Evaluate the merits and economics of your case and tell you candidly whether it is a candidate for third-party funding.
• Provide you with a list of established funders or independent brokers active in trust and estate litigation finance.
• Continue to represent you in the underlying litigation on our standard fee agreement, with you as our direct client.
• Flag any provisions in a proposed funding agreement that would compromise our representation, your settlement authority, or our independent professional judgment.

We will not:

• Negotiate the financial terms of any funding agreement on your behalf — that is a separate transaction in which you should have independent counsel.
• Accept any referral fee, commission, or other compensation from any funder for sending you to them.
• Recommend a single funder or steer you to a particular funding source in which we have any financial interest. We have none.
• Take any direction on litigation strategy or settlement from a funder. Our obligations run only to you.
  

MacDonald Rudy’s Role in the Funding Process

Our role in any funding arrangement is deliberately limited and clearly defined. We will:

• Evaluate the merits and economics of your case and tell you candidly whether it is a candidate for third-party funding.
• Provide you with a list of established funders or independent brokers active in trust and estate litigation finance.
• Continue to represent you in the underlying litigation on our standard fee agreement, with you as our direct client.
• Flag any provisions in a proposed funding agreement that would compromise our representation, your settlement authority, or our independent professional judgment.

We will not:

• Negotiate the financial terms of any funding agreement on your behalf — that is a separate transaction in which you should have independent counsel.
• Accept any referral fee, commission, or other compensation from any funder for sending you to them.
• Recommend a single funder or steer you to a particular funding source in which we have any financial interest. We have none.
• Take any direction on litigation strategy or settlement from a funder. Our obligations run only to you.
  

Talking to Us About Your Case

If you believe you have a meritorious estate or trust contest and the cost of pursuing it has been the only thing standing in your way, we welcome the conversation. An initial consultation will allow us to evaluate the strength of your potential claim, the realistic economics, and whether third-party funding is a viable path. There is no obligation, and no preferred answer — we will tell you candidly what we think.

To schedule a consultation, contact our office at +1-808-523-3080 or info@macdonaldrudy.com.

Disclaimer: This page is provided for general informational purposes only and does not constitute legal advice, financial advice, or a solicitation to enter into any specific funding arrangement. Litigation funding is a complex financial transaction with significant economic consequences. Every case is different. Past results do not guarantee future outcomes. No attorney-client relationship is formed by reviewing this page. Please consult with qualified counsel regarding your specific circumstances.

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