Even though a living trust is created in lieu of a will, and the terms of the trust clearly spell out the beneficiaries and what they are to receive, those very terms are vulnerable to challenges and contests by parties claiming the living trust violates state trust law and is, therefore, invalid.
What is a Trust Contest?
The living trust can be revocable or irrevocable; the person contesting the trust must file a lawsuit. This suit is typically filed in the trust's state of jurisdiction's probate court. Persons contesting the trust are required to provide documentation outlining the legal arguments supporting the reasons they are contesting and they must have a basis of interest in the outcome. (3)
Common Reasons for Contesting a Living Trust
Claims of a grantor suffering mental illness or being coerced by others are the two most common reasons a living trust gets challenged. The point of contesting a trust is to prove that the trust is not a true representation of the grantor's wishes on dispersing his estate. The probate courts will then allow witnesses, i.e. medical experts to attest to the decedent's mental capacity as well as those who can provide proof of undue influence.
By contacting the attorneys at the Law Offices of James C. Shields they will show you how they can protect you and your loved ones from this happening. They will help you draft a living trust with all the legal requirements to minimize the chances of a challenge.
"Documentary Defects" Contests
Filing a lawsuit claiming the Trust Document is defective is another area that is often contested in a living trust. This type of lawsuit claims that the trust document doesn't meet the state's requirements. There may be several reasons that may cause the probate court to invalidate the trust, such as:
- The document doesn't include a sufficient number of signatures
- Document's language is unclear and ambiguous
- The authenticity of the grantor's signature is challenged
However, the burden of proof is always on the plaintiff -- not only must they provide convincing evidence in order for the courts to invalidate the trust, but they have to demonstrate they have a "standing to sue". In other words, they must have something to gain (inheritance) through state intestate succession laws. If the party prevails in the contest, the probate court will distribute the property under the state's intestate (without a will) succession laws as opposed to the terms of the trust. (1)
Talk to Your Family & Friends
Talk to those closest to you and let them know what your final wishes are and how they are spelled out in the trust. Your family and friends will be the ones to attest to your mental state at the time the trust was drafted and be able to assist the courts in determining if you had the requisite mental capacity.
Does & Don'ts
- Do not "do it yourself"!
- Let your family members know you have a living trust
- Use discretionary trusts for problematic beneficiaries. Put that beneficiary's share in a "lifetime discretionary trust"-- name a trust company or bank as trustee. This way you control when they receive distributions and who inherits anything that is left when the beneficiary dies.
- Keep your estate plan up to date
- Include a no-contest clause in the trust; the no-contest clause severs a beneficiary's interest if the challenge is unsuccessful
Head Off Challenges
By using the attorney services at the Law Offices of James C Shields to draft a trust, they will help you avoid the likelihood of trust litigation after your demise. Their goal is to ensure that your final wishes are fulfilled; this will go a long way to giving you and your loved ones' peace of mind.
If you think it might be time to think through your estate plan, give us a call to schedule a "Discovery Session" where we can determine the best approach to protecting your intentions from trust challenges.