Trust Contest Laws: Which Apply And When?

Trust contests are petitions filed with the court that seek to invalidate a decedent's trust or its problematic portions. While the chances of successfully contesting a trust are slim, working with a trust contest lawyer can improve one's odds. To contest a trust, one must have a pecuniary interest in it or be an intestate heir. Common grounds for contesting a trust include undue influence, lack of testamentary capacity, fraud, forgery, and revocation. The process of contesting a trust involves filing a lawsuit with the probate court, providing facts and details that amount to grounds for invalidation, and notifying the trustee and other beneficiaries of the upcoming hearing.

Undue influence

In the context of trust contests, undue influence is a critical issue as it can undermine the intent and purpose of the trustor. To address this, states like California have implemented laws to safeguard the integrity of trusts. Under California law, undue influence is defined as "excessive persuasion that causes another person to act or refrain from acting by overcoming that person's free will and results in inequity." This definition highlights the key elements of undue influence: the abuse of power, coercion, and an unfair outcome.

When determining whether undue influence has occurred, courts may examine several factors:

• The vulnerability of the victim: This includes factors such as impaired cognitive function, incapacity, illness, age, and emotional distress.
• The influencer's apparent authority: The influencer may hold a position of trust or authority, such as a fiduciary, family member, caregiver, or legal professional.
• The actions or tactics used: This includes controlling the victim's access to basic necessities, medication, or information; using affection, intimidation, or coercion; and making changes to the victim's rights or property without proper justification.
• The unfairness of the outcome: Courts will consider the economic consequences to the victim, any changes from their prior intentions, and the appropriateness of the outcome given the nature of the relationship.

To successfully contest a trust based on undue influence, clear and convincing evidence must be presented. This means that the contestant must provide substantial proof that undue influence occurred and resulted in an unfair outcome.

Lack of testamentary capacity

Trusts can be contested for many of the same reasons as a will, including a lack of testamentary capacity. To have the capacity to execute a trust, the settlor must be at least 18 years old and have the ability to know the extent of their property and the natural objects of their bounty, which includes family members such as spouses, children, and siblings.

The test for determining whether the testator had sufficient mental capacity is typically similar to that required to make a valid will. However, until recently, trusts have been regulated more like contracts, with higher standards for the mental capacity required to conduct business. This has begun to change as more people have established trusts as part of their estate planning.

In California, for example, the California Court of Appeal partially reversed a lower court's finding that the capacity to make and amend a trust required a higher standard of mental capacity than is required to establish a will. In Andersen v. Hunt, the Court said that if the provisions of a trust are analogous to the designation of beneficiaries and other determinations typically set forth in a will, then the lower mental capacity requirements set forth in Probate Code Section 6100.5 shall apply.

In Illinois, a will or trust may be invalidated based on a lack of testamentary capacity if, at the time the document was executed, the testator did not have the mental capacity to:

• Know and remember his or her children and other immediate family (referred to as "natural objects of his or her bounty");
• Understand the property he or she owns; and
• Plan for the disposition of his or her property.

The party seeking to invalidate the will or trust based on a lack of testamentary capacity bears the burden of defeating the presumption that the testator had the mental capacity to execute the document. They must prove that the testator lacked the capacity to understand one of the three elements stated above.

Medical records and expert testimony are commonly introduced as evidence to prove or disprove the testator's mental capacity. Even if the expert did not personally examine the testator, they may still render an opinion based on any available evidence. Non-expert testimony may also be used, with lay witnesses who knew and observed the testator able to testify as to their opinion of the testator's mental condition.

Fraud or forgery

Fraud

Fraud occurs when a trust is created, changed, or revoked under false pretenses or deceit. This can include a beneficiary making changes to the trust document without the grantor's permission, or misleading the grantor before they sign. Trustees can also commit fraud by mismanaging trust assets, self-dealing, or misrepresenting the value of assets in the trust.

Forgery

Forgery is when a trust document is signed by someone other than the grantor, or when changes are made to the trust document without the grantor's permission. Forgery can also include the creation of a fake trust from the perspective of the grantor.

To contest a trust on the grounds of fraud or forgery, you must have legal standing. This means that you must be a beneficiary of the trust, a legally recognized heir, or a successor trustee.

It is also important to act quickly when contesting a trust. In California, for example, you must file a challenge within 120 days of receiving a Notice of Irrevocability or within 60 days of receiving a copy of the trust.

If you suspect fraud or forgery, you should consult an attorney and gather evidence to support your dispute. This evidence may include forged documents, communications from coercive family members, or testimony from witnesses. Then, you will need to file a petition with the court to contest the trust.

Trust contests can be emotionally and financially draining, so it is important to weigh the costs and benefits before taking legal action. However, if you have a valid reason for disputing a trust, consulting an attorney can help you navigate the process and secure your rightful inheritance.

Revocation

A revocable trust is a flexible legal entity that allows the grantor to change, remove, or alter trust assets, amend the trust, or modify its beneficiaries at any time during their lifetime. Revocable trusts, or living trusts, are often used to transfer assets to heirs while avoiding the time and expenses associated with probate. During the life of the trust, income earned is distributed to the grantor, and only after death does its property transfer to the beneficiaries.

The basic steps involved in revoking a revocable trust are fairly simple and include the transfer of assets and an official document of dissolution. The first step in dissolving a revocable trust is to remove all the assets that have been transferred into it. This involves changing titles, deeds, or other legal documents to transfer ownership. The second step is to fill out a formal revocation form, stating the grantor's desire to dissolve the trust. The official revocation declaration must be signed by the grantor, notarized, and, in some cases, filed with a local probate or estates court.

People might revoke a trust for a number of reasons, usually involving a life change. One of the most common reasons for revoking a trust is divorce, especially if the trust was created as a joint document with a soon-to-be ex-spouse. A trust might also be revoked if the grantor wishes to make extensive changes, or if they want to change the trust's provisions entirely.

There are generally three steps involved in dissolving a revocable trust: removing all assets from the trust; creating a legal document that states the trust's creator wishes to revoke all terms and conditions of the trust and dissolve it completely; and signing and dating the dissolution document, with a notary public acting as a witness.

Ignorance of the trust's contents

While trust contests are usually based on grounds such as undue influence, lack of testamentary capacity, or fraud, ignorance of the trust's contents can also be a factor. Here are 4-6 paragraphs discussing the potential implications of ignorance of the trust's contents:

In some cases, beneficiaries may argue that they were unaware of certain trust provisions that contradict their understanding of the settlor's intentions. For instance, if a beneficiary expects to receive a larger inheritance based on prior discussions with the settlor but finds out that the trust document allocates a smaller portion to them, they may contest the trust. However, it is important to note that a trust cannot be contested solely because a beneficiary feels they deserve a larger share.

Additionally, ignorance of the trust's contents can also refer to the settlor's lack of understanding of the legal implications, requirements, or consequences of the trust they are creating. In such cases, beneficiaries or other interested parties may contest the trust on the grounds that the settlor lacked the necessary mental capacity or was unduly influenced by another party when establishing the trust. This could be relevant if the settlor was elderly or suffering from cognitive impairment.

To successfully contest a trust based on ignorance of its contents, beneficiaries or other interested parties must typically demonstrate that they have a valid reason for their contest and that they have standing, meaning they have a financial stake in the outcome. They must also act within the specified time frame, as there is usually a statute of limitations for trust contests.

In conclusion, ignorance of the trust's contents can be a complex issue in trust contests. It is important for beneficiaries to be informed about their entitlements and for settlors to fully understand the legal implications of their decisions. Seeking legal advice from a qualified trust contest lawyer can help ensure that all parties involved are aware of their rights and responsibilities, reducing the likelihood of disputes arising from ignorance of the trust's contents.

Frequently asked questions