Contesting a Trust
An estate plan allows one to transfer their assets smoothly and quickly to beneficiaries after they pass away. Furthermore, one of the most common documents to include in an estate plan is a trust document that allows someone to place their assets into the care of a third party who will distribute these assets to the person’s family, friends, and favorite charity. There are many benefits to utilizing a type of trust during estate planning. However, if someone does not have an estate plan that includes one or more types of trusts, family conflict, higher tax burdens, and probate costs can occur.
When one is looking to contest a trust, they must start by filing a lawsuit in probate court in the state where the creator of the trust passed away. Further, you must collect and provide the proper paperwork and have the standing to sue the trust. If you successfully contest the trust, then the probate court will throw out the trust.
Below is detailed look into the process associated with suing a trust and who has standing to sue a trust.
Who Can Contest a Trust
One must have standing to file a lawsuit. Standing means that an entity is personally affected by the outcome of the lawsuit. Below are the two main entities who have the standing to file a lawsuit against a trust in probate court.
- Disinherited or disadvantaged heirs at law: Family members who under state law could inherit more if the deceased person failed to make a valid will or trust.
- Disinherited or disadvantaged beneficiaries: Beneficiaries including family, friends, or charities that would be given a larger inheritance prior to a written trust.
When Can you File a Contest to a Trust
State laws where the probate case is filed dictate when one can file a contest on a trust. In Alaska, Arkansas, Delaware, New Hampshire, Nevada, North Dakota, and Ohio, one can file a trust contest while the creator of the trust is still alive. In all other states, the plaintiff must wait to file a claim until after the grantor of the trust passes away. Further, the time frame to contest trusts vary from state to state. In certain states, one may only have a few months to contest a trust while other states allow a timeline of a few years.
Situations That can Prompt a Trust Contest
Below are the most common reasons why people attempt to contest a trust in probate court.
Fraud or Undue Influence
In some cases, family members or close advisors try to take advantage of elderly people who are creating a trust. It is against the law to place undue influence on someone who is creating a trust. In addition to undue influence, some people may go as far as forging the trust documents. If one suspects that a trust was made under undue influence or with forgery, one can contest the trust.
Anyone who is 18 or older can create a trust as they have capacity. Capacity refers to someone who can legally partake in an action because they are both 18 years of age or older and are of sound mind. For example, if someone has dementia, substance abuse issues, or other disabilities, they may not have the capacity to create a trust. However, it is on the plaintiff to prove that an individual does not have the capacity to create a trust. If one believes that the creator of the trust does not have capacity to create a trust, they can challenge the validity of their other estate planning documents.
In most states, you must create trust documents and then sign these trust documents with two witnesses. Additionally, the two witnesses must be independent third parties who are not in the will.
The Trust Does Not Serve its Purpose
In certain cases, someone may create a trust for a specific reason. However, the current reality of the assets within the trust prevent the trust from achieving its goal. If the beneficiaries will not receive the originally desired benefit or the administration of the trust will cost more than the beneficiaries receive, one may contest the trust and ask the court to disband the trust.
Trust Language is Ambiguous
You must establish trusts with legal documents. However, when the language within these documents is too ambiguous or vague, the trust may be subject to different interpretations. If this is the case, the beneficiaries may ask the probate court to terminate or modify the trust. The reason for this is so that the distribution of assets may be clear.
How to Avoid a Trust Contest
If you are worried about one of your beneficiaries—or someone who you did not list as a beneficiary—challenging your trust, below are a few things you should consider when creating your trust.
- Hire an Attorney: The majority of people should hire an estate planning attorney when creating a trust. However, if one believes that the trust will likely face a contest, hiring an attorney can deter many potential lawsuits.
- Inform family members about the estate plan: By discussing your estate plan with your family or other beneficiaries, you can work to stop any potential trust contests.
- Use discretionary trusts with problematic beneficiaries: In many cases, removing a beneficiary from your trust because you are worried they will squander their inheritance will lead them to contest the trust. Instead of removing someone, consider creating a discretionary trust that requires a beneficiary to ask a third party to distribute assets to them.
- Update your trust and general estate plan regularly: When creating your estate plan, you should consider it an ongoing process. Further, by constantly updating your estate plan, you will lower the chance that one of your beneficiaries will contest the trust.
Trust and estate laws are complex. This is so no matter the type of trust you decide to establish. As such, it is extremely important to have legal representation that can help you correctly set up your trust. The Antonoplos & Associates trust and estate lawyers have over 20 years of experience helping clients in DC, Maryland, and Virginia set up living trusts, testamentary trusts, irrevocable life insurance trusts, charitable remainder trusts, qualified domestic trusts, spendthrift trusts, special needs trusts, asset protection trusts, and Totten trusts. With this knowledge and experience, we can help with any legal issues that occur from setting up your trust.
Furthermore, Peter Antonoplos, founder and managing partner of Antonoplos & Associates has an LLM in Taxation from Georgetown University Law Center. With this knowledge, Peter can help you decide what is the best type of trust for your and your family and maximize the cost savings you receive from setting up a trust in DC, Maryland, and Virginia.
Contact our DC Law Office for More Information
Finally, for more information regarding contesting a trust, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding trust and estate law, check out our blog.