How Do I Dispute a Family Trust?

Executive Summary

• A family trust is a trust created by an individual who names family members as beneficiaries to receive specified trust assets.
• To contest a family trust, an interested party must have grounds for contesting a trust by being a beneficiary of a trust, a legally recognized heir, or a successor trustee.
• Legally recognized reasons for disputing a family trust include undue influence, fraud, a lack of mental capacity, and more.
• To dispute a family trust, you should consult an attorney and gather evidence supporting your dispute to petition the court.

Introduction

Trusts are legal agreements in which one person (a trustee) holds property for the benefit of another (a beneficiary). A family trust is created by one or more people who want to share their wealth with their children, grandchildren, nieces, or nephews.

However, there can be circumstances where a beneficiary may not want to accept the terms of the trust, such as when their inheritance has been reduced or eliminated because of interference by a third party. In these cases, it may be possible to dispute a family trust.

Navigating the process of family trust disputes shortly after the death of a beloved family member can be difficult. A trust administration attorney can help you navigate family trust lawsuits and related cases so that you can secure access to your rightful inheritance while preserving the true intentions of the deceased—this guide highlights what you need to know about the process.

What Is a Family Trust?

A family trust is a type of trust set up by an individual or estate that specifically benefits their family members. This can include a trust that names children, grandchildren, nieces, nephews, or siblings as beneficiaries. An individual often sets up a family trust for the sake of transferring wealth within their family and providing for their heirs.

A family trust typically consists of the following elements:

• Grantor – The grantor is the person who creates a trust to have their assets distributed to named beneficiaries based on the terms they laid out.
• Trustee – A trustee is an individual who is named in a trust as responsible for managing and administering the assets of the trust.
• Beneficiary – A beneficiary is any individual named in a trust as entitled to receive a share of assets from the trust.

Some benefits of creating a family trust include asset protection, lowered taxes, and the ability to remove ambiguity from the administration of an estate’s assets. However, even with these benefits, there are instances where a family member can raise a dispute against a trust.

What Are Some Reasons To Dispute a Family Trust?

In order to contest a family trust, you must have a legally recognized reason to challenge the validity of the trust document. This means that, in some circumstances, you may not have the legal grounds necessary to dispute the trust.

The following are some of the most common reasons for disputing trusts.

Undue Influence

An interested party can initiate a trust dispute if they believe the trust does not represent its maker’s true intent because a third party exercised undue influence over them. Undue influence involves a bad actor using tactics to influence a grantor to make changes to their trust, often for their own personal gain.

Examples of undue influence over a grantor include using guilt or emotional manipulation, threatening to withhold care, or using isolation to influence them to make changes to a trust that benefit the bad actor.

Fraud

If the trust was procured through fraud, the document is considered invalid. Fraud can occur at the time of trust creation or at any point during the trust administration process.

Instances of fraud may include a beneficiary making changes to the trust document without the grantor’s permission, hiding a trust document from other parties, and misleading the grantor before they sign. A trustee can also commit fraud by mismanaging trust assets, self-dealing, or misrepresenting the value of assets in the trust.

Forgery

Interested parties in a trust have the right to contest if it is a forged or otherwise fraudulent document. Examples of forgery include someone creating a fake trust from the perspective of the grantor, making changes to the trust document without a grantor’s permission, and forging the grantor’s signature without their knowledge.

Lack of Mental Capacity

If the person who made the trust did not have the mental capacity to do so, the trust may be considered invalid. Examples of a lack of capacity include having a medical condition that affects your memory or ability to make decisions, having a mental health condition, or being not of sound mind due to old age.

Financial Elder Abuse

In cases where a trust creator was an elderly and vulnerable individual and taken advantage of by a bad actor, a trust will likely be considered invalid. Financial elder abuse can take several forms and can include cases of undue influence, coercion, or manipulation.

Breach of Fiduciary Duty

If a trustee managing the trust breaches their fiduciary duty, an interested party will also have a right to contest a trust. Breaches of fiduciary duty can include mismanagement of trust assets, self-dealing, or failing to provide accurate information about the trust’s terms.

Beneficiaries or successor trustees can claim a breach of fiduciary duty to have the trustee removed and dispute the administration of the trust’s assets.

Legal Grounds for Contesting a Trust

Not only must an individual have a legally recognized reason for contesting a trust, they must also have legal standing to contest a trust. In other words, they must be a specified interested party in the trust to contest it.

The following parties have grounds to contest a trust:

• Trust beneficiaries
• Legally recognized heirs of the grantor who were not included in the trust
• A successor trustee

To have grounds for contesting a trust, an individual must meet one of these criteria and also suspect one of the above legal reasons. Regardless of the circumstances, you should always consult an attorney to discuss your case if you suspect you have grounds for a contest.

Keep in mind that some people avoid contesting a trust if there is a no-contest clause in place. However, in California and Texas, no-contest clauses are often not enforceable, especially when there is a reasonable basis for the contest, so it is still worth contacting an attorney if you have a valid reason for disputing a trust.

The Process for Disputing a Family Trust

Disputing a family trust, like disputing a standard trust, requires a detailed process that involves navigating the court system.

If you are looking to dispute a family trust, you should take the following steps:

• Consult with an attorney – The first step to contesting a family trust is to consult with an experienced trust litigation attorney. A knowledgeable professional can review your situation and make recommendations as to the best course of action to achieve your goals.
• Gather evidence for a trust dispute – With your attorney, begin acquiring evidence for your trust dispute, which may include forged documents, medical records that demonstrate incapacity, communications from a coercive family member, or testimony from witnesses.
• File a petition to contest a trust – A trust contest must be filed through a petition to the court, including the appropriate documentation and procedures.

In some situations, it may not be possible to dispute a trust, or you might decide that the emotional toll would be too great. Speaking with a trust lawyer can help you determine whether the costs of legal action outweigh the possible benefits.

If you consult with an attorney and determine that a trust dispute is the best form of action, then you should be sure to file your petition within the appropriate timeline for it to be recognized and considered by the court.

How long do you have to challenge a trust?

To dispute a trust in California, 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 it is not included with the initial notice.

Under California Probate Code Section 16061.7, whenever a family trust becomes irrevocable because of the death of one or more of the trust’s creators, the trustee is required to send a Notice of Irrevocability to all beneficiaries. The trustee must serve the notice within 60 days, and the notification must include the following warning:

“You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.”

If the trustee includes a copy of the trust with the notice, you have 120 days from the date the notice is mailed to contest the trust. However, if the trustee does not include a copy of the trust with the notice and does not provide a copy within the 120-day period, you still must contest the trust before the 120-day deadline. If the trustee does not include a copy of the trust with the notice but sends one before the expiration of the 120-day period, you have 60 days from that point.

As you can see, determining the deadline for disputing a family trust in any given case can be incredibly confusing. If you miss the deadline for filing a contest, you have likely forfeited your opportunity to challenge the trust’s legitimacy. For this reason, we recommend discussing your situation with an accomplished trust dispute lawyer to ensure you don’t miss your chance.

Can a Spouse Contest a Family Trust?

A spouse can contest a family trust as they are considered someone who is directly affected by the execution of the trust and has legal standing to do so. Spouses typically have unique legal rights to a deceased spouse’s assets, so they have legal grounds to contest if they believe these rights are not being honored by the trust administration process.

Common circumstances where a spouse may contest a trust include:

• Community property – In community property states like California and Texas, a surviving spouse is entitled to all the estate assets that were acquired during the course of the marriage. If this right is infringed upon, a spouse can raise a contest against a trust.
• Omitted spouse – If a spouse was unintentionally omitted as a beneficiary of a trust, they may raise a dispute citing their legal right to a share of the estate. This is common in situations where a grantor remarried after creating their trust.
• Undue influence or coercion – A spouse may contest a trust if they know that they were named as a beneficiary of the trust at some point and suspect that another beneficiary influenced the grantor to exclude them from the trust.
• Discrepancies between trust terms and previous communications – A spouse may raise a contest if the terms in the trust are different from the intentions that a grantor expressed before they passed.

If you are a spouse and have concerns regarding your entitlement to assets outlined in a trust instrument, you should consult a trust litigation attorney. Spouses have unique rights to an inheritance, and consulting an attorney is the best way to help you exercise them.

Family Trust Problems and Solutions

When setting up a family trust, it’s important for all parties to be aware of the potential problems that may arise and how to solve them. Some of the most common issues that can compromise family trusts include unclear terms, mismanagement of trust assets, or questions about the grantor’s intent.

Solutions to these problems are often carried out through transparency and clear communication. This process starts with creating the trust document with clarity in mind. Having a trust administration lawyer by your side when creating a trust can help you navigate the challenges of creating a trust, avoid ambiguity, and prevent potential issues that can arise after the grantor’s death.

If there are concerns or disagreements surrounding a trust, it’s a good idea to get out in front of them. Trust disputes can take an emotional toll on all parties involved and cause strain in family relationships. An inheritance dispute attorney can help provide mediation and oversee negotiations before disputes go to court.

Challenges and Considerations in Trust Disputes

Although a trust dispute may be an avenue for securing a larger portion of the inheritance, there are roadblocks that may prevent individuals from pursuing them. Before pursuing a trust dispute, interested parties should consider whether the benefits of upholding the wishes of a grantor outweigh these potential challenges.

Disputing a trust can come with the following challenges:

• Emotional toll – Losing a family member is difficult enough, but compounding this with having to contest other beneficiaries and navigate the legal system can be even more emotionally draining.
• Financial costs – Taking time to hire a lawyer and raise a contest in court can be time-consuming and costly, which can be a barrier to pursuing a trust dispute.
• Weighing the costs and benefits – It can be difficult to determine whether the time, effort, and financial costs are worth the return. An attorney can help you assess your chances of success before pursuing a contest.

Despite these challenges, disputing a trust can often be worthwhile for the sake of securing access to your rightful inheritance. If you stand to benefit considerably from a trust dispute and receive a sizable portion of the estate, it may be worth the costs spent on the filing and court fees.

Preventing Family Trust Disputes

Trust disputes are more likely to occur in situations where there is a lack of clarity surrounding trust assets. Being proactive when creating a trust is the best way to minimize the chances of disputes over the terms laid out in the document.

Strategies for preventing family trust disputes include:

• Creating a clear trust – Ensuring clarity and sufficient detail while creating a trust document will minimize the risk of disputes arising over ambiguous terms. A grantor should consult a trust administration attorney when drafting their trust to verify its clarity and legal standing.
• Maintaining clear communication and transparency – A grantor should clearly communicate their intentions and be transparent about their wishes with the trust before their passing, and a trustee should communicate carefully with beneficiaries in their management of the trust after the grantor’s passing.
• Regularly updating and reviewing the trust document – A grantor should update their trust document whenever a significant life change occurs, such as remarrying or having a child, and aim to review the trust document at least yearly to ensure it still aligns with their wishes.

All of these strategies will make it harder for parties to question or contest a grantor’s true intentions. Your best bet for preventing family trust disputes is to consult an attorney as soon as possible. An attorney can provide guidance to ensure that the document considers the unique inheritance rights of specific parties, like spouses, and can review a trust document to ensure it is clear and free from ambiguity.

Seeking Legal Advice for Trust Disputes

If you believe you have grounds for a trust dispute, the guidance of a trust litigation attorney is invaluable for ensuring you have legal standing and follow the appropriate procedures. With the strict deadlines imposed on raising a trust dispute, it’s important to seek an attorney as soon as possible.

As you search for the right attorney, you should pay careful attention to their level of experience and strategy in approaching cases. You have the right to research for an attorney that you feel the most comfortable representing you.

Consider asking the following questions of potential trust litigation attorneys:

• What are some examples of similar cases you’ve handled successfully?
• What legal strategies do you recommend for my case?
• What is your fee structure? Can you provide an estimate of the charges for my case?
• What potential outcomes can I expect from my case?

Our attorneys here at RMO have decades of experience representing clients in trust dispute cases. Even better, we take a compassionate approach to supporting our clients throughout every step of the process, ensuring an empathetic helping hand.

Take Action on Disputing Your Family Trust Today

You can dispute a family trust if you have an adequate legal reason and legal grounds for doing so. Grounds for petitioning the trust can include a trust being created under undue influence, fraud, or a lack of mental capacity. The trust dispute process involves gathering evidence to support the trust contest and petitioning the court.

At RMO, our team of trust litigation attorneys can support you in initiating or navigating family trust disputes. With decades of experience, our attorneys are well-versed in understanding the steps surrounding trust disputes. Using this experience, we will help you navigate the legal system and develop a winning strategy to secure your rightful inheritance.

Schedule a consultation today to learn more about how we can help you navigate family trust disputes.