A generation-skipping trust is a type of irrevocable trust agreement that allows grantors to leave their assets to their grandchildren, “skipping” their children. While grandchildren are the most common beneficiaries of generation skipping trusts, anyone who is at least 37½ years younger than the grantor and is not the grantor’s spouse or ex-spouse can be named as a beneficiary of a generation skipping trust.
What is a generation skipping trust?
Generation skipping trusts are an effective way for people with substantial assets to preserve their family’s wealth. If the assets transferred to the generation skipping trust were left to the grantor’s children through a will or trust, estate taxes, which can be a significant amount of money for large estates, may be incurred at the grantor’s death and again at their children’s death. But, since a generation-skipping trust transfers assets from the grantor’s estate directly to the skip beneficiaries, the grantor’s children never receive title to the property, and, therefore, you can avoid a generation of estate taxes.
Can a generation skipping trust be broken or dissolved?
Possibly. Because a generation skipping trust is irrevocable, the trust cannot be broken, modified, revoked or dissolved like a revocable trust, which can be changed or amended any time. Still like any other irrevocable trust, a generation skipping trust may be modified or terminated judicially using the authority found in the California Probate Code.
Can a generation skipping trust be contested?
Yes, a generation skipping trust can be contested. However, you cannot challenge the trust just because you do not agree with the terms. Generally, you’ll need to prove that the trust is not legally valid in order to successfully contest it.
A few of the reasons you can use to contest a generation skipping trust include:
For a generation skipping trust to be valid, the grantor must be “of sound mind” at the time they create the trust. The legal standard for sound mind is relatively low, and basically requires that the grantor have the mental awareness to understand what they are doing.
If the trust was created because of undue influence, its validity can be challenged. Undue influence means that the grantor was coerced by a third party to create the trust or to name a specific person as a beneficiary or fiduciary. For an undue influence claim to be successful, the level of pressure faced by the grantor must be so severe that it overwhelms their own free will to the point that the trust document reflects the desires of the influencer instead of the grantor.
Fraud or Forgery
If a trust document was procured through fraud, it too can be contested and thrown out. Fraud occurs when the grantor is tricked into signing the trust. For example, a fraudster may tell the grantor they are signing a check when really they are signing a trust that favors the fraudster.
Fraud can also involve trust documents that are completely forged. In these situations, a fraudster might write a generation skipping trust naming themselves as a beneficiary and then forge the grantor’s signature.
Who can contest a generation skipping trust?
Not just anyone can walk in off the street and contest a generation skipping trust. In order to challenge a trust, the party must have legal “standing” to do so. Under California law, a party has standing to contest a trust if they have a property interest (or a potential interest) that will be affected by the administration of the trust. In the context of generation skipping trusts, interested persons are usually beneficiaries or trustees. However, other family members whose property interests may be impacted may also contest a trust in some circumstances.
Do I need a trust litigation attorney to contest a generation skipping trust?
While California law does not require you to retain a trust litigation attorney to contest a generation skipping trust, you will benefit significantly from doing so. Trust contests are complicated, and being represented by an experienced probate litigation lawyer will drastically increase your chances of success.
If you want to contest a generation skipping trust, you should contact a trust litigation attorney as soon as possible. A seasoned lawyer can review your situation and advise you on the relative strengths and weaknesses of your case, potential costs and timeframes.
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About RMO, LLP
RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego, Fresno, the Bay Area, Dallas, and Houston. For more information, please visit https://rmolawyers.com/.