The Winner’s Guide to Family Trust Contests

Whether you’re seeking to contest a family trust, or defending a family trust dispute, it’s important to contact a trust litigation attorney near you as soon as possible to help improve the chances of winning your case. Here’s a guide.

 

Can a family trust be contested?

Yes. Contesting a trust is very common in California and every state, and may be done by any interested party.  Interested parties include heirs, beneficiaries, trustees, and indebted creditors. But in any trust contest case, any interested party must act as soon as possible. Why?  Because the statute of limitations on trust contests in California can be as short as 120 days. That means you may have only four months to file suit, which also means you need to act quickly.

 

What is a family trust contest, dispute, or conflict?

A family trust contest, dispute, or conflict is a civil lawsuit arising where an interested party seeks to invalidate a trust or trust amendment on at least one of several grounds: fraud, forgery, incapacity, undue influence, etc.  If successful, a trust contest will make the trust or trust amendment illegitimate, void or voidable, and unenforceable. Interested parties may include a deceased person’s heirs, their named beneficiaries, or creditors to whom they were indebted at the time of their passing.

When a family member passes away, surviving relatives must deal not only with the emotional pain of their loss, but the resulting practical and financial matters as well. If a family trust is involved, a trustee is tasked with marshaling, inventorying, and distributing assets to the beneficiaries of that trust and paying creditors. But in some cases, beneficiaries or creditors may have cause to doubt the validity of a family trust agreement 

While most trusts are administered without incident, an ever-increasing number result in trust contests.  This is not surprising, considering the proliferation of planning, an aging demographic, changing family dynamics, and growing awareness of the ability to contest illegitimate planning.  And all case, parties want to be sure that their loved one’s true wishes, as they intended them to be, are carried out fairly and in good faith. The best way to explore whether your loved one’s wishes are being honored is to consult a trust litigation attorney. 

 

What is a family trust?

A family trust is a legal agreement, a contract, that helps a person’s estate avoid probate by placing assets into an entity, a trust, that contractually avoids probate and distributes the person’s assets to their intended beneficiaries, usually their family, without the time or expense of probate.  An intervivos trust begins while a person is living, while a testamentary trust, which is uncommon these days, comes into being through a person’s will after they have passed and still requires that that will be probated. 

In either case, the trust document, trust agreement, or trust instrument usually will have been drafted by an attorney on behalf of the trust maker, trust maker (often called a trust settlor or trust grantor), who dictates its terms and signs them into effect. A trust establishes a legal relationships between the trust creator, its trustee(s), and its beneficiaries. The trust creator appoints a designated trustee, who holds legal title to the assets in the trust, and is responsible for distributing them to the trust’s beneficiaries according to the terms of the trust document. 

 

What’s the difference between a trust and a last will and testament?

The difference between a trust and will is that a trust takes legal effect from the time it is signed and created, in the case of a testamentary trust. The assets in a trust may be distributed before death, at death, or in some cases, well after death. In a trust, the trustee is the ultimate manager of the assets and property in the trust. Typically, the owner of the assets serves as his own trustee while living, and names a successor trustee to take over in the event of his or her death.  And, as long as the trust creator has funded his or her assets into the trust, the trust will help the trust creator’s heirs and beneficiaries avoid lengthy and expensive probate court proceedings. 

A will, on the other hand, only takes effect upon the death of the person who signed it. In a will, the owner of assets or property appoints a legal representative, an executor, to distribute the according to the terms outlined in the will.  The assets can be distributed outright to the will beneficiaries, or they can be retained in trust (in the case of a testamentary trust) for the benefit of the trust beneficiaries.  Whether assets are distributed outright or in trust, a will always needs to go through the probate court process, which takes time and costs money.

Importantly, a will, and any testamentary trust contained in it, and an intervivos trust can be contested. The decision whether to do so should be undertaken with the advice and consult of a trust litigation lawyer.

 

Can a beneficiary contest a family trust?

Yes, beneficiaries can contest a family trust. In fact, they are the most common parties to do so.  The second most common trust contestants are heirs who never were or, in the case of an amended or restated trust, are no longer beneficiaries.  Whether an heir or beneficiary, understanding what you stand to lose or gain in inherited funds, personal property, or real estate should be examined with the help of a probate litigation attorney who can help you understand the strengths and weaknesses of your case, as well as the costs, so you can make a well-informed decision.  

 

What are the grounds for contesting a family trust?

A family trust may be contested under any of the following scenarios:

  • The trust creator was incompetent or was incapacitated at the time the trust was created or amended;
  • The trust or trust amendment was the result of undue influence or coercion by parties with an interest in trust assets; 
  • The trust or trust amendment was the result of fraud or forgery committed by parties with an interest in trust assets; or
  • Tortious interference Breach of contract or breach of an agreement to make a trust.

Each claim is fact determinative, and rarely does any case rest on a single fact. Rather, these cases often are won or lost due to an ability/inability to build a case on innumerable, minute facts that help evidence the validity/invalidity of the trust instrument. This is why retaining competent trust litigation counsel early is so crucial.  

 

What if my sibling is contesting a trust?

Siblings contest trusts when they believe that they should be entitled to a larger share of their parents’ (or other family member’s) trust estate.  Disputes between siblings are perhaps the most common types of contests we see, often underlaid with years of history and emotion.  Because of this, we understand that emotions can run high in these cases due to the personal nature of the relationships involved. If you find yourself in the unfortunate position of having to fight a sibling over the distribution of trust assets, finding a probate lawyer who can keep one eye on ensuring you obtain the result you want while keeping another on the relationships you need is vital to securing a complete result. 

 

When should I contest a family trust?

You should contest a family trust if you suspect it fails to reflect what our loved one intended. Most often this opportunity only arises after you’ve lost our loved one and their estate planning documents come to light.  It is in this moment, when you learn about the trust and what it provides that you need to act quickly to ensure their true intentions are carried out.  

Often, trusts are created or amended by elderly individuals later in life, when they may suffer from neurological conditions like dementia or Alzheimer’s, or become increasingly dependent upon others to care and make decisions for them. These circumstances are sometimes exploited by those seeking to profit from the person’s infirmity and relative lack of negotiating power and result in undue influence. 

In other cases, a will or trust may be entirely valid — it is simply less favorable to an interested party than they might have hoped. While it may be clear that the creator of the trust was of sound mind and free of undue influence when signing the document, a trustee or beneficiary may still need to argue for their inheritance if other parties contest the family trust.

 

How do I contest a family trust? 

To contest a family trust, consult a trust litigation attorney as soon as possible. Then consider these guidelines:

  1. Contact a trust litigation attorney for a consultation to see if you have a claim.  Most offer a free consultation.  Take advantage.
  2. Obtain a copy of the trust document if available, and any other evidence and/or documentation supporting your claim, as directed by your attorney. If someone who has a copy of the trust will not provide you a copy, your trust litigation attorney should be able to help you get a copy.
  3. Be sure to do the above in a timely fashion. In California, a petition or complaint contesting a trust must be filed by an interested party in the county probate court within as little as 120 days after receiving notice of the trust from the trustee. PLEASE NOTE that the 120 days is not necessarily from receipt of the trust document.
  4. After receiving a copy of the trust, have it reviewed by your trust litigation attorney who will advise you as to the best strategy.
  5. Whether you file a claim or not, a good trust litigation attorney will be able to help you marshall facts that will help put your case in the best position to settle your case on favorable terms. 
  6. And if you cannot reach a favorable settlement, your trust litigation attorney will be prepared to try your case to verdict in the probate court.  
  7. If the probate court judge rules in your favor, then the trust document will be deemed invalid, and the assets of the estate will be distributed according to your state’s intestate succession laws or, potentially, a prior trust instrument, if any and depending on the terms of the documents at issue.

 

What is required to contest a family trust?

To contest a family trust, you generally must:

  • Be an interested party to the trust, meaning you have a stake in claiming its assets;
  • Have a legal basis for your claim. 
    • You must be able to prove that the trust document is invalid due to a violation of the state laws in which it was created. Common civil claims for contesting a family trust include incapacity, undue influence, fraud and forgery.
  • File your claim within the time frame stipulated in your state’s statute of limitations for contesting a trust. In California, it may be as little as 120 days from the mailing of a trustee’s notice.

 

How long do I have to contest a trust?

Generally, California’s general civil statute of limitations for claims like fraud and forgery apply, but there also is California State Probate Code §16061.7, which requires trustees to serve a notice of administration to all parties to the trust within 60 days of a death or other qualifying event and then gives any potential contestant only 120 days from receipt of that notice to file a contest.  The time can be extended up to 60 days after receipt of the trust instrument or trust amendment as long as it is received within the 120 day period.  

These timing issues can be very tricky and a trap for the unweary.  If you miss this deadline, you’re dead in the water, no matter how good your case is.  Consult counsel to help avoid any missteps.

 

What if the family trust has a no contest clause in California?

No contest clauses are often inserted into a trust agreement to prevent interested parties from disputing any of the trust’s provisions in a court of law. While no contest clauses are a very common element in family trust documents, most states do not actually enforce them from a practical standpoint. In other words, even if there is a no contest clause in a trust, most courts in most states will hear your case anyway. The existence of a no contest clause in a trust usually does not prevent you from disputing the trust’s legal validity, provided there are good reasons for doing so.

California, however, happens to be one of those states where no contest clauses generally are enforceable, albeit with some limitations. Like the 16061.7 notice issues, no contest clauses are nothing to mess around with or guess about.  Consult counsel before taking any action that could inadvertently trigger a no contest clause.  

 

Can you sue a family trust?

No. You technically cannot sue a family trust, but you can sue the trustee of a family trust if you believe they are mismanaging assets you have a claim to, or otherwise stealing or abusing their privileges. You can learn more about this topic by reading our article, Can You Sue A Family Trust?

 

What if I suspect family trust embezzlement or stealing?

If you suspect a family member is embezzling or stealing funds from a trust, contact a trust embezzlement lawyer immediately to defend your rightful inheritance before it’s gone. You can learn more about these offenses by reading our article, The Guide to Family Trust Embezzlement and Stealing.

 

Do I need a trust litigation attorney near me?

We recommend finding an experienced family trust contest lawyer familiar with the probate court in the county where the trust was established and executed. For example, if an offending trustee lives in Miami, Florida, yet the trust is being administered in Los Angeles, California, we recommend working with a trust litigation attorney in Los Angeles. A Los Angeles probate lawyer will generally be more familiar with the Los Angeles Superior Court Probate Division, versus an out of state attorney.

 

Have questions? Contact us any time.
hello@rmolawyers.com or call (424) 320-9444

 

Read More

The Guide to Family Trust Embezzlement and Stealing
The Guide to Undue Influence and Step Parents
Can I Contest My Parents’ Will in California?
How to Fight Conservatorship Abuse
How to Contest a Trust From Home

 

About RMO Lawyers, LLP

RMO LLP serves clients in Los Angeles, Santa Monica, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri and Kansas. Our founder, Scott E. Rahn has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation – Trusts and Estates. For a free consultation, call (424) 320-9444 or visit: https://rmolawyers.com