Imagine a situation where a trust document undergoes a last-minute amendment that significantly deviates from the grantor’s previously stated intentions on how they plan to transfer their wealth to the next generation. What are your chances of successfully contesting a trust?

Trusts are a valuable estate planning tool for transferring wealth from one generation to the next, but when situations arise, such as disagreements between beneficiaries, concerns about how a trustee manages a trust, or questions about the fitness of the grantor to make changes to the trust document, it is important to understand when and how trust terms can be contested.

What is a trust?

A trust is a legal entity created by a grantor (settler, grantmaker) and managed by a trustee. A grantor will typically serve as the trustee throughout their lifetime. They may also choose to have another individual or company act as trustee on their behalf. The grantor funds a trust with assets, such as real estate and money, to benefit the trust’s beneficiaries.

Once the grantor passes, the successor trustee has a fiduciary duty to follow the instructions in the trust document when distributing the trust assets to the beneficiaries. A trust document is a legal document that is enforceable in court.

Trusts may be revocable, meaning that the trust documents can be changed throughout the grantor’s lifetime, or they can be irrevocable.

What evidence is needed to successfully contest a trust?

Generally, only people with legal standing can contest a trust. These individuals have either a financial interest in the trust or would inherit it under state intestacy laws. There are many reasons a beneficiary, heir, or successor trustee may contest a trust.

• Lack of capacity: A grantor must be at least 18 years old and have the mental capacity to create a trust. If the grantor is diagnosed with dementia or another condition (cognitive impairment or mental health issues) that impacts their ability to understand the nature and consequences of their actions when signing a contract, any amendments they make to the trust documents after their medical diagnosis may be contested.
• Undue influence: If a grantor is manipulated or coerced into creating or trust or making changes to the trust document that benefit a specific individual, the trust may be contested. Elder abuse is common. According to the Office of Victims of Crime 2023 report, about 1 in every 10 adults over the age of 70 has experienced some form of abuse within the past year.
• Fraud or forgery: Suspicions of fraud or forgery that result in the grantor being deceived when creating or executing the trust can be grounds for contesting a trust.
• Mistakes: If there are mistakes in the trust documents or the grantor’s intentions are not clearly established, the trust may be contested.
• Improper execution of the trust: If the trust is not properly created or executed, the trustee is not handling the trust assets in accordance with the trust instructions, or the trustee is mismanaging trust assets, the trust may be contested. It is the trustee’s fiduciary duty to manage the trust assets in the beneficiaries’ best interests.

Trusts are complicated, so it is important to discuss your reasons for contesting a trust with your attorney. They can help you navigate the legal requirements for contesting a trust and help evaluate your likelihood of success.

Can you contest a trust with a no-contest clause?

A no-contest clause is designed to discourage beneficiaries from contesting a trust by stating that anyone who unsuccessfully challenges the trust will forfeit their inheritance. However, you can contest a trust with a no-contest clause. No-contest clauses are not absolute and may not be enforceable in all states, especially if the person contesting the trust has a legitimate reason for doing so.

A  no-contest clause only applies to someone who has something to lose by contesting the trust. If a disgruntled relative challenges a trust with a no-contest clause and they are not a beneficiary of the trust, then they have nothing to lose by contesting the trust.

A trust cannot be contested simply because someone feels they have been treated unfairly. Before contesting a trust, verify whether it meets at least one of the following criteria: the trust creator was under undue influence from someone who would benefit from the trust; the trust creator lacked the mental capacity to create the trust or revise the trust document; the trust was improperly executed; or it involved fraud or forgery.

Consulting with an estate attorney to help draft a trust agreement can help reduce the risk that the trust will be contested.

If you have questions about contesting a trust or want to learn about how to protect your assets and property with a comprehensive set of estate planning tools, contact us.

You can schedule a call with us or reach us directly at 855.631.3457 to learn more about how to best plan today to protect those most important to you.