A living trust helps protect your assets in case you cannot manage them during your lifetime. It also transfers those assets to beneficiaries upon your death. A common question asked is “Can a living trust be contested?” Here’s what you need to know.
Can a Living Trust Be Contested?
Yes, it is possible to contest a living trust. Generally, you must take the claim to court and show legal grounds for not honoring it. You will need to produce evidence to support your claims during the proceedings. It is similar to contesting a will, but it can be more difficult.
It is not easy to successfully contest a properly executed living trust that follows all legal requirements. Because of that, many people choose to establish trusts to ensure that their assets are distributed according to their wishes.
Grounds for Contesting a Living Trust
There are several grounds for contesting a living trust. Most appeal to the validity of the document itself. However, some beneficiaries may also choose to contest a trust based on improper oversight. The following are key reasons people contest living trusts:
● Breach of duty: The executors of a trust have a fiduciary responsibility to manage it properly. Beneficiaries may contest the trust if they feel this duty was violated, such as through theft or mismanagement.
● Fraud or influence: In some cases, someone can trick or manipulate a person into establishing or changing a trust. This is especially true in cases where the individual in question benefits unfairly. In that case, other beneficiaries or those excluded may choose to contest the trust.
● Lack of capacity: As with any financial and legal decisions, a person must have the mental capacity to enter into an agreement. Dementia, mental illness, or other disorders that affect reasoning may leave someone incapable of making that type of decision. You may contest a living trust based on this lack of capacity.
● Poor execution: States have very specific rules about how to execute a trust. Failure to follow these rules can result in it being invalid or subject to being contested.
People may contest a living trust for other reasons. In all cases, it is up to the courts to determine if a claim is valid and whether to honor the instructions in the trust.
What Is a Living Trust?
Living trusts serve as a legal way to assign control of your assets. There are two main types of living trusts: revocable and irrevocable. A revocable living trust is a flexible arrangement where you or the grantor retains control over the trust. You can make changes or revoke it.
The latter is usually permanent and grants control over the covered assets to a trustee. This may have tax benefits or help protect assets from creditors. Both versions transfer assets to beneficiaries without probate after your death.
Components of a Living Trust
A living trust portfolio from AmeriEstate is a comprehensive package of all legal documents necessary to protect your estate. It features a revocable living trust and pour-over will as its main components. It also includes:
● Advance Health Care Directive: This lays out your wishes for medical care if you are unable to communicate them yourself.
● Healthcare Power of Attorney: This document provides an agent the right to make healthcare decisions for you if you cannot.
● Financial Power of Attorney: Like its healthcare counterpart, a financial POA appoints an agent who can make financial decisions for you if you cannot.
● Last Will and Testament: This is a legally binding document that outlines how you want assets distributed after your death. It reinforces your trust and can be helpful for any assets not covered in the trust.
In addition to these important legal documents, which we prepare in a leather-bound folder, we provide in-home notary service and membership to our annual legal plan.
Who Should Have a Living Trust?
Anyone with assets in only their name should have a living trust. This includes homeowners, business owners, and others with assets over the state probate limit. In many states, trusts allow you to avoid probate court. Having one in place ensures your wishes are followed and saves your beneficiaries a considerable amount of time and effort settling your estate.
Will Your Living Trust Be Contested?
If you have a living will, you can take steps to protect it from benign contested. Hiring an experienced legal team is your first step toward securing your assets. Our team at AmeriEstate will help ensure that your living trust is written and executed according to state requirements. We will also take steps to establish competency and guard against outside influence if there are any concerns. Contact us to schedule a consultation.