When loved ones have disagreements about how a trust should be established and managed, including how the trust property should ultimately be distributed, the resulting dispute can be emotionally stressful, as well as expensive. Nevertheless, trust beneficiaries and trustees often have disputes that can lead to trust contests and litigation in court. Here is what our Orange County trust lawyers have to say about some of the common trust issues and how to deal with them.
Can someone “contest” a trust like they do a will?
People are more familiar with will contests. But it is just as common for people to contest a trust and how it is being administered or how the assets are being distributed. There are many different reasons why someone might contest a trust. As our Orange County trust lawyers can tell you, the most common reasons are based on with whether the person making the trust had the capacity to do so.
Why do most people contest a trust?
As with the last will and testament, the most common reason for contesting a trust is the fact that family or friends of the deceased thought they should have received something that they did not. It is usually that simple. For some, the knowledge that they have been disinherited leads them to automatically assume their loved one must have been tricked into doing so.
Lawmakers and courts are always looking to honor the intentions of the person who created the trust, so it can be very difficult to win a trust contest in court. That does not mean that coercion and deception never occur. Depending on the circumstances, a trustor could be susceptible to undue influence or could even lack the mental capacity to understand what they signed. For that reason, evidence must be submitted to the court to prove the trustor’s mental state at the time the document was signed. This can be a big challenge.
How does a court determine whether a trustor had legal capacity?
Although the level of evidence that is required to prove that a trustor did not have sufficient mental capacity at the time the trust was created is not a particularly high standard, it is a higher burden than what is required for a will. Generally speaking, it must be shown that the trustor knew and understood what was included in his or her estate and was aware of the “natural objects of his bounty.” Put more simply, the trustor must have known about any houses, bank accounts, personal property, etc. that were included in the estate, and who was entitled to inherit those assets, including a spouse, children, brothers, sisters, etc. If these issues arise in your family then you need to consult with one of our Orange County trust lawyers.
California recognizes a “no contest” provision
One way to reduce the chance of a trust contest arising is to include a so-called “no contest” clause. In fact, it has become more common for trusts to contain this type of provision which states that if a beneficiary challenges any of the terms of the trust, that person is automatically disinherited. At one time, the law governing “no contest” clauses in California also recognized what was referred to as a “safe harbor” petition. This particular petition allowed a beneficiary who disagreed with the terms of the trust to seek prior approval from the court to determine whether their challenge would be considered a violation of the “no contest” clause. In other words, the beneficiary would be allowed to test the waters without necessarily jeopardizing their inheritance.
The repeal of California’s “safe harbor” law
California repealed the “safe harbor” petition provision as it was in 2010. Instead, the petition will only be allowed if the court determines that the petitioner had “probable cause” to believe that the facts would lead a reasonable person to find that mental incapacity, undue influence, or a variety of forms of deception existed.
What are some of the most frequently raised issues in trust litigation?
There are a wide variety of situations in which a trustee may find himself in court on behalf of a trust or estate. It could be that the trustee must initiate the lawsuit based on the wrongdoing or negligence of someone else. On the other hand, a trustee may be required to represent the trust or estate in defense of a claim brought against it by another party.
If you have questions regarding trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.
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