Can a Living Trust Be Contested?
A living trust is an alternative to a last will and testament that accomplishes the same goal of distributing assets to beneficiaries upon one’s death but also has the added advantage of avoiding probate proceedings. The person creating the trust is called the settlor or grantor, who remains the trustee while he or she is alive. The settlor transfers all assets into the trust and then manages them while he or she is alive.
When the settlor passes away, the successor trustee named in the legal instrument takes over the administration of the trust’s assets. The trust administration process is similar to that of an executor’s role in the estate administration of a last will and testament, but the probate court is more hands-off —unless there are challenges to the terms or validity of the trust.
Much like a will, heirs and would-be beneficiaries of a living trust can challenge the instrument on different grounds, and when that happens, the probate court in the county in which the grantor lived and died becomes involved. Challenges can be difficult to prove, just as they would be with a challenge to a last will and testament.
If you are looking to create a living trust and you reside in Southern California, contact our estate planning and litigation attorneys at Bochnewich Law Offices. We will review your financial situation with you—along with your goals for your loved ones and beneficiaries—and help you create the legal instrument to establish your living trust. We proudly serve clients throughout the counties of Los Angeles, San Bernardino, Riverside, Orange, and San Diego.
What Is a Living Trust?
A living trust, also known as an inter-vivos trust, is much like a will in that it allows the grantor who creates it to designate who gets what of the assets placed into the trust, and that’s a key difference from a will – you have to place your assets into the trust. While you’re alive, you are the trustee of the trust with full control over the assets therein, whether they be bank accounts, real property, securities, heirlooms, art collections, or anything else.
The trust document also must name a successor trustee to take over the administration of the assets upon your death and then distribute them to your named beneficiaries. While the trustee can administer your estate pretty much outside of probate court supervision—a major benefit of a living trust, as mentioned earlier—the trustee is still subject to the California Probate Code.
A living trust is also a revocable trust, meaning the grantor can withdraw it or modify it at any time during their lifetime. Once the grantor passes away, however, the living trust becomes irrevocable, meaning it cannot be changed or withdrawn. Under the Probate Code, however, there are avenues to challenge the trust, but the window for doing so is short and focused.
Can a Living Trust Be Contested?
The answer is yes, but certain factors and qualifications must be met. When the successor trustee takes over administration, he or she is mandated by the California Probate Code to notify beneficiaries and heirs. The notice is required to contain a statement advising everyone of the time frame to challenge the terms of the trust, with wording such as:
“You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.”
Basically, challenges must be made no more than 120 days from the date that the beneficiary or heir receives notice that the trust is being administered, but if a copy of the trust is requested, then a 60-day window opens from the date of receipt.
Reasons for Challenging a Living Trust
Challenging a living trust generally must be based on the same reasons or factors used to challenge a will. These reasons include:
The settlor was unduly influenced: Perhaps a family member, friend, associate or other named beneficiary coerced the settlor into rewarding that person more than justified, maybe through threats or intimidation or by taking advantage of the settlor’s emotional or mental state at the time.
The settlor was not of sound mind: A challenge can also be based on the mental fitness of the grantor when creating the document. This can be difficult because courts have specific criteria, and dementia itself may not always be a deciding factor.
The language of the trust is ambiguous: Trusts must be carefully crafted to avoid confusion when it comes time to administer the assets. If this is not the case, then beneficiaries and heirs can challenge the document.
Fraud: Someone forged or altered the document.
The trustee ignores fiduciary duty: The successor trustee may be using their role for self-benefit at the expense of beneficiaries.
The trust does not serve its purpose: Current realities may prevent the trust from fulfilling its original purpose. Perhaps the trust may cost more to administer than beneficiaries receive. Sometimes, a trust may contain a termination clause, but if not, beneficiaries can petition the probate court to void the instrument.
Eligibility for Challenging the Trust
In addition to the time limitations on challenges, the person making the challenge must also have standing under the law to do so. To have standing, the challenger must be a beneficiary or an heir under the law. If a person is not named in the document or is not an heir according to state definitions, they cannot challenge the trust.
Get Your Questions Answered
A living trust is a more expeditious way to take care of loved ones when you pass on since it avoids probate court proceedings, which can drag on for months or more and in the process ring up legal and other costs. If you’re embarking on the estate planning process, or wish to review what you’ve already created, you can rely on our attorneys at the Bochnewich Law Offices.
We will answer all your questions and address all your concerns. We proudly serve clients throughout Southern California in the counties of Los Angeles, San Bernardino, Riverside, Orange, and San Diego.