In the same way that interested persons can contest a will, there are recognized grounds to contest a living trust.
A living trust is intended to be the expression of a settlor’s wishes with respect to his properties or assets, as an alternative to probate.
Sometimes, the settlor’s wishes come as a surprise to family members.
If the settlor’s wishes involve the exclusion of a family member or two, questions may start to arise regarding the validity of the trust itself.
No other dispute can become as heated as the ones that take place between family.
If you are in the process of setting up a living trust, or if a family member has set up a living trust and you have questions about its validity, it may be a good idea to familiarize yourself with the various legal challenges that may be brought against the trust.
You can either ensure that your living trust survives such challenges, or you can assess whether your intent to contest the trust has any legal ground to stand on.
The following are by no means an exhaustive list, but we take a look at some of the more common grounds for challenging a living trust as set out under the California Probate Code.
The Caveat of Contesting Under a No Contest Clause
One caveat that you should be aware of, if you are contemplating contesting a living trust, is the no contest clause.
Under California Probate Code §21310, a contest is:
- A pleading filed with the court
- By a beneficiary
- That would result in a penalty under a no contest clause, if the no contest clause is enforced
A no contest clause is a provision in the trust document that states, in a nutshell, if you contest the document, you would be penalized. So, if there is a no contest clause, and you filed a pleading with the court that activates the no contest clause, this would result in some form of penalty against you – oftentimes the forfeiture of your entire interest in the trust.
No contest clauses are designed to deter challenges to the trust instrument, by essentially taking back what you would otherwise have received if you had not challenged its validity.
If you are considering contesting or challenging a trust or any other form of estate planning instrument, and there is an existing no contest clause, we highly recommend consulting with an estate planning attorney beforehand for a clear discussion of your legal options and risks.
The Legal Threshold: Direct Contests vs. Disagreements
Just because you disagree with a person’s decision in setting up a living trust does not mean that it qualifies as a legal issue.
Simple disappointment, a feeling of being unfairly excluded, or a feeling that you were treated unfairly, is not enough reason for a court to invalidate a trust.
Subsection (b) of Probate Code §21310 sets out some of the more common grounds for a direct contest to a living trust.
Lack of Capacity
One of the most common grounds raised in contesting a living trust is the lack of capacity of the trustor.
This is especially true in living trusts that were set up and funded in the final years of a person’s life.
If they have already been suffering from some form of physical or mental ailment, during which the living trust was created and funded, the question of whether or not the trustor had the mental capacity to do so may be raised.
Under Probate Code §810, the default presumption is that a living trust is valid and the settlor has the requisite capacity.
This is a rebuttable presumption, however, and may be overcome by concrete evidence of “a deficit in a one or more of the person’s mental functions” rather than on the basis of a diagnosis of the person’s mental or physical state.
The evidence must show that the person is “totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the capacity to perform a specific act.”
In this case, the specific act that must be correlated to the mental deficit is that of signing the trust.
Unless this burden of proof is substantiated by acceptable and sufficient evidence, then the presumption of capacity stands.
Undue Influence
Undue influence, under California law, is defined as “excessive persuasion” that causes another person to act or not act, “overcoming that person’s free will, resulting in an inequity.”
California’s Welfare & Institutions Code §15610.70 sets out the following elements that are examined in order to determine whether there was undue influence:
- The vulnerability of the victim
- The influencer’s apparent authority
- The actions or tactics used by the influencer
- The equity of the result
To a certain extent, literature has gotten most of these right. We all know the stories of vulnerable individuals under the care of someone exercising authority over the person’s daily life. If undue influence was exerted that resulted in obvious inequity, there must have been some form of influence exerted that is not wholly the victim’s decision.
It is a very common trope. For purposes of a legal challenge, however, sufficient and admissible evidence must be shown satisfying these elements in order for a court to find that undue influence was indeed exerted over the trustor.
Fraud, Duress, and Mistake
When the story trope ends with influencing results to outright fraud, duress, and menace, the grounds for challenging the trust shifts, but are still recognizable legal grounds.
Fraud occurs when a person is intentionally misled, while duress and menace takes place when actual physical or emotional threat or coercion is exerted over the trustor.
Either way, should there be sufficient and admissible evidence to justify a finding that the creation and funding of the trust was not entirely voluntary on the part of the trustor, the living trust may potentially be found invalid.
A mistake on the other hand, is wholly voluntary on the part of the trustor, except it requires a showing that the trustor acted based on a substantial mistake of fact or law. The burden of proof here is a evidence showing that the trustor completely misunderstood the legal effects of their actions.
Audit Your Trust Instruments
If you are establishing a living trust – or have already created one without the guidance of legal counsel – it is highly advisable to schedule a legal review of your trust documents. An experienced estate planning attorney can help identify vulnerabilities, evaluate whether the trust reflects your intentions clearly, and assess how well the plan may withstand potential future challenges.
Likewise, if you are considering contesting a living trust, whether or not it contains a no-contest clause, experienced legal guidance remains essential. Trust contests are highly fact-specific and often depend on the quality of the available evidence. We can help you evaluate the strength of potential claims, explain the legal risks involved, and assess your options based on a careful review of your particular circumstances.