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Estate Planning | Elder Law | Special Needs Planning

CAN YOU CHALLENGE A TRUST?

CAN YOU CHALLENGE A TRUST?

Most people have heard about last will challenges, but can you challenge a trust? If you look for the answer to this question on the Internet you may get some confusing answers.

Popular Misconception

Before we talk about trusts, let’s talk about last wills first. A will must be admitted to probate before the heirs to the estate receive their inheritances. It is up to the probate court to examine the will to determine its validity.

Because of this inherent court involvement it is relatively easy to challenge a last will. The will is in the hands of the court already. The court is charged with the responsibility of determining whether or not it is valid. Therefore, the entire process is set up to allow for challenges to the validity of the will.

Now, back to trusts. When you hear the above, you may immediately think that you could use a trust rather than a will to avoid challenges. There are those who contend that a trust will prevent a challenge.

When you arrange for asset transfers through the utilization of a trust rather than a last will, the transfers take place in a direct manner outside of probate. The trust is not admitted to the probate court like a will would be, so there is no built-in forum within which a challenge could be presented.

This does not mean that it is impossible to challenge a trust. You could challenge the terms of a trust by initiating a lawsuit.

No-Contest Clauses

There are those who will contend that you can eliminate this possibility by including a no-contest clause within your trust. A no-contest clause would stipulate the total disinheritance of anyone who challenges the terms of the trust.

Let’s say that your father creates a trust late in his life and makes you a beneficiary. He got remarried when he was in his eighties, and you are not receiving as much as some of the newer people in his life. You feel as though he was not of sound mind when he created the trust agreement. You have reason to believe that he was unduly coerced by his wife. The trust includes a no-contest clause.

If you initiate a lawsuit to challenge the terms of the trust and you lose, you will in fact be disinherited entirely. Therefore, a no-contest clause can certainly serve as a powerful disincentive, because you would be taking a big risk.

However, such a clause does not make it impossible for you to challenge a trust. You could win the lawsuit and you would not be disinherited, but others who thought they were protected by the no-contest clause may fact be left out in the cold.

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