Although a trust beneficiary does usually have the right to challenge a trust, simply being unhappy with the trust’s terms is not a valid basis for doing so. In other words, a beneficiary of a trust can only challenge a trust on certain established grounds.
Suppose a dying parent requests her adult son to help manage her medical care and personal affairs. The son, in turn, devotes himself to providing around-the-clock support to his parent. Eventually, he uses the closer bond he’s formed with his parent to pressure her into changing her trust to benefit him to the detriment of his siblings. Upset by their brother’s manipulative behavior, his siblings may wonder: Can an unhappy beneficiary challenge a trust?
While it may seem the son’s sacrifices should earn him special acknowledgement in his parent’s trust, his behavior actually may have constituted undue influence, which is a form of manipulation and a valid reason for challenging a trust.
All that to say, a beneficiary’s unhappiness with the terms of a trust often stem from larger issues with the trust, which may entitle the beneficiary to challenge the trust. The best way to know for sure whether it’s possible for you to challenge a trust is to consult with a skilled trust contest attorney.
What Does It Mean to Challenge a Trust?
When you challenge a trust, you are asking the court to assess the validity of the trust instrument. In other words, you are contesting the trust.
When a trust is successfully challenged, what happens to trust assets will depend on whether or not there are prior valid trusts. If the decedent had previously executed a valid trust, trust assets typically will be distributed according to the terms of the last valid version of the trust. If the decedent hadn’t previously executed a valid trust, trust assets typically will transfer to the decedent’s estate.
If trust assets transfer to a decedent’s estate, they will be distributed to estate beneficiaries according to the decedent’s will, so long as the instrument is valid. If the decedent hadn’t executed a valid will, the assets will be distributed to the decedent’s heirs according to intestate succession laws.
When Can an Unhappy Beneficiary Challenge a Trust?
Before investing time and resources into pursuing legal action, disgruntled beneficiaries must confirm their case meets the legal requirements for challenging a trust.
Namely, they must be able to show they have a legal right to contest the trust (called legal standing) and are doing so within the stipulated time frame and for the right reasons.
They Have Standing to Challenge the Trust
A trust beneficiary cannot challenge a trust unless they have what is known as legal standing. To have standing, a beneficiary must stand to receive a greater inheritance by winning their legal matter than the inheritance they’re receiving under the current trust.
To put it another way, if by challenging a trust and winning, a beneficiary would receive an equal or lesser inheritance than the inheritance a trust currently provides them, they would not have standing.
They Are Within the Time Limits for Challenging a Trust
A trust beneficiary cannot challenge a trust if they file their trust contest after the deadline for challenging a trust has already elapsed. This is why it’s crucial for disgruntled beneficiaries to act quickly if they plan to challenge a trust. Ideally, they should touch base with a trust contest attorney as soon as they receive notice by the trustee.
According to California Probate Code section 16061.8, the window for challenging a trust closes 120 days from the date notice is served by the trustee or 60 days from the date a copy of the trust instrument is delivered during the 120-day period, whichever is later.
If a trustee fails to properly notify beneficiaries within this time frame, their window for challenging a trust could be extended.
They Have Valid Reasons for Challenging the Trust
A trust beneficiary cannot challenge a trust unless the trust instrument meets one or more established grounds for contesting a trust.
In most cases, for a trust instrument to meet one or more grounds for challenging a trust, it should have been created, amended or revoked as a result of another party’s wrongful conduct, the trust creator’s lack of capacity or an error of some kind.
The established grounds on which a disgruntled beneficiary can challenge a trust are described in the following sections.
Undue Influence
If it seems a decedent changed their trust as a result of another party applying excessive pressure on them or manipulating them, it may be possible to have the trust invalidated on the basis of undue influence.
Keep in mind that proving undue influence can be tough, so involving a skilled trust contest attorney in the process is recommended.
Fraud
If it seems a party intentionally deceived or misled the decedent for personal gain, it may be possible to have the trust invalidated on the basis of fraud.
In the context of challenging a trust, fraud in the inducement may have occurred if the decedent was lied to about material facts, whereas fraud in the execution may have occurred if the decedent was lied to about the very nature of the instrument they were signing or its implications.
Forgery
If it seems someone other than the decedent created or signed the instrument that’s purported to be their trust, it may be possible to have the trust invalidated on the basis of forgery.
Proving a trust instrument is a forgery can be complicated. Typically, a handwriting analyst will need to provide expert testimony to support your claim.
Lack of Capacity
If it seems the decedent had not been mentally competent at the time they created or changed their trust, it may be possible to have the trust invalidated on the basis of the decedent’s lack of capacity.
Keep in mind that the level of capacity needed to create or change a trust can be quite high, especially if the trust is complex.
Lack of Due Execution
If it seems the decedent failed to follow established protocols to execute their trust, it may be possible to have the trust invalidated on the basis of a lack of due execution.
For a trust instrument to be valid, it must be signed by the trust creator, name a trustee and beneficiaries, and hold assets.
Mistake
If it seems the decedent might have been mistaken about the nature of the instrument they were signing (i.e., they were unaware it was a trust), or some other fact that caused them to execute the instrument, it may be possible to have the trust invalidated on the basis of their mistake.
Trusts are complex legal instruments. For this reason, it is easy for trust creators to be mistaken about certain facts related to their trust, causing their trust to not be a reflection of their true intent.
How Can an Unhappy Beneficiary Challenge a Trust?
Instead of dwelling on the dissatisfaction they feel about their inheritance from a trust, disgruntled beneficiaries should take proactive steps to uncover whether there’s a legitimate issue with the trust.
By proving there is a valid issue with a trust, disgruntled beneficiaries can transform their frustration into a fair resolution, leaving behind their unhappiness.
1. Review the Trust Instrument
If you wish to challenge a trust, inspecting the trust instrument is an essential first step. If there are inconsistencies in the instrument, unusual terms or other red flags, they are worth going over with a skilled trust dispute attorney.
Remember, not all red flags in a trust will be overt. Sometimes, they will be so subtle that only a legal professional with a trained eye can catch them. That is to say, even if you don’t spot any red flags in a trust instrument, it wouldn’t hurt to have a trust attorney give it a second look.
Your trust attorney can also weigh the value of the assets at stake in your legal matter against the amount of money and time they believe will be required to litigate the matter to help you determine whether doing so would be worth it and in your best interest.
2. Double-Check You Have Standing
It’s important to bear in mind that being a beneficiary does not in itself give you legal standing. Standing requires you to have a financial stake in the outcome of your legal matter.
To confirm you have standing, simply calculate the amount you would win by successfully challenging the trust. If the amount is greater than your current inheritance, you have standing.
3. Ask Other Beneficiaries to Join Your Lawsuit
If there are legitimate issues with a trust, chances are some of the other beneficiaries also will be affected by them. By discussing your concerns with the other beneficiaries, you may be able to convince them to join your trust contest, which, in turn, could offset your legal costs and time investment.
In addition, multiple beneficiaries participating in a trust contest generally lends the contest more credibility.
4. File a Petition to Invalidate the Trust
At this stage of the process, you should have a firm grasp of the parties involved in your legal matter, the allegations you are making, and the evidence you have to back up your claims. All of this should be included in your petition to invalidate the trust.
It is not necessary for you to have all the evidence you plan to present in court at this time (the bulk of evidence-gathering occurs during discovery); however, you should be prepared to provide some support for your claims.
The stronger your petition, the more likely it is the opposing party will settle on your terms. For this reason, working with an experienced trust attorney to draft your petition is important.
5. Gather Strong Evidence
A trust is presumed to be a representation of its creator’s true final intentions unless proven otherwise. The only way to prove otherwise is with a preponderance of evidence. In other words, the evidence must prove the trust is more likely than not invalid.
The type of evidence your legal team gathers will depend on your reasons for challenging the trust. For example, if you are challenging a trust because you suspect the instrument is a forgery, the evidence you gather may be documents that were verifiably signed by the trust creator and expert testimony from a handwriting analyst.
6. Consider Settling Outside of Court
It shouldn’t come as a surprise that most trust contests are settled outside of court. Settling outside of court can result in a speedier resolution and be far less expensive than going to trial. The only caveat is that all the parties involved in the dispute must agree to settle in order for it to be a viable option.
To settle outside of court, the parties must reach a resolution through mediation, negotiations guided by a neutral third-party mediator. Most parties choose to attend mediation with their attorney.
Keep in mind that parties can opt to settle even if a trial is already underway.
7. Go To Trial
If your case proceeds to trial, you must attend with your attorney so they can make arguments on your behalf in front of the court.
Be sure to arrive at the correct courthouse on the correct date and at the correct time.
FAQs for Disgruntled Beneficiaries
If you still have questions about your right to challenge a trust, explore our frequently asked questions section below to see if you can find the answers you’re searching for there.
For more personalized guidance, we recommend reaching out to our firm.
Can a trustee defend a trust contest?
Yes, a trustee can defend a beneficiary’s trust contest, so long as they are acting in good faith. In fact, they may have a duty to defend the contest if the contest seeks to invalidate the trust as a whole or if the trust requires them to do so.
That said, trustees also have a duty of impartiality. Therefore, if two beneficiaries are opposing each other in a trust contest of an amendment that simply changes the beneficial interest of each beneficiary, it may be advisable for the trustee to abstain from participating, since their participation could be interpreted as them favoring one beneficiary over another.
A trust attorney can serve as a great resource for beneficiaries and trustees who wish to clarify the proper role a trustee should play in a beneficiary’s trust contest.
How can I get a copy of the trust?
It is common for the trustee to attach a copy of the trust instrument to the notice they send beneficiaries and interested parties following the trust creator’s death. However, if the trustee did not attach a copy of the trust to the notice, beneficiaries must request a copy from them.
Beneficiaries should aim to make their request for a copy of the trust in writing. This way, they will have evidence to present to the court in the event they have to sue the trustee for failing to comply with their requests.
If you are still waiting on a copy of the trust from the trustee, it’s crucial you seek help from your attorney to secure a copy. Without seeing the trust, you won’t know what you are entitled to under it.
Can I challenge a trust with a no-contest clause?
Yes, you can challenge a trust with a no-contest clause. A no-contest clause simply means that challenging the trust comes with risks. Put simply, if you contest a trust with a no-contest clause and lose, you risk disinheritance.
That having been said, no-contest clauses have become increasingly difficult to enforce over the years. They should not deter disgruntled beneficiaries with valid reasons for challenging a trust from filing a lawsuit.
A knowledgeable trust attorney can help beneficiaries weigh the benefits of challenging a trust with a no-contest clause against the risks to determine whether doing so would be in their best interest.
Am I entitled to sue the trustee?
Yes, disgruntled beneficiaries with concerns about trustee misconduct are entitled to sue the trustee, but they must have a valid reason for doing so. For example, they could sue the trustee if the trustee is failing to communicate with them, supply them with the required trust accountings or provide them with timely trust distributions.
When beneficiaries sue the trustee, the trustee is generally entitled to use trust funds to hire an attorney to defend them in court. Therefore, suing the trustee without valid reason could actually cause beneficiaries’ inheritances to be reduced. On the other hand, if the trustee loses, they may be ordered to reimburse the trust for their legal costs.
What happens if the terms of a trust are unclear?
If there are ambiguities in a trust, the best practice is generally for the trustee to seek instructions from the court on how to interpret the ambiguities. They can do this by filing what is known as a petition for instructions.
If a beneficiary is disgruntled because a trustee chose to interpret ambiguities in a trust without first consulting the court, which adversely impacted their inheritance, they may have the right to sue the trustee for violating their fiduciary duties, which require them to consider the best interests of all the beneficiaries, and treat all the beneficiaries equally.
Still unclear about when a beneficiary can challenge a trust?
If you’re dissatisfied with the inheritance you were left in a trust, it’s important to determine whether your concerns stem from a legitimate issue with the trust instrument itself.
The experienced probate attorneys at Keystone Law can help you identify potential problems with a trust and assess its validity. If the trust is indeed problematic, we’ll work diligently to secure the best possible outcome for you in court.
As a firm dedicated exclusively to probate litigation and administration, trust contests are our specialty. No matter how complex your situation, we have the ability to handle it with efficiency and expertise. Reach out now to learn how we can help.
