Trusts offer some unique advantages for estate planning and they can be a valuable tool for creating a legacy of wealth. But what happens when the beneficiaries of a trust disagree with its terms or the way the trustee manages it? Can a trust be contested? The short answer is that yes, in certain situations, the terms of a trust may be challenged the same way that a last will and testament might be contested. If some type of trust is part of your estate plan or you’ve been named as the beneficiary to a trust, it’s important to understand what contesting one involves.
Be sure to take full advantage of the experience and insights of a financial advisor as you consider how to handle various estate planning issues.
A trust is a legal entity that’s created by a grantor. This grantor can name themselves or someone else to act as trustee. The trustee is responsible for ensuring that the terms of the trust set by the grantor are carried out, according to the best interests of the people named as beneficiaries.
When a grantor creates a trust, it has to be funded. Trust funding means transferring assets to the ownership of the trust. For example, someone might transfer real estate, investments or heirlooms to the trust. Trusts can be revocable, meaning changes can be made to the trust terms later, or irrevocable, meaning the transfer of assets is permanent.
Understanding the various roles, i.e. grantor, trustee and beneficiary, is important when discussing trust contests.
Can a Trust Be Contested?
Just as someone might challenge the terms of a will, a trust can likewise be contested. This involves filing a case in probate court. There are several reasons why someone might choose to contest a trust. Some of the most common scenarios in which the terms of a trust are contested include:
Beneficiaries who are unhappy with the terms of the trust
Individuals left out of the trust who believe they should have been included
Disagreements or issues with the trustee’s handling of trust assets
Concerns that the trust grantor was subject to undue influence or compromised mental state when making the trust
Suspicions of fraud or forgery
It’s important to note, however, that contesting a trust doesn’t guarantee that any changes will be made to its terms.
What Does It Take to Contest a Trust?
In order for someone to contest a trust, they must have legal standing to do so. Someone has standing if they’re likely to be directly affected by the execution of the trust. So, people who may be able to contest a trust include:
Heirs of the trust grantor who were not included in the trust
Legal standing alone is not enough to contest a trust. The person contesting the trust terms must also have grounds for doing so. Simply being unsatisfied with the distribution of assets, the selection of beneficiaries or the choice of trustee is not enough, however. Generally, it’s only possible to bring a valid claim if someone believes that:
The trust grantor was mentally incapacitated or otherwise incompetent when they made the trust (or made changes to an existing trust)
The trust was created as a result of coercion or undue influence
The trust document was forged
The trustee is mismanaging trust assets for their own benefit (otherwise known as breach of fiduciary duty)
If you’re a trust beneficiary and you’re dissatisfied with the fact that your brother gets a larger share of trust assets, you could technically try to contest the trust. But if the trust is otherwise valid and the trustee is not violating any ethical or legal obligations in carrying out its terms, then your claim likely won’t go far in court.
How Long Does a Person Have to Contest a Trust?
The window for contesting a trust can depend on the probate laws in your state. States can impose a statute of limitations on how long someone has to bring a challenge to trusts and wills. Depending on the state in question, this may be 120 days from the date of the trust grantor’s death. Or you may have several years following the grantor’s passing to contest a trust.
Reviewing probate laws can help you to determine how long you have to contest a trust. You may also want to consult an estate planning attorney. Keep in mind that trusts can include what’s called a no-contest clause. These clauses, if allowed by state law, can effectively block a beneficiary from receiving assets through the trust if they decide to contest it.
How Much Does It Cost to Contest a Trust?
The cost of contesting a trust can vary, depending on what you pay toward court fees and attorney’s fees. The longer it takes to resolve a challenge to a trust in court, the higher the cost can climb. An estate planning attorney can charge a flat rate, an hourly fee or a contingency fee. Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
For that reason, it’s important to consider what you stand to gain by contesting the trust. If your claim is successful and you expect to receive several million dollars in assets from the trust as a result, then paying attorney’s fees may be well worth it. On the other hand, if the amount of money involved in a trust contest is less than what you’d pay to hire an attorney you may not come out ahead by bringing a challenge.
How Successful Is Contesting a Trust?
Your success in contesting a trust can depend on what’s being contested, the skill and experience of your attorney and your legal grounds for bringing a claim. If you’re contesting a trust because you believe the trustee is using the trust assets for their own gain, for example, this may be very easy or very difficult to prove. You’d have to provide evidence that the trustee is violating their fiduciary duty for your claim to be successful.
As mentioned, it may be very difficult to successfully contest a trust if you simply disagree with how the trust assets were divided up or you believe you should have been included in the trust but weren’t. You may have legal standing to bring such a claim but if the court determines that the trust is valid and that the grantor wasn’t coerced or mentally incapacitated then you may not be successful in changing the trust terms.
The Bottom Line
Can you contest a trust? Yes, if you have legal standing and grounds for doing so. Whether you’re successful in doing so can depend on the details of the claim and your state’s probate laws. Talking to a lawyer who does estate planning can help you to determine what standing and grounds you may have for disputing the terms of a trust in court.
Estate Planning Tips
Consider talking to your financial advisor about how to set up a trust or how to contest one if you’ve been named as someone else’s beneficiary. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’ve got questions about estate planning, whether just in general or in terms of a specific state, check out this free estate planning resource.
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