Living trusts offer many advantages for estate planning so you can create a legacy of wealth for your heirs. But what happens if there are problems with the trust or how it is managed?
In the worst case, these issues can lead to a contested estate. Below is important information about how living trusts can be contested and how to avoid the problem. If you have questions about estate planning, our living trust lawyers in Encino at Ourfalian & Ourfalian can help.
What Is A Living Trust?
A living trust is a legal entity that you can create as part of your estate planning. A grantor establishes the trust and can name themselves or another party as the trustee. The trustee ensures that all trust terms established by the grantor are executed for the benefit of the beneficiaries.
When you create a trust, it must be funded. Trust funding entails moving assets into the trust. For instance, if you own several rental houses, you might transfer them into the trust. A trust can be revocable, meaning changes can be made at a later date. Or the trust can be irrevocable, meaning the asset transfer cannot be changed.
Who Can Contest A Living Trust?
For someone to contest the trust, they must have legal standing. Someone has legal standing if they will probably be directly affected when the trust is executed. Some of the individuals who might be able to contest a living trust are:
- Beneficiaries of the trust
- Trust grantor heirs who were not named in the trust
- A successor trustee
However, it is not enough to have legal standing. The person who wants to contest the trust must have lawful grounds. If you are unhappy that you didn’t receive something in the trust, that’s not enough to contest it:
- You believe the trust grantor had a mental incapacity and could not legally change the trust.
- The trust was set up because of undue influence or coercion.
- Trust documents were forged.
- The trustee has mismanaged assets for their benefit.
If you are a beneficiary of the trust and do not like that someone got more assets than you did, it is technically possible to contest the estate. But if the living trust is valid and set up legally, your effort will likely fail.
In California, you have 120 days to contest the trust from when the probate notice is mailed. The notice under Probate Code 16061.7 offers specific information to the heirs and beneficiaries of the trust.
How To Avoid Holes In Your Trust
If you go to the effort and expense to set up a living trust, you want it to stand up in court. While your Encino living trust lawyer will do their best to set up an unbreachable trust, there are several things you also can do to prevent someone from contesting your trust. Doing these things will avoid holes and vulnerabilities in the trust:
Talk To Your Heirs And Beneficiaries
Communicate with your heirs and beneficiaries about your estate plans and goals. Some of these matters can be difficult to discuss with your loved ones, especially those with wealth. However, talking about what you plan to do with your money with the relevant parties will avoid many problems before they occur.
If family dynamics mean, you cannot easily communicate with family about these subjects, your estate planning attorney can mediate for you. Your lawyer also might even recommend a therapist to assist you.
Write An Explanation Letter
Putting a written, signed letter in the estate plan is another way to avoid someone trying to poke holes in the living trust. First, discuss why you left assets to a particular person and your goals. Then, you can prevent holes in the trust by hand writing this letter to prove it was you.
The letter is not a legal document. Instead, it is a personal letter in your handwriting to your loved ones to help avoid a contested estate.
Do Not Put Beneficiaries In Your Estate Planning
If a beneficiary helps with your estate planning, this could be a way for someone to contest the estate. They may claim the beneficiary had undue influence on you. It is better to rely on your living trust attorney to help you.
Noting will help the probate court to decide there was undue influence than if there is a sudden change to another attorney. It is even more suspicious if one of the beneficiaries was involved in that process.
Have A Psychological Examination
It might seem strange to need to prove that you are of sound mind and body when you set up a trust or write a will. But it will help to avoid a contested estate if a forensic psychologist examines you and declares you in good physical and mental health. This information and the psychologist’s contact information can be included with the estate planning documents.
Have Another Attorney Review The Trust
You also can avoid a contested estate and holes in the trust by having another estate planning attorney review the documents. This independent review will ensure your estate planning is appropriate and legally sound. In addition, a probate court will probably not intervene and invalidate your estate plan if two independent attorneys signed off on it.
None of these recommendations mean your estate cannot be contested. But if you take these steps, it will make a litigation attorney think about taking on a contested will case. In addition, many attorneys will see that a second, independent estate planning lawyer signed off on the trust. That will make it much less likely they will prevail in a trust contest.
Call A Living Trust Lawyer In Encino For Legal Assistance
Setting up a living trust is an effective way for many people to handle their estate planning. Ourfalian & Ourfalian can assist if you need assistance with a living trust. We can answer any questions and create a comprehensive estate planning strategy ideal for your needs and goals. Please contact our living trust lawyers in Encino for a complimentary consultation at (818) 550-7777.
