Trust Contests

A trust can be contested for many of the same reasons as a will, including lack of testamentary capacity, undue influence, or lack of requisite formalities. The beneficiaries may also challenge the trustee’s actions as violating the terms and purpose of the trust. Most settlors will desire a no-contest clause in the trust that severs a beneficiary’s interest if he or she unsuccessfully challenges the trust.

As in the law of wills, the trust contestant must have a pecuniary interest in the trust or be someone who would have inherited under intestacy in order to have standing to challenge the trust. While a will contest is brought in conjunction with the administration of the estate, a trust proceeding begins when a contester files a civil complaint or petition.

A contest petition requests that the challenged portion of the trust be stricken. Contest petitions are typically difficult to win because legislatures and courts tend to honor the settlor’s intent. The court will try its best to honor the settlor’s written instructions and presume they reflected his or her intentions. The court operates under the assumption that often trust contests exist simply because a friend or family member is unhappy because he or she expected to inherit a more significant portion of the settlor’s estate.

Under the Uniform Trust Code (UTC), a trust is invalid if it has an unlawful purpose or a purpose that is contrary to public policy, such as imposing limits on religious freedom or the freedom to marry. Some states require that a trust cannot violate the rule against perpetuities, which dictates that a trust cannot last longer than 21 years plus the life of a person in being when the trust is created. If one of these conditions is invalid, only that condition is invalid, not the entire trust.

The test for determining whether the testator had sufficient mental capacity to create a valid trust is typically similar to that required to make a valid will. To have capacity, the settlor must have been at least 18 years old and have had the ability to know the extent of his or her property and the natural objects of his or her bounty. The “natural objects” include family members such as spouses, children, and siblings.

Medical records are a good source of evidence for proving lack of mental capacity if they discuss the settlor’s mental capacity near the time the trust document was signed. While it is unlikely that a medical document will reflect the settlor’s mental capacity at the exact time the document was signed, such records can still be relevant if they were prepared near the time the document was signed.

Friends and family members also can provide a strong source of evidence, especially if these people spent a good deal of time with the settlor and were familiar with his or her wishes and mental state at the time of drafting the trust. The testimony of those close to the settlor can greatly assist the court in determining whether the settlor had the requisite mental capacity. Expert witnesses can also assist the court in certain circumstances.

Valid trusts, like valid wills, are the product of the settlor’s free will and volition. When a settlor’s perceptions are based on lies, mistakes, or deceptions, the resulting portions will be stricken.

A settlor’s trust is invalid due to mistake where he or she executes the trust with the belief that he or she is executing something else. An insane delusion interferes with the testator’s ability to devise a rational trust. To prove an insane delusion, the contester must prove that the settlor insistently believed alleged facts, which had no basis in reality, and that the delusion had some impact on the settlor’s disposition of the property. Only the portion of the trust caused by the insane delusion fails, but the delusion may potentially affect the entire trust. An insane delusion is separate from incapacity or mistake.

A trust or a portion of the trust may be stricken if the court finds it was the result of undue influence. This occurs when the settlor’s desires are subverted for those of another. Undue influence is most commonly proven through circumstantial rather than direct evidence. Mere motive and opportunity are insufficient to prove undue influence. The contester typically must show that another person exerted his or her will on a vulnerable settlor and that the influence produced a trust provision expressing the intent of the influencer rather than that of the testator.

Using a lawyer’s services to draft a trust helps avoid the likelihood of trust litigation after the settlor’s death.