What Happens When a Living Trust Is Contested?

By Ronna L. DeLoe, Esq.

What Happens When a Living Trust Is Contested?

By Ronna L. DeLoe, Esq.

A living trust is an instrument that's created during the grantor's lifetime for their own use. After the grantor passes away, the successor trustee administers the trust so the beneficiaries receive the assets that remain after debts and taxes are paid.

Yet, despite the grantor's planning, you may wonder whether someone exerted undue influence upon the grantor to create the trust or if the living trust is valid. If so, you may decide to contest the living trust.

An elderly couple and younger woman speaking with a suited man

What Does it Mean to Contest a Trust?

The grantor, also known as the settlor, likely created a living trust to avoid probate and control whether they could keep certain assets private. A living trust also allows the grantor to control whether beneficiaries inherit trust assets immediately upon the grantor's passing or after a specific event occurs, such as a child attaining a certain age.

Sometimes beneficiaries or heirs who were left out are unhappy with the terms of the trust and may decide to contest or challenge the trust with the hope of overturning it. Keep in mind, though, that a beneficiary's unhappiness with their share of assets is often not enough to win a trust contest.

You can contest a living trust like you would a will, but many trust contests are unsuccessful. Certain rules apply to the person filing the petition or complaint. For instance, the person contesting the trust must have “standing," or be permitted by law to contest the trust. Usually you're considered to have standing if you are:

  • Beneficiary
  • Heir who was left out
  • Successor trustee who believes the trust has issues

If you want to contest the trust but aren't one of the above, you may lack standing to challenge it. In that event, you'll want to consult with an attorney to see whether you can still contest the trust.

How Much Does it Cost to Contest a Living Trust?

Contesting a trust is an expensive undertaking. It takes a lot of legal work to contest a living trust and winning a trust contest isn't easy. If you pay by the hour, the fees add up quickly.

An attorney, for example, may charge $350 an hour, and doing a thorough job contesting a trust can take anywhere from a few hours, if you settle the case, to several hundred hours, if the case goes to trial. The fees could be anywhere from $700 to $70,000 in this scenario. If the attorney agrees to a contingency fee, which might range from 33% to 40%, then you'll pay the attorney out of any money you win, if you win. You'll still have to pay court costs, which are often several hundred dollars or more for filing the appropriate papers.

Before deciding to contest a trust, decide with a legal professional whether it's worth it and how many hours they expect the case to take. Also, find out whether your attorney thinks you can win the case, because you're still responsible for legal fees paid on an hourly basis whether you win or lose.

Grounds for Contesting a Living Trust

While only certain classes of people, such as beneficiaries or disinherited heirs, can contest a trust, contesting a trust can also happen only in certain circumstances. The reasons for contesting a trust are that:

  • Grantor lacked the capacity to create a trust, or was not of sound mind
  • Someone pressured or unduly influenced the grantor to create the trust
  • Someone committed fraud to make the grantor create the trust
  • Trust isn't legal under state law
  • Someone forged the grantor's signature
  • Trust is open to several interpretations
  • Trust isn't ethical in the state where it exists
  • Successor trustee violated the terms of the trust
  • Mistake in the way the grantor wrote the trust

Is a No-Contest Clause in the Trust Enforceable?

Some trusts have no-contest clauses that the grantor inserted to prevent people, such as beneficiaries, from contesting the trust. These clauses are enforceable in most states, although some states restrict no-contest clauses if the person contesting the trust does so in good faith.

In many states, if there's a valid reason to contest the trust, the no-contest clause may not apply. Likewise, someone left out of the trust isn't bound by a no-contest clause and may challenge the trust. As of 2021, a no-contest clause in a trust is unenforceable in Florida and Indiana.

No-contest clauses are usually written so that if a beneficiary decides they didn't inherit enough, or didn't like what they inherited, the beneficiary loses the inheritance if they contest the trust. The no-contest clause should make a person think twice before contesting the trust. Still, if there are valid reasons for contesting the trust, you may want to proceed with a trust contest.

Trust contests are expensive, time-consuming, and difficult to win except in clear cases of fraud or undue influence, or if the grantor was not in their right mind when they created the trust. Make sure you have a good attorney to help you decide whether you have a chance of winning your case.

 

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.