Trusts can be a valuable piece of your overall estate plan. A trust is a written document that allows someone, called a trustee, to hold assets on your behalf. You are called the grantor.
There are various types of trusts, and knowing which one is best for you depends on your situation. Trusts can be revocable or irrevocable.
A revocable trust means that as that grantor, you can change or terminate the trust, while an irrevocable trust means you cannot.
Why people create trusts
Trusts have many advantages. The assets you place in a trust can be shielded from the probate process, meaning your assets can be distributed without having to go to court.
Additionally, an irrevocable trust could mean fewer taxes are owed upon your death, since the trust is not considered part of your taxable estate.
Overall, a trust is a great option that allows you to control your wealth and protect your legacy. You can select which beneficiaries receive which assets and when and choose the terms of the trust.
Why people dispute the terms of a trust
However, the terms of your trust can be disputed. Common types of trust disputes involve breach of fiduciary duty, lack of capacity or disinheritance.
The trustee that you appoint has a fiduciary duty to manage your trust assets responsibly. If someone feels that the trustee has breached this duty, this can cause a trust dispute.
You must be of sound mind and body to create your trust and its terms. Someone who believes that they should have received something in the trust and did not may dispute the trust terms, arguing either that you lacked capacity to understand what you were doing or that you were forced into disinheriting them, otherwise known as undue influence.
Filing a petition
When a trust dispute arises, the probate court becomes involved. The person contesting the trust terms must file a petition with the probate court where the trust is administered.
The petition must state a legally valid reason for contesting the trust. If you are the one disputing the terms of the trust, you should not be doing it simply because you are upset about not receiving anything in it. You must present some evidence of lack of capacity, undue influence or any other valid reason you believe the terms of the trust should not be enforced.
Deadlines and notice requirements
There are many requirements and deadlines that must be honored if you want to dispute the terms of a trust. For example, the deadline to challenge a revocable trust in Minnesota is 120 days.
There are also special rules regarding what information you must include in your petition and who you must give notice to.
Once these requirements are met, a hearing will be held in probate court to determine if the terms of the trust are valid.
As the person disputing the terms of the trust, it is your burden to prove your case. You can present evidence such as witness testimony or documents that prove your claim.
This is more challenging than you may think, since it is usually assumed that the terms of a trust are valid.
Estate planning attorneys can help guide you through the complex process of a trust dispute, no matter which side of it you are on. They can assist you with designing a legal strategy aimed at meeting your goals.