Contesting Trusts and Actions of Trustees

Trusts are increasingly utilized in Colorado and throughout the nation. Trusts offer several benefits in estate planning and asset distribution. Trusts allow for great specificity regarding how, when, and to whom assets are distributed. Additionally, there is a wide variety of special-use trusts dedicated to particular estate planning coals, such as charitable giving or tax reduction.

However, a trust not only designates who may benefit from the funds or resources in the trust but addresses situations of incapacity, such as strokes, dementia, or Alzheimer’s. Those at risk of such circumstances may want to consider utilizing trusts to ensure that their resources and funds are preserved, managed, and spent in a manner that conforms to their wishes while in the care of loved ones or healthcare professionals.

Contesting a Trust

Similarly to a will, trusts can be contested for a number of reasons, including but not limited to a lack of testamentary capacity, undue influence, or a lack of requisite formalities. Additionally, beneficiaries may challenge a trustee’s actions for violating the terms or purpose of a trust. Many, if not all, settlors will utilize mechanisms to limit challenges, such as inserting no-contest clauses in the trust that sever a beneficiary’s interest if they unsuccessfully challenge the trust.

Those wishing to contest a trust must have a pecuniary interest in the trust, or qualify as someone who would have inheritance under intestacy to have standing to challenge a trust. Unlike a will contest, a contester must file a civil complaint or petition to initiate a trust challenge proceeding. Such a petition must request that a specific portion or section of the trust be stricken. Trust contest petitions are traditionally difficult to execute successfully as courts tend to defer to the settlor’s original intent. This manifests with the court attempting to interpret in a manner that reflects the settlor’s intentions through the settlor’s written instructions. The court will operate under the assumption that most trust challenges are the result of beneficiaries that are unhappy with the division of assets.

Successful challenges to trusts include the establishment that the testator did not have sufficient mental capacity to create a valid trust. The process to prevail in such a contest is similar to the process of challenging the validity of wills. To have capacity, the settlor must have been at least 18 years old and had the ability to know the extent of their property and natural objects of their bounty. Medical records and evidence provided by family members and friends can be used to prove a lack of mental capacity when establishing a mental capacity challenge to a trust. If medical records display mental health difficulties or a reduction in mental capacity around the time the trust was established, it can assist in the contest of a trust. Similarly, if friends or family members spent large amounts of time with the settlor and observed a reduction in mental capacity, their testimony could be important in establishing a successful challenge.

Speak with a Boulder, Colorado, Estate Planning Attorney Today

If you have questions about estate planning, contact the Braverman Law Group for information about exploring trusts, trustee actions, and other estate planning services. The dedicated Boulder estate planning lawyers at the Braverman Law Group are here to help clients with benefits planning, estate planning, and many things in between. To schedule a free, no-obligation consultation with one of our trusted Boulder estate planning attorneys, give us a call today at (303) 800-1588.