If you are the trustee of a trust, your goal is usually for the administration to go as smoothly as possible. Unfortunately, it doesn't always work out that way. Sometimes an unhappy beneficiary (or more than one) decides to contest the trust. A trust contest is a proceeding where an heir or beneficiary challenges the validity of the trust instrument. Sometimes they have a good reason and sometimes they don't. Regardless, as trustee, it is something you will have to respond to if it happens.

The law regarding trust contests

To properly bring a trust contest in court, it begins with filing a petition under Probate Code Section 17200, which authorizes such an action to determine “the validity of a trust provision.” The petitioner must comply with the statutory requirements for such a petition, including stating the facts, the grounds of the petition, and the name and address of each person entitled to notice (Probate Code Section 17201).

Failure to follow the requirements for such a petition can be one ground for defending against the trust contest. Not filing within the statute of limitations period is another. If you've given proper notice of the trust administration, the beneficiaries will have no more than 120 days to file such a petition.

Furthermore, the court also has the authority to dismiss the petition altogether “if it appears that the proceeding is not reasonably necessary for the protection of the interests of the trustee or beneficiary” (Probate Code Section 17202).

Types of trust contests

There are a variety of claims one can make to contest the trust. Each has different elements that must be shown to prevail or to shift the burden of proof:

• Lack of capacity (settlor lacked capacity to draft a valid trust document)
• Undue influence (someone improperly influenced the settlor to draft the trust in their favor)
• Fraud, duress, or menace
• Forgery
• Document invalid as drafted (formal requirements for valid trust not met)
• Mistake (document executed while settlor had mistaken belief of fact or did not understand effect of document)

Ultimately, the objective of someone contesting a trust is to show the document, or part of it, is invalid and thereby obtain a better share of the trust assets. A trust contest can be expensive and time consuming. It can not only eat up the trust assets, but can cause permanent damage to the relationships between beneficiaries.

Effect of no-contest clause

Trusts often contain a “no-contest clause” provision that provides that a beneficiary forfeits his or her share if they contest the trust. These provisions are intended to discourage beneficiaries from engaging in unnecessary litigation at the expense of the trust and the other beneficiaries.

However, for a no-contest clause to be enforceable the contest must be a direct contest, claiming the instrument or a portion of it is invalid and the petitioner must lack probable cause. An indirect contest, or one where the petition has a good reason, may not invoke the no-contest clause provision.

Helix Law Firm can help with estate planning and estate administration

If you need an estate plan, we can help you plan out your estate in such a way that the potential for future conflict is minimized. On the other hand, if you are a trustee having trouble with beneficiaries, we can help get you through the process.

If you're interested in learning more about how Helix can help, please call us at (619) 567-4447 to schedule a free consultation.