There are misconceptions that circulate about certain aspects of estate planning. One of them is the notion that you can prevent an estate challenge if you create a revocable living trust. People recognize the fact that wills can be challenged, but many assume that trusts cannot be challenged. In this post we will look at the facts.
When you use a last will to facilitate future asset transfers, the executor must admit the will to probate before the heirs receive their inheritances. The probate court then supervises the administration of the estate.
The court is charged with the responsibility of determining the validity of the will. The whole process of probate has a lot to do with the proving of the will. As a result, probate provides a forum for anyone who may want to challenge the validity of the will to do so.
Grounds that could be used to challenge a will include undue influence, coercion, the mental state of the testator, improper execution, fraud, and the contention that the will that has been admitted to probate is not the last will that was created.
Revocable Living Trusts
One of the primary benefits that you gain when you use a revocable living trust to transfer your assets is the avoidance of the process of probate. When you create the trust you name a trustee to administer the trust after you die, and you name beneficiaries to receive monetary distributions.
After your passing, the trustee will distribute assets to the beneficiaries in accordance with your wishes as stated in the trust agreement. These distributions would not be subject to the probate process.
Since the probate court is not involved, the forum within which a challenge can be presented does not organically exist as part of the process. However, this does not mean that a revocable living trust cannot be challenged. To challenge a trust, you would have to file a lawsuit, but you can indeed challenge a trust.
Some people say that you cannot challenge a trust because the trust can contain a no-contest clause. This type of clause would allow for the disinheritance of anyone named in the trust who issues a challenge.
A no-contest clause would certainly act as a disincentive, because someone who is named in the trust agreement may be jeopardizing his or her inheritance if a challenge was issued. However, the existence of the clause itself does not technically prevent a challenge.
It should also be noted that no-contest clauses are not recognized in all states.
Free Report on Revocable Living Trusts
If you would like to learn more about what living trusts can and cannot accomplish, download our special report. This report is being offered free of charge, and you can obtain your copy through this link: Free Living Trust Report.