Setting Aside a Trust: Did someone take your inheritance?

From the Desk of San Diego Will and Trust Attorney, Kristina Hess.

Research and contribution by Klint LeBlang

Are you worried about your family after life and want to ensure you provide for them? Do you want to avoid the costly, time-consuming process of probate? A living trust provides an effective solution.

A trust is an essential tool that an estate planning attorney in San Diego will regularly recommend to her clients.  Both an inter vivos trust (during life) and a testamentary trust (after life) can provide individuals an effective solution for their estate planning purposes.  Along with its many tax benefits, a trust can permit your loved ones to avoid the time consuming, expensive, San Diego Probate Court process. Probate, with no will or trust, can last for a number of years and cause extreme grief and significant expense to a family who is already suffering from a lost family member. Therefore, a trust is recommended to avoid a lengthy probate process and provide for your loved ones after life.

However, in some cases, a dispute can arise from the terms of the trust.   What if, for example, your elderly parent with dementia is being cared for by a loved one in Del Mar, and then, your parent is either coerced or influenced to change his or her will or trust?

When this occurs, a son or daughter (beneficiary or legal heir) can file a petition to set aside the trust.  It is important to note that the petition can set aside all or just part of the trust depending on the individual’s situation.  A California Probate Court can set aside a trust for the following 6 reasons:

  1. lack of capacity,
  2. undue influence,
  3. fraud,
  4. duress or menace,
  5. mistake or
  6. limitations on transfers to drafters and others.

Each cause of action alone is enough to set aside the trust, although a combination can be argued if the elements of the specific cause of action are present.

A trustor must have the required testamentary capacity in order to create a trust. The main rule regarding capacity is that the trustor must have capacity at the time the trust is created. Although evidence can be given regarding the trustor’s capacity before or after the trust’s creation, the main focus is the creation time.  A trust can be set aside based on a lack of capacity if the trustor cannot understand the nature of the act, cannot remember his or her property or cannot remember his family who will be affected by the trust’s creation.

Undue influence is another possible reason to set aside a trust. It is established when the trustor created a testamentary disposition based on undue pressure, argument, entreaty or other coercive acts destroying the freewill of the trustor. This is a high threshold to prove. Although, the burden of proof is shifted to the opposing party if a confidential relationship existed between the trustor and the alleged individual, the individual actively participated in preparing the trust and the individual unduly profited from the trust. Therefore, the opposing party must show they did not exert undue influence on the trustor.

Similar to undue influence, a trust is easily set aside if created based on fraud. Fraud is shown when the trustor was deceived and would not have done the act in the absence of fraud.

Duress or menace is another ground to set aside a trust. Duress occurs when a trustor is unlawfully confined or property is unlawfully detained. Menace is a threat of duress or violence to the trustor.

When executing a trust, a substantial mistake of law or mistake of fact is grounds for it to be set aside. An example of this is if the trustor creates the trust, but is given nothing in return, although this mistake must be material (relevant to the essence of the trustor’s decision).

Lastly, a limitation on transfers to drafters and others can provide a ground to set aside a trust. This is extensively law based and imposes strict guidelines on transfers to various individuals who possess a certain relationship with the trustor.

If you would like any further information regarding setting aside a trust, please contact us at www.krhess.com.  Our San Diego estate planning attorney  is located in San Diego, California