Trusts are legal tools that can help you accomplish specific goals with your estate and legacy. Many people include them as part of their estate plans; however, these documents can be complex and complicated. In today’s blog, we’re discussing what elements you need for a valid trust, as well as how to challenge the validity of a trust.
What is a Trust?
Trusts are legal entities that are designed to accomplish an estate planning goal. The creator of the trust can create instructions as to how the finances or property in the trust should be handled and who will receive those assets after their death. There are many different types of trusts, including revocable, irrevocable, testamentary, living, charitable, special needs, and spendthrift. One of the most common types of trusts is a revocable trust. With a revocable trust, the person who created the trust can add or remove assets, change the terms, or revoke the trust at any time, as long as they are still living and mentally competent.
Who are the Parties?
The person who creates the trust is known as the grantor. When the grantor creates the trust, they can appoint a trustee to manage the assets in the trust and oversee distribution when the grantor dies. (It is possible for someone to be both the grantor and the trustee if they create a living trust and manage those trust assets while they are alive). The person who receives the trust assets after the grantor dies is known as the designated beneficiary.
What are the Required Elements of a Trust?
When a grantor creates a trust, there are state laws and conditions that the grantor must meet in order for the trust to be valid and legally enforceable, including:
- The grantor must have the mental capacity to estate the trust and understand their actions
- The grantor should have clear intent to create the trust
- The grantor must own property and assets to transfer into the trust at the time that they create the trust
- The trust must be funded
- The grantor must name at least one designated beneficiary
- The grantor must name a trustee to manage the trust assets and outline the trustee’s duties and rights
- The trust must be fully and validly executed according to state law
What Can Invalidate a Trust?
There are a number of factors that will cause a trust to become invalid. If the trust is not properly executed (ex: missing signature, trustee not named) or the grantor does not follow the legal formalities, their trust may be invalid. If the grantor did not have the mental capacity to establish a trust or was coerced into creating a trust, that can invalidate the trust. If the grantor engaged in fraud (ex: forged signatures), or someone engaged in fraud to convince the grantor to create the trust – this can also cause the trust to be invalid.
Can You Challenge the Validity of a Trust?
If you believe that a trust is invalid, it is not enough to vocalize your objections. You have to take legal action. Someone who wants to challenge the validity of a will must file a petition with the probate court, explaining why they think the trust is invalid. They should also be prepared to present evidence to support their claim, such as witness testimony or physical documentation.
If the probate court finds that the trust is not valid, the designated beneficiaries will not receive the trust’s assets according to the grantor’s instructions. Instead, the property will pass to their heirs according to the grantor’s will (if they have one) or according to the state’s intestacy laws.
Have Any Additional Questions? Contact Brian N. Douglas & Associates
If you are interested in creating a trust, or if you have questions about the validity of an established trust, please reach out to our team of experienced estate planning attorneys. We’re happy to answer any questions you may have. To schedule a consultation, you can call (770) 933-9009 or use our online contact page.
