Wills and trusts both require the person executing the legal document to have the mental capacity to do so. So, can trusts be contested? Sure, just like a will. The most common reasons for contesting trusts are lack of mental capacity, undue influence or coercion. The person seeking to contest a trust must file a petition in court, requesting that certain terms be stricken, or that the entire trust be found invalid.
Why are trusts contested?
Courts follow the principle that the trustor’s intentions must be honored. However, courts generally recognize that some trust contests are simply the result of a family member or friend of the deceased believes they should have received something, but did not. Some people, once they realize they were disinherited, assume automatically that it must have been a mistake, or that the decedent was tricked into disinheriting them. Therefore, courts are vigilant and trust contest petitions can be very difficult to win.
Unfortunately, there are some cases where the trustor is susceptible to undue influence, or they lack the mental capacity to know what they are signing. In those cases, substantial evidence must be offered to show the trustor’s mental state at the time the trust was executed. This can be very challenging.
How do courts determine capacity?
A court’s assessment of whether the trustor possessed sufficient mental capacity to make the trust is not a really high standard. Generally, it must be shown that the trustor knew what his/her estate consisted of (i.e., real property, bank accounts, personal property) and was aware of the “natural objects of his bounty,” which means heirs, such as spouse, children, brothers and sisters.
Arkansas recognizes the “no contest” clause
One way to eliminate trust contests is to include what is referred to as a “no contest” clause. Most living trusts contain such a clause, which states that, if any beneficiary challenges any of the terms of the trust, that person is automatically disinherited. This type of deterrent can be very effective. Each state has its own rules regarding the enforceability of “no contest” clauses.
Arkansas enforces no-contest clauses, unless it can be shown that the contest is based on good faith. Generally, a contest that will trigger a forfeiture under a no-contest clause requires an attempt to set aside a trust or a provision of a trust. A court action seeking to interpret the terms of the instrument, to determine whether a particular action is consistent with the terms of the instrument, or even to determine whether a particular challenge would violate the no-contest clause, does not typically result in a forfeiture of a share of the inheritance.
If you have questions regarding trusts, trust contests, or any other estate planning issues in Fayetteville, please contact Sexton, Bailey Attorneys, PA online, or by calling us at (479) 443-0062.