Please read our page with frequently asked questions on Contesting a Trust issues. Feel free to contact us if you need any other clarifications.
It is very common for the beneficiary of a trust not to be aware that the trust has been amended to impact them until much later. Generally, a trust must be contested within four years of its writing or amendment that negatively impacts the beneficiary. However, since the beneficiary often had no knowledge of the change, or any ability to obtain such information, many trust contests are filed many, many years after the change in question.
If you are a named beneficiary of a trust, as soon as you become aware of an amendment to the trust that decreases your share or cuts you out, you can immediately file a contest. Sometimes beneficiaries are not entitled to immediate compensation from the trust (such as a parent has to die first), but they can contest the trust as soon as they learn of the negative action.
If you are a beneficiary of a trust, even if you are not immediately entitled to distributions from the trust, you have the right to demand an accounting of the trust from the trustee. A written demand in compliance with the Texas Trust Code must be made, and should be handled by an attorney.
There are two major advantages to obtaining an accounting of your trust. First, it puts the trustee on notice that you are concerned about the trust and probably helps prevent the trustee from abusing the trust. Second, if statements in the accounting later prove to be false, you have an independent cause of action for fraud, much easier to prove than other claims against the trust.
If the trustee is mishandling the trust, as soon as you learn of the inappropriate behavior of the trustee, you should consider legal action. In most circumstances, you will have four years to sue from the time the trustee reports the improper behavior or four year from when the beneficiary should have been aware of such behavior.
There are two general categories of lawsuit that are typically filed. First, terms of the trust are contested because you contend the trust was drafted by someone without capacity or was unduly influenced. The second category of suits usually involve the management of the trust. Often the person who creates the trust manages the trust, and often they do not respect the rules of the trust they create. They take money out of trust that they put into trust against the rules of the trust and against the law. These are suits for breaches of fiduciary duty.
A breach of fiduciary duty is an action by someone, like a trustee, that favors themselves over the person they owe a duty, such as the beneficiary of a trust. A trustee must operate the trust for the benefit of the beneficiaries, and if instead the trustee operates the trust for his or her own benefit, that can be a breach of fiduciary duty.
Yes. In most circumstances.
Yes, a trustee is entitled to compensation. The compensation should be reasonable and may be limited by the terms of the trust.
A Trust, like a will, must be properly executed, but there are no formalities requirements such as witnesses or notaries, although most trusts are notarized. The Trust merely needs to be signed by the trust maker. The trust maker must have mental capacity to make the trust and must be free of “undue influence.” These are two grounds to contest the creation or amendment of a trust.
Capacity to make a trust is similar to, but not exactly like the capacity needed to sign a will, e.g. testamentary capacity. A person must have the ability to understand the nature, consequences, and effect of what they are doing. That means they need to know they are signing a trust and the impact on the trust on their assets and their family.
A Trust written by a patient in a hospital or long-term care facility is not immediately invalid, but it raises questions whether they were well enough to draft a Trust. Someone can be on such high doses of medication, including pain killers, or have severe dementia to prevent them from writing a Trust.
It is not wrong for someone to encourage another to leave them property in a Trust. That is normal influence. Influence becomes “undue” when someone is pressured in a manner that they are unable to normally resist. Someone who is mentally weak or physically infirm is more susceptible to “undue” influence. Undue influence is almost always proven by circumstantial evidence, and it takes a skilled lawyer to identify the correct facts and circumstances to build a substantial case of undue influence.