The old switcher-oo can happen to just about anyone. That’s where the old Trust is abandoned for a new Trust. And the new Trust has entirely new provisions that leave everything to the bad actor.
For example, let’s say your oldest brother has decided that he should receive the entire estate. Your father passed away two years ago and your mother is in her eighties, but she’s in poor health. Brother manages to find a new estate planning attorney and talks the attorney into doing a new Trust for mom. The new Trust leaves everything to brother and excludes you and your younger sister. A year later, mom dies and the attorney for your brother sends you a copy of the new Trust where you are disinherited. You are, of course, surprised to learn of your disinheritance. You had a good relationship with mom and dad and you know they would not want to exclude you. Plus, you remember they created a Trust many years ago that left their assets to all three kids equally. So, what happened? Can this new Trust be tossed out?
Unfortunately, Invalidating The New Trust Is Not So Easy.
For starters, in many cases your brother and his attorney may refuse to provide you with copies of any earlier Trusts claiming they only have to show you the last Trust in time because that is the operative document. This is false, but there’s no way to force them to do otherwise until you go to court.
There’s also another big hurdle. Documents that are signed by your mother are presumed valid. Think about that for a moment, this new Trust that mom created leaving out two of her children from the Trust estate is presumed to be perfectly valid, legal, and binding. Your disinheritance is presumed to be correct in the eyes of the law. To overturn the new Trust, you must file a lawsuit in court challenging the validity of the new Trust document and asking the court to issue an order setting it aside. But to do that, you must have a legal argument. The fact that you believe your mother never would have disinherited you is not sufficient. A legal argument is something like lack of capacity or undue influence. You then must build your case by finding admissible evidence to support your claim for lack of capacity or undue influence. And ultimately, if your case doesn’t settle, you must go to trial and meet your burden to prove lack of capacity and undue influence.
Compare all of that with what your brother must do: nothing. The new Trust documents is already presumed valid in the eyes of the law. Once you file your lawsuit to challenge the validity of the new Trust, then he will fight against you, but your brother is not the one with the burden of proof. If you don’t prove your case come time of trial, then the brother is the default winner. Is this fair? Not always (maybe not ever), but this is how our system works.
Before you go headlong into a Trust contest lawsuit, however, there is one other avenue you should consider. In many Trusts, especially those created prior to 2018 when the estate tax limit was raised to over $11 million per person, the Trust separates into two different Trusts when one spouse dies. The decedent spouse’s share of the estate is transferred to a Bypass Trust, which is irrevocable and typically cannot be amended or changed. The surviving spouse’s share is transferred to a Survivor’s Trust that can be amended. Using the example above, if mom and dad created a Bypass Trust/Survivor’s Trust division of assets, then at least one-half of the estate could not be amended by mom. That means you can ask the court to enforce the original Trust terms. This is not a Trust contest and therefore can be a bit easier route to take.
Also, Some Trusts Specify That The Entire Trust Becomes Irrevocable After The First Spouse Dies.
While this is rare, it is something to look for when analyzing the best path forward. Of course, to determine these issues you must obtain a copy of the original Trust. If you don’t have it, and your brother and his lawyer won’t provide you with a copy, then you must go to court and ask the judge to order them to hand it over.
In many ways, when someone creates a new Trust to transfer assets it is no different from creating an amendment for an old Trust. Some people think the new Trust will be harder to attack or that it will provide some form of added protection against a Trust contest. It does not. It may add a level of confusion for a short time, but that can be overcome in time. The bigger problem is successfully challenging the validity of the new Trust. And that’s where finding a good lawyer can make a big difference.
