Can Trusts Be Contested in Missouri?
Trusts are among the most versatile and powerful estate planning instruments available. Not only do they allow an individual the ability to settle their estate, but they also do so without the need to go through the costly and tedious probate process. But they are not bulletproof. There are formal legal requirements that must be met to create a trust, as well as a strict code of conduct by which trustees must abide. A failure to meet one of these requirements or a breach of the trustee’s duties — as well as a few other scenarios — can set the stage for a trust challenge. A Springfield estate planning attorney can help you avoid that outcome.
Why Trusts Are Contested
Missouri law gives settlors — the parties who create trusts — broad discretion to dispose of their property as they see fit, and the courts generally are reluctant to intervene or second-guess the settlor’s stated intentions. However, there are some situations that for policy reasons may warrant judicial intervention to invalidate or amend a trust. One obvious (though uncommon) example would be a court refusing to enforce a trust if it contained illegal terms or terms that violated a clear public policy. A more common scenario arises where a beneficiary or other interested person believes that the trust contains a defect that renders it void or invalid.
Some of the most common reasons why trusts are contested include:
- Beneficiaries who are dissatisfied with their distributions
- Individuals omitted from the trust believing they should have been included
- Concerns about the mental capacity of the settlor
- Discovery of failure to comply with the legal requirements to create a trust
- Allegations that the trust is a product of fraud, duress, or undue influence
- Disagreements concerning the trustee’s management of the trust assets or behavior toward the beneficiaries
- Unanticipated changes in circumstances that frustrate the purpose of the trust
While Missouri law does provide for no-contest clauses — i.e. clauses that rescind donative transfers to individuals who challenge the terms of a trust — the application of such clauses is highly fact-specific, and they may not always be enforceable.
Grounds for Contesting a Trust
Individuals wishing to contest a trust typically do so on one or more of the following legal grounds:
Lack of Capacity
A threshold requirement for trust creation and administration is that the settlor must have adequate mental capacity to do so. In Missouri, the capacity to create, amend, revoke or add property to a trust is the same as that required to execute a will. The courts look to four factors when determining whether settlors have the testamentary capacity necessary to create trusts:
- Whether they understand the ordinary affairs of their lives
- Whether they understand the nature and extent of their property
- Whether they know the parties who will be the objects of their bounty
- Whether they understand that, by executing the instrument, they are giving property as specified in the instrument
Trust contests based on lack of capacity typically arise when the settlor is an elderly individual who suffers from dementia or another age-related mental infirmity. One effective strategy to prevent allegations of lack of capacity is to establish either a revocable trust or irrevocable trust before age-related mental decline begins. A Springfield estate planning attorney can help you do that.
Lack of Due Execution
Trusts, like wills, must comply with a formal set of legal requirements to be enforceable. These requirements not only prevent fraud, but they help to ensure that the trust’s assets are distributed as closely in line with the settlor’s wishes as possible. There are five primary requirements for trust creation under Missouri law:
- The settlor has the capacity to create the trust (discussed above)
- The settlor indicates an intention to create the trust
- The trust has a definite beneficiary
- The trustee has duties to perform with respect to the trust
- The sole trustee and the sole beneficiary are not the same person
Allegations of lack of due execution can arise where the trust instrument is not drafted by an attorney with experience handling such matters or where the trust is created orally.
Fraud, Duress, or Undue Influence
Fraud, duress, and undue influence refer to scenarios in which the terms of a trust do not accurately reflect the settlor’s true wishes. Fraud occurs when the perpetrator knowingly makes a material misrepresentation to the settlor who then relies on the misrepresentation in creating or amending a trust. Duress involves similar behavior, but with duress, the perpetrator uses threats of violence or repetitional harm to influence the settlor. Undue influence occurs when the settlor’s will is overpowered or manipulated by a person having authority over him or her, which causes the settlor to make provisions he or she otherwise would not have made. Trusts created or amended due to fraud, duress, or undue influence are considered void.
Breach of Trust
Trustees owe a fiduciary duty to the trusts they manage. This generally means that the trustee must act in good faith and avoid self-dealing. Additional duties of trustees include:
- Acting impartially between multiple beneficiaries of the trust
- Administering the trust prudently (i.e., with reasonable care, skill, and caution)
- Incurring only reasonable costs associated with the administration of the trust
- Keeping the beneficiaries reasonably informed about material facts necessary for them to protect their interests
- Enforcing claims of the trust and defending claims against the trust
A trustee’s failure to comply with one or more of these fiduciary duties can result in a breach of trust, which is one of the most common grounds for trust contests.
Avoid Trust Contests with Help from a Springfield Estate Planning Attorney
No one wants their estate plan to be jeopardized by a trust contest. The most effective way to insulate a trust from potential challenges is to work with an experienced attorney who can help you cover all your bases. To get started, please contact a Springfield estate planning attorney at LifeGen Law Group by calling 417-823-9898 or using our online contact form.