Many people have heard stories of someone contesting a last will. An interested party can in fact challenge the validity of a will during probate. There is a built-in process in place, because a court provides supervision during probate whether there is a challenge or not.
Since the administration of a living trust is not subject to probate, you may assume that the terms of a trust cannot be contested. In fact, this is not the case.
An interested party can file a lawsuit to challenge a living trust. However, there is a step that can be taken to dissuade would-be litigants.
For example, let’s say that you have a living trust, and you know that one of your sons will not be happy with the terms. You could include a no-contest clause that would disinherit your son, and his descendants, entirely if he files a lawsuit to contest the terms.
He could still choose to file the suit, but it would be a big risk that a lot of people simply would not take.
Other Living Trust Benefits
The ability to include a no-contest clause is a plus, but most people that use living trusts are not concerned about challenges. These trusts are popular because of the other benefits that they provide.
We touched upon the probate process in the previous section, and it comes with a number of drawbacks. No inheritances are distributed during probate, and it will take a minimum of eight months to a year in most jurisdictions.
In addition to the time consumption, there is the cost factor. The executor of an estate is entitled to payment, and they will often engage an attorney and an accountant. There is a filing fee that must be paid to the court, and there can be appraisal and liquidation charges.
These expenditures reduce the value of the estate before it is distributed among the heirs. Another negative is a loss of privacy, because probate records are available to the general public.
As we have stated, when a living trust is being administered, there are administration steps to appropriately close the trust estate but a probate court is not involved.
Another appealing benefit of a living trust is the ability to include spendthrift protections. If you have concerns about the money management capabilities of a loved one, you can include a spendthrift provision. This would protect the principal from the beneficiary’s creditors.
When you establish the trust, you can leave instructions with regard to the way that you want the trustee to distribute assets to the beneficiary. For example, you could instruct the trustee to distribute a certain amount each month until the beneficiary reaches a certain age.
You would act as the trustee while you are alive and well, and you could name a disability trustee to assume the role in the event of your incapacity. This is a useful feature, because it may not be a pleasant prospect to consider, but cognitive impairment is common among elders.
The individual or entity that you empower to act on your behalf if you become disabled can also serve as the overall trustee to administer the trust after your passing.
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We are here to help if you are ready to put an estate plan in place. Each situation is different, and there are many different ways to proceed. The optimal course of action will depend upon the circumstances, so you should discuss all of your options in detail with an experienced and licensed attorney.
When you work with our firm, we will gain an understanding of your situation and make recommendations. If you decide to go forward, we will create a custom-crafted plan that is ideal for you and your family.
You can schedule a remote consultation appointment at our office in Oklahoma City if you call us at 405-843-6100. The number in Overland Park, Kansas is 913-385-9400, and if you would rather send us a message, fill out our contact form and we will get back in touch with you promptly.