Can a Beneficiary Challenge a Revocable Trust?

A beneficiary is someone who will receive a benefit from a trust, but despite the expectation of benefit, the beneficiary still has the right to challenge the validity of a revocable trust. However, because the grounds for challenge generally involve attacking the mental state of the trust's creator, a victory for the beneficiary will usually overturn the entire trust. Potential challengers should research their applicable state law, as there are time limits for challenging a trust.

Revocable Trusts

A revocable trust is a tool, generally used for estate planning, that allows people to legally transfer their assets to someone during their lifetime, rather than waiting for death. The assets become the legal property of a trustee, who manages and increases the assets. But the trustee can't profit from the trust; all of the profit and benefit of the trust goes to one or more third parties, known as beneficiaries. The creator of the revocable trust, known legally as a "settlor" or "grantor," retains the right to revoke or change the trust at any point during his lifetime, but when the grantor dies, the trust becomes irrevocable, meaning that it can't be changed or ended unless the language of the trust itself says so.

Beneficiary Challenges

Anyone with an interest in a trust has the right to mount a legal challenge to the trust. Although a beneficiary isn't the legal owner of the assets in the trust, the beneficiary holds an "equitable" interest because he expects to receive a benefit from the trust. Beneficiaries may challenge a trust for many reasons: because they don't feel that their share is large enough; because they feel that another potential beneficiary was wrongly left out of the trust; or because they feel that the grantor's chosen trustee is unfit to administer the trust.

Capacity to Trust

The same grounds that are used to contest a last will and testament can be used to challenge a trust. One common ground for challenging a trust is the grantor's capacity to trust. Each state has its own basic requirements for someone to be able to execute a trust. These laws might vary, but generally, a grantor must have reached the majority age in that state, though some states make exceptions if the grantor is married or legally emancipated from his parents. The law also requires that, at the time of executing the trust, the grantor have the mental capacity to understand that he's transferring away his property. If a beneficiary can prove that the grantor didn't understand the transaction he was entering into, this might be sufficient to overturn the trust.

Undue Influence

Another common basis for challenging a trust is undue influence, the claim that someone took advantage of the grantor's mental or physical weakness, and that this manipulation somehow affected the language of the trust. Undue influence is slightly different from a claim of mental incapacity to trust. In an undue-influence situation, the grantor with good mental capacity somehow had that capacity impaired (even temporarily) by the actions of the person applying the undue influence. An undue-influence challenge may involve claims of fraud, as well.

Photo Credits

  • Creatas Images/Creatas/Getty Images

About the Author

Erika Johansen is a lifelong writer with a Master of Fine Arts from the Iowa Writers' Workshop and editorial experience in scholastic publication. She has written articles for various websites.

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.