Comparing heirs and beneficiaries is a little like comparing a family sedan to a sports car. They're both vehicles, but they have some fundamental differences. Both heirs and beneficiaries can inherit. Beneficiaries are those people who are specifically named in the will or trust documents. Heirs are people -- such as spouses and other relatives -- who would have the legal right to inherit if someone were to die without a will or trust. Heirs can be beneficiaries -- and they often are -- but they may not be if the decedent decides to disinherit them. It's an important distinction when determining whether you, as an heir, have standing to revoke an irrevocable trust.
Challenges by Heirs
Heirs cannot revoke an irrevocable trust if they're not also beneficiaries, but they can challenge or contest it. The procedure is much the same as contesting a will, with one major difference. You can file a trust challenge either during the trustmaker's lifetime or after his death, but you can only contest a will after the testator has died. Until this time, he reserves the right to revoke or change his will, so it's not a binding document. The burden of proof when contesting a trust is similar to that of contesting a will. You must typically prove there's an error in the trust's formation documents, or that the trust maker was not of sound mind at the time he created it. The threshold for sound mind is a little more stringent for an irrevocable trust than for a revocable trust or a will. As with will contests, a trust contest is typically a full-blown legal proceeding involving a trial. Breaking the trust would ultimately come down to the opinion of a judge.
Revocation by Beneficiaries
Irrevocable trusts are supposed to be forever, but in actuality, they can sometimes be broken. During the trust maker's lifetime, an irrevocable trust is easier for heirs to revoke – provided they're also beneficiaries. Some states, such as New York and Virginia, allow irrevocable trusts to be broken upon the written, unanimous consent of all beneficiaries. Revocation typically requires the trust maker's agreement and consent as well.
Revoking an irrevocable trust after the death of the trustmaker is a similar process, but it may require a court appearance. Some states allow beneficiaries to file a petition with the court, requesting termination of the trust. Your odds of success would also depend on the unanimous consent of the beneficiaries and the trustee. Although the court can overrule the dissent of one or more beneficiaries, it might not do so unless the beneficiaries demonstrate that the trust no longer serves the purpose for which it was intended. Courts are not inclined to fly in the face of an irrevocable trust maker's wishes after his death without good cause.
When a charity is a trust beneficiary, this can complicate revocation. Because of taxation issues, charitable trusts usually can't be revoked. Even with the charity's consent, the court may not allow such a trust to be broken. Complications can also arise if any of the beneficiaries are minors. States that have adopted the Uniform Trust Code typically allow parents or guardians to speak for minors in such a situation, but other states will not do so. In these jurisdictions, the trust may not be revocable until all beneficiaries are of legal age.
- Bluestein, Shapiro, Rich & Barone: Revoking an Irrevocable Trust (PDF)
- Kaufman & Canoles: Revoking Irrevocable Trusts
- Law Offices of Barton P. Levine: NYC Probate and Estate Litigation
- John Rogers Burk: Understanding the Difference between a Beneficiary and an Heir
- Bankrate.com: The Nuts and Bolts of Charitable Trusts