Trusts can be a central and invaluable component of a comprehensive estate plan. An estate planning lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can help choose the elements of your estate plan that are best for you and your family. They also can advise you on how to craft the plan that most closely meets your needs and achieves your goals.
However, trusts must meet strict requirements to be legally valid and effective in carrying out your wishes. By educating yourself about the requirements for valid trusts, you can avoid problems in the future. You also can reduce the likelihood of trust litigation and legal challenges to trusts by heirs and beneficiaries. Here are the three most common reasons that trusts face legal challenges.
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Concerns Over Undue Influence or Mental State of the Settlor
The settlor, or the person who creates the trust, must be of sound mind and mental capacity to execute a trust. If a settlor lacked mental capacity at the time of executing the trust, then the trust may be legally invalid. A lack of mental capacity may be due to a degenerative medical condition, such as Alzheimer’s disease or dementia, a brain injury, the influence of prescription or illegal drugs, or mental illness. These factors can lead to allegations that the settlor lacked the mental capacity to execute the trust, which may cause heirs to contest the trust.
Furthermore, a trust is only legally valid to the extent that the settlor executed the trust free from any undue influence. For example, suppose evidence exists that a relative, significant other, caregiver, or third party bullied, coerced, manipulated, intimidated, or tricked the settlor into executing the trust. In that case, the heirs may contest the trust as invalid based on undue influence.
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Trustee Misconduct and Negligence
A great deal of trust litigation centers around trustee misconduct and negligence. Under Florida Statutes 736.0801, trustees must administer the terms of the trust in good faith and for the interests of the beneficiaries. They also owe fiduciary duties under Florida law, including the duties of loyalty, impartiality, and prudent administration. Their job is to control and protect trust property, distribute it according to the terms of the trust, keep accurate records, and provide accountings for all transactions concerning trust property. Florida law outlines various specific and general duties that trustees must follow as part of their duties. Any deviation, dereliction, or violation of those duties can lead to trust litigation by beneficiaries against trustees.
Common examples of potential trustee misconduct might include:
- Self-dealing, or a trustee who uses trust assets for their own purposes
- Failing to distribute trust funds per the trust terms
- Not following trust provisions
- Collecting excessive trustee fees
- Failing to maintain records or provide trustee accounting of trustee property and transactions
- Putting trust property or investments at risk
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Problems with the Execution of the Trust or Invalid Provisions
You must meet the same qualifications to execute a trust under Florida law as a will, in that you must be at least 18 years old and of sound mind and capacity. A trust that has testamentary provisions must be in writing and signed by the settlor in the presence of two disinterested witnesses who also sign the trust. Additionally, under Florida Statutes 736.0402, a settlor must meet the following requirements:
- The settlor must indicate the intent to create a trust.
- The trust must have a definite beneficiary (one who is ascertainable now or in the future). Otherwise, the trust must be charitable, a trust to care for an animal, or a trust for a noncharitable purpose.
- The trustee must have duties to perform.
- The same person is not the sole trustee and sole beneficiary except for revocable trusts
Furthermore, the trust may not contain invalid provisions under state law. For instance, a trust may not contain a provision preventing the trustee from paying necessary taxes or transferring illegal assets to the trust.
Contact Our Office Today for All Your Estate Planning Needs
At Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., an estate planning attorney can provide you with a full range of estate planning services, including trust creation. In addition, if you lose a loved one, we are here to assist you with all estate-related needs.
We can guide your family through the complicated legal landscape of estate planning law as quickly and efficiently as possible. Call us at (954) 966-2112 or learn more about the legal services we can offer you online. Schedule an appointment to talk to us about your legal needs right away.