How Trusts Work
A trust is a fiduciary arrangement under which the creator (the “settlor”), instructs a third party (the” trustee”), to hold property in trust for the benefit of a third party, (the “beneficiary”). The trust agreement will (1) instruct the trustee on how the trust property is to be utilized and/or invested; and (2) how, when and whom the trust property is to be distributed upon death of the settlor.
What Happens upon the Death of the Settlor of the Trust
Often, the settlor of the trust desires that their property to pass immediately to family members, relatives, and/or charitable organizations. Typically, the property is distributed to the beneficiaries without complication. However, on occasion, those expecting to receive property from the decedent are surprised to learn that the decedent had an unexpected alternative plan. Michigan Courts give great deference to the settlor’s wishes and will not invalidate a trust merely because a beneficiary is disinherited. However, there are occasions where facts and circumstances support a legal challenge to the validity of the trust agreement.
The Michigan Trust Contest
A trust contest is a probate court proceeding to enforce or defend the rights of a trust beneficiary. Trust contests can arise for a wide variety of reasons, including whether the settlor was competent, whether there was any undue influence, coercion, duress, fraud and/or misrepresentation exerted upon him or her. Disputes can arise if someone was left out and it is unclear if this was done purposefully or by error. Interested parties can initiate a trust contest action when they do not received what they feel they are entitled to or believe fraud may have occurred and seek to petition the court to allow them to obtain a larger share of the estate. Sometimes issues arise because a trust has been amended on several different occasions or because the trustee has diverted funds and/or has failed to properly inform and account to the beneficiaries as required under Michigan Law. To contest the validity of a trust, a challenger must have standing. In other words, only certain parties may challenge a trust. Persons with standing include heirs of the decedent, beneficiaries under earlier iterations of the trust, and nominated or incumbent fiduciaries of the deceased individual’s estate/trust.
Although contesting a trust can be complicated, in some instances, legal action becomes necessary. A consultation with our Bloomfield Hills, Michigan Wills, Trust & Probate Litigation law firm at the DeLuca Law Firm, is a good first step. We have significant experience handling will and trust disputes and other probate litigation and we can help you assess the validity of your circumstances. Please contact Frank M. DeLuca for a free consultation at (248) 940-2000.