America is one of the most litigious countries in the world. Everyday thousands of law suits are filed in Arizona. People are fighting over all sorts of things; from contract disputes to personal injury claims. As such, estate documents are no different and are not immune to law suits. Anyone could contest a trust. However, there are ways to make it tough and deter people from contesting a trust.
First, it is harder to contest a trust versus contesting a will. A trust unlike a will, does not go through probate. This prevents the trust from being made public. All wills go through a probate, if the estate size exceeds a minimum threshold ($75,000 in Arizona). Probate is a court supervised legal process. This is a very public process because a case is filed with the probate court. Court proceedings are public record. This means that anyone who feels they have a right to the estate money can easily join an already existing lawsuit.
A trust on the other hand does not go through a court proceeding, so the administration of the trust is not as public as a will. A person must take the initiative to bring their own lawsuit, in which he or she would incur their own attorney cost and fees. These steps create hurdles that most do not want to have to jump over.
Second, you can include an “In Terrorem” or “No Contest” clause in your trust, which will act as a deterrent. Although a No Contest clause does not prevent someone from contesting the trust, it is a preventive measure that will make anyone have a second thought to contesting a trust. A No Contest clause helps to establish that if someone challenges the trust and loses, he or she will receive nothing from the trust, even if what they were set to receive was not being contested. For example, if your daughter contest the Trust because she feels she should receive 50% of the estate, she risks losing the 25% she was already set to receive. Such a potential lose would most likely deter your daughter from contesting the trust.
There are no guarantees that someone will not contest the trust, since anyone may litigate anything at any time. However, creating a Revocable Living Trust through a qualified estate planning attorney will allow you to create a plan that will lower the likelihood of someone trying to contest and is able to hold up in a court of law.
Contributed by an MH Phoenix Estate Planning Attorney.
Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone. Financial predators are looking for ways to take funds from others and often use litigation as their means to do so. At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you. We do this through proper and current estate planning techniques. With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more. A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family. Without a living trust, this information will be made public. For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Cave Creek, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe. In New Mexico we serve the areas of Albuquerque, Santa Fe, Las Cruces, Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more. Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.