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3 types of disputes that can jeopardize your trust

Trusts can be essential tools in any estate plan. They can help people minimize taxes, avoid probate, secure funds for specific people and shield assets from unwanted parties. Considering how beneficial they can be, it is not surprising that people all across California have trusts as part of their estate plan.

However, it is important to understand that trusts are not bulletproof or immune to challenges. Disputes can and do arise that can affect your trust. Knowing what some of the more common disputes are could help you avoid them when you are creating or revising trusts.

  1. Lack of capacity: If you are not of sound mind when you create or make changes to a trust -- or any estate planning document, for that matter -- then this can be grounds to contest a trust. If someone can argue that you did not understand your assets, relationships or the legalities of signing this type of document, then the courts can declare that you did not have the capacity to make a contract.
  2. Fraud: A trust can be contested based on allegations of fraud. This can include fraud on your part in creating the trust, or fraud on the part of other parties who manage or benefit from the trust.
  3. Property in the trust is in question: If you do not actually own property that you place in a trust, or if you do not put any property in a trust, it can be invalid.

Being aware of these common reasons why a trust can be challenged or invalidated could help you make some proactive decisions. You might include a no-contest clause in your trust or video tape a statement documenting your mental capacity and clarity of thought. You might also make decisions regarding beneficiaries differently if you anticipate challenges from certain people.

Protecting your wishes, your assets and your beneficiaries are all critical priorities when you are establishing a trust. In order to ensure your trust actually achieves these goals, it can be wise to review your estate plan regularly and with the guidance of an attorney.

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