Establishing a Revocable Living Trust helps families get their financial affairs in order so that their assets can transfer effectively and efficiently upon their passing. In some situations, some beneficiaries or other family members may disagree with the terms of the Trust which may lead to additional legal actions and a longer administration of the Trust.
Generally, after the settlors of a trust die the Revocable Trust becomes Irrevocable. The Trustee should then issue notices to beneficiaries and any other party entitled to notice informing them of the change. This notice not only tells the beneficiaries that the settlors have passed but also tells them that the Trust is now Irrevocable and there is a specific timeframe for any party to contest the terms of the Trust.
The contesting parties generally have 120 days to contest and once the time has passed, can no longer contest the trust for whatever reason. In addition, trusts may often contain “no contest” language where any party who chooses to contest may be removed as a beneficiary completely.
Failure to properly administer a trust can result in both timely and costly mistakes. Often the risk falls upon the Trustee. We recommend seeking professional advice when dealing with estate planning issues and making sure all risks are managed.