Challenging a Trust for Lack of Capacity or Undue Influence

A trust can be a powerful tool to safeguard a settlor’s assets and reduce tax consequences for their loved ones. While these instruments can ensure the settlor’s property is protected and their wishes are met, it’s important to understand that there are some instances where these documents might be challenged. Significantly, if a settlor lacked capacity or was unduly influenced at the time the trust instrument was signed, a beneficiary or legal heir may be able to contest it. In the event it can be proven that the creation of the trust was procured by undue influence or in connection with the settlor’s lack of capacity, the instrument will be deemed void.

When Can You Challenge a Trust?

If you are the beneficiary of a trust and discover your inheritance has suddenly decreased or a new beneficiary appeared in the instrument, you might consider contesting it. However, you cannot contest a trust simply because you are unhappy with what was written in the document. You must be able to establish that grounds exist to render all or part of the trust invalid. Grounds upon which a trust can be challenged can include lack of capacity, unsound mind, undue influence, fraud, or improper construction of the instrument.

In addition, not just anyone can challenge a trust — you must have the legal standing to do so. This means you have an interest in the outcome of the court’s determination. In other words, you must be able to show that you are a beneficiary with a financial interest in the trust. A legal heir who would have inherited a portion of the settlor’s estate under Illinois intestacy laws may also be able to assert legal standing.

What is Lack of Capacity When Challenging a Trust?

Grounds upon which a trust can be challenged can include lack of capacity, unsound mind, undue influence, fraud, or improper construction of the instrument. If you are challenging a trust, it’s crucial to speak with a skillful attorney who can guide you through the legal process.

Lack of capacity is one of the most common grounds upon which a trust can be challenged. These grounds for a trust contest can arise when the settlor did not have the legal capacity to execute the trust instrument. For instance, they may have had a certain medical condition, such as dementia, that made them incapable of understanding the consequences of signing the document. If the person executing the instrument could not understand the terms of the trust, the extent of their property, or their relationship to the beneficiaries, the grounds for challenging a trust for lack of capacity may exist.

To prove the settlor lacked the capacity to execute a valid trust, medical evidence must be presented to the court. This can show the settlor’s medical condition and state of mind at the time the document was signed. Additional evidence can also be helpful to establish that the document does not reflect the settlor’s true intent.

What Does Undue Influence Mean When Challenging a Trust?

Not to be confused with lack of capacity, undue influence refers to situations in which a party took advantage of a settlor’s vulnerability. To challenge a trust based on undue influence, it must be shown that the settlor’s age, health condition, dependency, cognitive abilities, or isolation made them vulnerable. Under Illinois law, there is a presumption of undue influence if the challenger of a trust can establish the following four elements:

• The existence of a fiduciary relationship between the settlor and a person who receives the benefit of the instrument;
• The settlor was in a dependent situation while the beneficiary had a dominant role;
• The settlor placed trust and confidence in said beneficiary; and
• The beneficiary participated in the procuring and execution of the instrument.

Undue influence can include actions or tactics such as controlling the settlor’s medication or interactions with loved ones. It can also involve the use of intimidation or coercion. Notably, under the Illinois Probate Act, any property transfer to a non-relative caregiver in an amount more than $20,000 is considered fraudulent if challenged. In such cases, the burden would be placed on the caregiver to prove that there was no undue influence exerted upon the settlor.

What Happens if a Trust Contest is Successful?

The legal process for challenging a trust is similar to contesting a will. A petition must be served upon the adverse party and any other parties interested in the outcome of the proceeding. Following the pleadings, the discovery phase of litigation begins — this is where evidence, information, and documentation is exchanged by both sides, giving the parties an opportunity to investigate the facts of the case. If the case does not settle, it will proceed to trial.

If a trust contest is successful, the instrument will be declared invalid. This makes it as if a trust were never created at all — and the outcome may be entirely different than it would have been if the trust remained in place. In such cases, the property and assets contained in the trust may be administered in accordance with Illinois intestate law. The individuals who would inherit under Illinois intestacy law depend upon which family members are living upon the decedent’s passing.

Contact an Experienced Illinois Trust Litigation Attorney

Challenging a trust can be complex, emotionally overwhelming, and stressful. If you are facing a trust dispute, it’s crucial to have a skillful attorney by your side who can guide you through the legal process. Located in Rolling Meadows, Litico Law Group provides reliable representation throughout Illinois for trust litigation matters. We welcome you to contact us by filling out our online form or call (847) 307-5942 to schedule a consultation to learn how we can assist you.