What Invalidates a Trust in California?

A trust is a legal relationship where an individual, known as the trustee, manages property for the benefit of a third party, known as the beneficiary. The person who creates the trust is called the settlor. There are certain circumstances in which a trust can be invalidated. Therefore, it is important to understand what invalidates a trust in California.

How Can a Trust Be Invalidated?

At Ross Law Group in Newport Beach, we assist clients across Southern California with trust disputes and can help you assess whether a trust may be legally invalid. There are several common reasons why a trust may be invalid:

1. The proper legal requirements were not followed or met when the trust agreement was created.
2. The trust was established as the result of forgery or fraud.
3. The settlor lacked the mental capacity to legally establish the trust.
4. An individual with an interest in the assets of the trust exerted undue influence or coerced the settlor in order to establish or modify the trust.
5. The legal property of the settlor was not transferred to the trust.

California law requires that a trust meet basic requirements to be legally valid. Failure to meet these requirements may be grounds for invalidation of the trust. The trust document must clearly and in detail establish intent, establish the settlor’s mental capacity, outline the method of distribution and management of assets, and may include an end date in the document.

If the intent of the trust is not satisfied by the end date, the trust may be invalidated. Trust documents require the signature of the settlor.

Process for Invalidating a Trust

To invalidate a trust, a petition will need to be filed in the appropriate California probate court. In Orange County, the probate court is located in the Costa Mesa Justice Complex.

Strong evidence will need to be presented showing why the trust or specific provisions in the document are invalid. There are often strict deadlines that define the amount of time an individual has to file a contest. It is essential to file a petition prior to the deadline to have your petition reviewed.

In order to file a petition with the court, you must have “standing” in the trust. Examples of individuals who typically have standing are designated beneficiaries of the trust, beneficiaries who have been recently removed, legal heirs of the settlor, or other individuals who have a financial interest in the trust.

Following the filing of the petition, an investigation and discovery period will commence where the individual filing the petition and the trustee will gather evidence. An attorney is typically involved in assisting with this complex process. Often, trust disputes are resolved through mediation conducted by a probate judge. If mediation is not successful, the dispute will move to trial, and a judge will render a verdict.

Ways a Trust Can Be Terminated

Terminating a trust means that the trust ends, its affairs are settled, and any remaining assets are distributed according to the terms of the trust and applicable California law. There are three ways in which a trust can be terminated:

• Revocable trust termination. The settlor can revoke or amend the trust at any time during their lifetime and manage or distribute the assets as desired.
• Irrevocable trust termination. These trusts cannot be changed or revoked by the settlor alone. However, they may be terminated by court order, by agreement of all beneficiaries (when no material purpose remains), or when the trust’s purpose is fulfilled or becomes impossible to carry out.
• Termination by operation of law. A trust can end automatically when its terms specify an end date, event, or condition — such as the death of a beneficiary, full distribution of assets, or satisfaction of the trust’s purpose.

While termination ends a trust according to its terms or with proper consent, invalidation involves challenging the trust’s legal foundation. Understanding the difference is essential if you suspect a trust was created improperly or under questionable circumstances.

FAQs

Q: How to Invalidate a Trust in California?

A: To successfully invalidate a trust in California, state laws and court procedures must be observed. Trusts can be contested under certain circumstances, including undue influence, duress, fraud, or lack of capacity. This requires presenting strong evidence, filing in the appropriate jurisdiction, and ensuring that all legal requirements are met. A petitioner will need to establish standing – which is the legal right to bring the case by demonstrating a direct financial interest in the administration of the trust.

Q: What are the Requirements for a Trust to Be Valid in California?

A: The individual establishing the trust must be at least 18 years old and possess the mental capacity to understand their actions. The trust must be funded through identifiable assets that can include bank accounts, stocks, real estate, or personal property. The trust must also clearly designate the beneficiary, which can be an individual, organization, or even an animal. A trust document will clearly state how the assets are to be managed and distributed and must be signed by the settlor.

Q: What Makes a Living Trust Invalid in California?

A: A living trust may be invalid if the proper legal steps were not taken when establishing the trust. The settler must meet the California requirement regarding mental capacity and age in order for the living trust to be valid. Other reasons for invalidation include failure to meet state requirements, creation or modification of the trust through fraud, or undue influence exerted over the settlor.

Find Your Southern California Trust Litigation Lawyer Today

If you need to invalidate a trust, it is essential to contact a Newport Beach trust litigation attorney to provide guidance. Invalidating a trust may be a complex matter that will require experienced legal advice. Ross Law Group, APC, in Newport Beach has over 21 years of experience in estate and trust litigation. If you need the guidance of a skilled litigator to navigate a challenging situation, contact our office, schedule a consultation with a trust and estate attorney, and learn more about the legal services we provide.