Should I Form a Trust to Transfer My Business to Beneficiaries?

When you set up a trust, you’re expecting that the terms will be upheld and your assets will be distributed precisely according to your wishes. However, there are situations where heirs can bring contests to challenge the terms of a trust, and working with a Rockville, MD estate lawyer is the best way to ensure that won’t happen.

Can My Heirs Contest the Terms of My Trust?

Yes; If They Have Grounds

Maryland law recognizes certain grounds for bringing a legal challenge to a trust. One is fraud. To allege fraud, your heirs will have to be able to prove that you were misled or lied to, perhaps by someone falsifying a document, and you either created the trust based on this lie or added terms you would not otherwise have included because of the fraud.

Another grounds for bringing a challenge is lack of capacity. This argues that you as the grantor were not of sound mind when you created the trust. The argument is usually that illness, age, or injury caused you to lack the mental capacity necessary to make decisions.

Your heirs might also bring a challenge of undue influence, which asserts that you were coerced or manipulated in some way into creating or changing the trust to benefit a particular person. Finally, your heirs can challenge whether the trust was legally and properly executed in the first place.

How to Avoid a Challenge

While it’s impossible to guarantee no chance whatsoever of your heirs bringing a challenge, there are things you can do to make it much less likely:

Work With an Experienced Rockville, MD Estate Lawyer

Working with a good estate attorney from the outset is the most important thing you can do. Your attorney will make sure everything is done right, advise you on how to discuss the terms with your heirs, suggest clauses that can minimize challenge opportunities, and be able to testify that you were of sound mind at the time of the trust’s preparation.

Communicate With Heirs

Many issues can be avoided entirely just by proactively communicating to avoid misunderstanding. If you’re going to leave someone out, make sure they know why. If you’re going to give more to one child than another, explain: maybe that child gave you a loan or took care of you when you were ill in a way the other children did not. Communication is always helpful.

Update When Necessary

If your life changes, such as if another child is born or you divorce, be sure to keep up with your trust and change anything important.

Include a No-Contest Clause

This clause automatically disinherits any beneficiary who challenges the trust with a spurious claim. If there’s a legitimate concern, such as if one of your heirs were to realize fraud had been committed against you when you made the trust, this clause wouldn’t go into effect. But it does prevent frivolous claims that have no basis.

Your heirs may be able to challenge your trust, but there are things you can do to protect both them and your assets. Talk to us today at Elville and Associates in Rockville, Columbia, or Annapolis, MD today to get started.

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