Is a Living Trust Valid?
Estate planning involves making decisions about who will inherit your property when you pass away. A comprehensive plan allows a person to create a legacy that has the potential to last for generations. Traditionally, a simple will was all a person needed. Many people want to use a trust, but may have concerns about validity.
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Living Trusts Are Generally Valid
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Living trusts are generally valid in all 50 states and in "commonwealth countries" such as Canada and England, according to Elderlaw.us. A living trust is a legal entity, according to Legal Zoom. Like a corporation, the living trust operates through individual entities, typically the trustee and the beneficiaries. In a living trust, the grantor (the person who created the trust) is often both the trustee and the beneficiary during his lifetime. This allows the grantor to maintain total control over the property. When the grantor dies, successor trustees and beneficiaries are appointed according to the grantor's instructions.
Elements of a Living Trust
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A living trust must have a grantor, trustee and named beneficiaries and must be properly funded. Funding a trust involves placing property into the name of the trust. This often involves drafting new property deeds so that real property is placed in the trust or creating new accounts in the name of the trust and transferring money into the trust account. The trust operates through a document called the declaration of trust. The trustee is bound to act according to that document's instructions.
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Disputing a Living Trust
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According to Mockensturm Limited, a legal and accounting practice in Toledo, Ohio, the heirs and beneficiaries of the living trust may attempt to challenge the trust's validity on grounds similar to those used in will contests. This includes alleging that the grantor was incompetent to create the trust or that it was created under duress. If grounds to challenge the trust exist, a court may declare the trust invalid. It is likely that, absent some other estate plan in place, the property of the grantor would be distributed according to the state's intestate succession law which typically gifts the property to the decedent's closest relatives.
Revoking a Living Trust
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During the lifetime of the grantor, the trust can generally be revoked. The revocation should be explicit and the trust document should be destroyed. If the trust documents still exist, or if the grantor was unable to remove the property from the name of the trust, an advocate may be able to have the trust declared invalid by proving the grantor revoked the trust with a subsequent document.
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