Why a Living Trust?

Introduction

A Forewarning

Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17

Why a Living Trusts : Shift the Burden to Challengers & Contests

A Will Puts The Burden On The Estate In A Challenge
Technically, both a Will and a Trust can be challenged on some of the same legal grounds -- but any similarity ends there. To begin with Wills tend to be more delicate. Unbeknownst and contrary to the maker's intentions, a Will is often held inadmissible by some quirky law that has nothing to do with a challenge (improperly witnessed or executed, etc.). In the 1990’s California found that between 60% and 80% of self-executed statutory Wills were held inadmissible.

Even when a Will is held admissible, probate provides certain advantages for contestants. First, no lawyer is required. Second, any challenge will dramatically increase the cost and duration of the probate -- even in cases with little or no merit. Third, since the assets are generally frozen (while the Will is contested) this puts the real world burden on the estate to first prove the invalidity of someone's claim (as the assets generally cannot be used or distributed until the matter is fully resolved). This gives any contestant a great deal of leverage to force settlements for even frivolous claims – and indeed most of these cases settle from the added expense, time, disillusionment, and sheer frustration with the process.

A Trust Shifts The Burden To The Challenger
In practice it tends to be more difficult and expensive to challenge a trust. Considerations usually require the challenger to hire an attorney to prosecute the case -- a deterrent all by itself. It is also very difficult to “tie up” or prevent the use of assets in a trust effectively shifting and placing all of the burden on the challenger. Finally, problems don’t just come from excluded heirs. They frequently come from disgruntled, trouble-making, included beneficiaries who are also designated to receive part of the estate.

A Will is generally limited to an all or nothing “no contest clause” which courts rarely enforce. A trust isn’t so limited. While drafting can’t make it painful for someone who is left out altogether, a trust can certainly be drafted to make it very painful and costly for an earmarked beneficiary to frivolously challenge the trust. It can also be written to assess heavy penalties against unreasonably uncooperative or troublesome beneficiaries – penalties that come directly out of their share (instead of everyone’s). It has quite the calming effect against useless problem makers.

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