Trusts Mistakes: Why Trusts Get Attacked
Uncertainty about a loved one’s last wishes can surface tensions between family members, causing arguments and hurt feelings. Trusts mistakes such as ambiguity, unaddressed issues, or inaccuracies in the deceased’s will, trust, or other estate plans can lead to costly, emotionally draining court battles that drive rifts between family members for years.
Trusts mistakes are the result of poor estate planning.
Mistakes usually fall into one of four categories:
- Mistakes by the trustee. Many trustees don’t handle trust administration at a professional level, and so can make basic mistakes in dealing with beneficiaries or investing trust assets.
- Sloppy estate planning. A trust can’t be made with a cookie-cutter approach. Once it is finished, it will need regular adjustments for changes in the testator’s life. Most people need professional help in drawing up the terms of a trust. Without it, there will inevitably be errors, misunderstandings, and unresolved issues that will need to be worked out through litigation in California probate court.
- Ambiguity or unclear terms. Language, even in carefully made trusts, can be open to interpretation. If a testator doesn’t make their wishes clear in up-to-date, explicit terms, it can create a lot of confusion and resentment. To reduce liability, ambiguous language is best clarified by an official judgment in court.
- Avoidance of painful issues in the testator’s life. The testator may have made a trust for the life they wanted instead of the life they had. If a testator is in denial about the reliability of the person they appoint as trustee, or if they won’t make adjustments for a beneficiary with health problems or special needs, it can lead to mistakes and omissions in the trust.
Some examples of situations that commonly lead to important mistakes in trusts include:
- A trustee invests trust assets without professional advice, leading to unwise decisions and significant loss.
- A trustee gives property or assets to a beneficiary immediately upon request, without verifying the accuracy of the request, or double-checking with the attorney.
- A testator made the trust using ready-made forms from a computer program.
- A testator left the entire estate to one of the children, assuming that child could be trusted to divvy up property and assets alone.
- A testator changed lawyers several times over the lifespan of the trust, leading to repeated, outdated, and omitted information.
- A parent didn’t want to choose between children, and so appointed multiple successor trustees.
- A testator makes a deal with a beneficiary and does not follow through on it, such as promising property if the beneficiary provides live-in support through the testator’s final years, but then actually bequeathing that property to someone else.
- A testator who remarried late in life neglected to adjust the trust to provide for the second spouse.
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