Below, we explore key grounds to challenge a trust, including undue influence, and highlight relevant New York case law.
A living trust can be an effective estate planning tool, but like a Will, it is not immune to legal challenges. In New York, challenges to revocable trusts often arise in Surrogate’s Court. Although they are more common after the grantor’s death, they can also occur during lifetime. One of the most common claims is undue influence, which can undermine the trust’s validity.
Standing to Challenge a Trust in New York
Standing to challenge a trust requires the challenger to have a direct financial interest in the trust’s outcome. Courts have consistently ruled that beneficiaries under a prior will, heirs-at-law, and others who stand to gain or lose from the trust’s validity have standing to contest it.
- Matter of Malasky, 290 A.D.2d 631 (3d Dept. 2002): Individuals must show a pecuniary interest in the trust. Mere speculation about potential inheritance is insufficient.
- Matter of Stout, 35 A.D.3d 947 (3d Dept. 2006): Beneficiaries of prior estate plans have standing to challenge a trust if its terms diminish or eliminate their inheritance.
Standing is only the first hurdle; the challenger must then establish grounds for invalidating the trust, such as undue influence.
Grounds to Challenge a Trust
1. Lack of Capacity
To create a trust, the grantor must have the mental capacity to understand the nature and effect of their actions. Evidence of cognitive decline, such as medical records or witness testimony, is critical in these cases.
2. Undue Influence
Undue influence occurs when a party manipulates the grantor to act against their true intentions, usually for personal gain. Courts evaluate the presence of undue influence based on factors such as dependency, isolation, and control.
Key New York Case Law on Undue Influence
- Matter of Walther, 6 N.Y.2d 49 (1959): The Court of Appeals established that undue influence must amount to a moral coercion that subverts the grantor’s free will. Suspicious circumstances alone are insufficient; the challenger must show a direct nexus between the influencer’s actions and the trust’s creation.
- Matter of Connelly, 193 A.D.3d 919 (2d Dept. 2021): The court invalidated a trust amendment where the decedent was heavily dependent on the influencer, and there was evidence of control over financial and personal matters.
- Matter of Elkan, 198 A.D.3d 801 (2d Dept. 2021): The court upheld an undue influence claim where the influencer was in a fiduciary relationship with the grantor, isolating the grantor from family and manipulating financial decisions.
- Matter of Kumstar, 66 N.Y.2d 691 (1985): The Court highlighted that undue influence is often proven circumstantially, given the inherent difficulty of obtaining direct evidence. Factors such as secrecy, haste in execution, and abrupt changes to estate plans were deemed probative.
These cases underscore the importance of evidence showing dependency, isolation, or a fiduciary relationship exploited by the alleged influencer.
3. Fraud
Fraud occurs when a grantor is deceived into creating or amending a trust. For example, a misrepresentation about the trust’s terms or consequences could support a claim.
4. Improper Execution
Trusts must comply with New York’s execution requirements. Errors, such as missing signatures or notarization, can render the trust invalid.
Steps to Challenge a Trust in New York
- Consult an Attorney: An estate litigation attorney can evaluate the strength of your claim, focusing on standing and applicable grounds such as undue influence.
- Gather Evidence: Collect medical records, correspondence, financial records, and witness statements to support claims of undue influence, lack of capacity, or fraud.
- File a Petition in Surrogate’s Court: The court will oversee the dispute and assess the validity of the trust.
Preventing Challenges
For those creating a trust, consider the following steps to minimize disputes:
- Work with a qualified estate planning attorney.
- Execute the trust in the presence of neutral witnesses.
- Document the grantor’s capacity through medical evaluations or affidavits.
- Communicate estate planning decisions transparently with family members.
- Include a no-contest clause to deter baseless claims (though these clauses are not a defense against claims of undue influence or fraud).
Challenging a living trust requires a careful legal strategy, especially when undue influence is alleged. For tailored advice and representation to challenge a trust, contact RK Law to schedule a consultation with our experienced attorneys.
For more information, please contact NYC Probate Litigation, Guardianship, Probate, and Estate Planning attorney Regina Kiperman:
Phone: 917-261-4514
Fax: 929-556-2089
Email: rkiperman@rklawny.com
Or visit her at:
40 Wall Street
Suite 2508
New York, NY 10005
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