When a Trust Does Not Reflect the Settlor's True Intentions

California trusts are powerful estate planning tools, but they are not immune to legal challenge. A trust may fail to reflect the settlor's genuine wishes because of fraud, undue influence, lack of capacity, or a technical defect in execution. When any of these circumstances exist, an interested party — typically a beneficiary or an heir who would have inherited absent the trust — may have standing to contest the trust in the California probate court.

Concrete example: An elderly Saratoga resident with moderate Alzheimer's disease is visited repeatedly by a new caretaker who isolates her from her adult children. Within six months, the caretaker accompanies her to an attorney's office where she executes a new trust leaving her entire estate to the caretaker. Her children, who had been named as beneficiaries under the prior trust, have grounds to contest the new trust on both lack of testamentary capacity and undue influence — and should consult a trust litigation attorney immediately to preserve their rights before the applicable limitations period runs.

"A trust is only as valid as the circumstances under which it was created. Where those circumstances were tainted by fraud, coercion, or incapacity, the law provides a remedy."

Ground One: Lack of Testamentary Capacity

A trust is valid in California only if the settlor — the person who created it — had the legal capacity to execute it at the time of signing. California Probate Code section 6100.5 sets out the standard for testamentary capacity: the settlor must have understood the nature of the testamentary act, the nature and situation of their property, their relationship to the natural objects of their bounty, and the practical effect of the trust instrument.

Cognitive impairment from dementia, Alzheimer's disease, stroke, or other conditions can deprive an individual of testamentary capacity. A trust executed during a period of incapacity is voidable, even if the settlor had periods of lucidity before and after. Medical records, testimony from treating physicians, and evidence of the settlor's conduct and communications at the time of execution are typically the most probative evidence in a capacity contest.

Ground Two: Undue Influence

Undue influence occurs when a dominant party substitutes their will for the settlor's, causing the settlor to execute a trust that does not reflect their genuine wishes. California law recognizes a presumption of undue influence when a donative transfer — including a trust — benefits a person who was in a position of trust and confidence with the settlor, was active in procuring the transfer, and receives an undue benefit.

Common fact patterns in undue influence cases include a caregiver, family member, or new romantic partner who isolates the settlor from other relatives, controls access to legal and financial advisors, and is present during the execution of a trust that dramatically departs from the settlor's prior estate plan. The presumption of undue influence, once established, shifts the burden to the beneficiary to prove that the transfer was the product of the settlor's free and independent will.

Ground Three: Fraud and Misrepresentation

A trust contest based on fraud requires proof that the settlor was induced to execute the trust through false representations of a material fact, made with knowledge of their falsity and with intent to deceive, on which the settlor justifiably relied to their detriment. Fraud in the inducement — where the settlor was deceived about the nature or consequences of the document they were signing — and fraud in the execution — where the settlor did not understand that they were signing a trust at all — are each recognized grounds for invalidating a trust instrument.

Ground Four: Defects in Execution

California Probate Code section 15200 requires that a trust be created by written instrument and signed by the settlor. Unlike a will, a trust does not require witnesses or notarization to be valid, but it must be in writing and executed with the requisite formalities. A trust purported to have been created orally, or a written instrument that lacks the settlor's signature, is not a valid trust under California law.

The No-Contest Clause and Its Limits

Many California trusts include a no-contest clause — a provision that purports to disinherit any beneficiary who contests the trust. California Probate Code section 21311 limits the enforceability of no-contest clauses to specified categories of challenges and provides that a contest brought with probable cause is not subject to forfeiture under such a clause. An interested party who has a good-faith, legally supportable basis for contesting a trust need not fear automatic disinheritance for doing so.

McLellan Law Group represents clients in Saratoga, San Jose, Cupertino, Los Gatos, and throughout Silicon Valley and Santa Clara County.

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