Important revisions to the Minnesota Trust Code effective on January 1, 2016, include several provisions relating to revocable trusts. One of the most significant changes sets time limits for challenging a revocable trust. The provisions affect the rights and interests of trustees and beneficiaries of revocable trusts.
The 2016 changes in the state Trust Code include several provisions that relate to revocable trusts, including revocable living trusts that are part of an estate plan:
The last of these changes is one of the most significant. Trustees and beneficiaries need to be aware of the details of these new provisions.
Section 501C.0605 of the Minnesota Statutes contains the new provisions relating to the time limit for contesting a revocable trust. The law sets the time limit for contesting the validity of a revocable trust at three years after the settlor’s death. This provision makes that time limit the same as the time limitation for challenging a will.
There is, however, an important caveat to the three-year limitation. The trustee can shorten the time limit substantially — to 120 days — if the trustee takes specific action detailed in the law.
For the 120-day limitation to apply to a person, the trustee must send that person a copy of the trust document and a notice that:
If the trustee sends this information to an individual, that person has only 120 days to initiate a proceeding to challenge the trust. By sending the notice, the trustee shortens the time limit from three years to four months.
Additional provisions in the section insulate the trustee from liability in distributing the proceeds of the trust in accordance with the terms, unless:
Finally, the section provides that if a court invalidates a trust in whole or in part, a beneficiary who received any distribution must return that distribution, to the extent the invalidity determination applies.
These provisions raise a number of critical issues for trustees and beneficiaries of revocable trusts following death of the settlor. Depending on whether and how a trustee implements the time-limit provisions and distributes the trust assets, probate court litigation may result.
While the statute provides a process for the trustee to shorten the time limit for a challenge, it does not define the persons required to receive the time-limit notification. The responsibility for making that determination lies with the trustee.
The logical approach would be to notify the same interested persons who would be notified of initiation of a probate proceeding. Since a person wishing to challenge the validity of the trust will have three years to bring an action in the absence of the required notice, casting a wide net in sending the notices is extremely important.
Regardless of the nature of an issue arising under these new provisions, assistance from an experienced probate litigation attorney is essential. Navigating through the legal requirements of the law and the factual circumstances requires special analytical and investigative skills as well as knowledge and experience with probate court practices and processes.If there is a challenge to the validity of the trust, issues may arise relating to distribution of trust assets. If a court invalidates the trust in all or some respects, beneficiaries may (or may not be) required to return asset distributions, depending on whether the invalidated provisions relate to a specific distribution.
My practice at the Dave Burns Law Office includes years of experience as a probate court litigation attorney. If issues arise relating to the notification of the time limit for commencing an action or a potential challenge to the validity of a trust, I can assist the trustee or beneficiary in working through the legal and factual issues and pursuing or defending against a probate court action when necessary.
If a court hearing becomes necessary, I have the trial experience to present the evidence and shepherd the case through the court process. I always ensure that clients understand the complex process and issues, so they can make sound decisions when necessary.
In my probate and estate litigation practice, I work with trustees, family members, and other beneficiaries of a trust or estate facing probate or estate disputes, including any type of challenge to the validity of a trust. I concentrate my practice on the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.
If you would like to discuss a situation involving the time limit on contesting the validity of a trust or another matter that may require probate litigation or bankruptcy litigation, please contact me at (612) 677-8351 or by email at email@example.com. I welcome inquiries from clients and referring attorneys throughout the State of Minnesota.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer