Partial invalidity of a trust refers to the situation where the court finds specific provisions within the trust invalid, but the rest of the trust is still enforceable. This helps keep the paramount wishes of the person who created the trust – the settlor – intact, even if some parts are problematic.
When is a trust considered partially invalid?
The court can decide that parts of a trust are invalid if:
- There was fraud or undue influence: This includes situations where someone pressured, deceived or lied to the settlor to include specific provisions.
- The settlor lacked mental capacity: This means that the settlor had cognitive problems when making certain parts of the trust.
- The provision violates public policy or is illegal: This includes provisions that require someone to do something illegal to get their inheritance or if it goes against public policy.
- A trustee breaches their fiduciary duty: These are parts of the trust affected by situations in which a trustee does not act in the best interests of the beneficiaries, manages the trust poorly or has conflicts of interest.
The court aims to honor the settlor’s overall intent. If only specific provisions are problematic, invalidating those parts allows the rest of the trust to function as intended. Partial invalidity also ensures that beneficiaries still receive their inheritance according to the valid parts of the trust.
What happens to the estate?
The estate distribution depends on which parts of the trust are invalid. Here’s what usually happens:
- The court will remove or ignore the invalid provisions. The rest of the trust stays in effect.
- Assets distributed according to invalid provisions will be redistributed according to the valid parts of the trust.
- If needed, the court may interpret or modify the remaining parts to ensure that the distribution matches the settlor’s overall wishes.
Generally, the beneficiaries will still receive their inheritance according to the valid parts of the trust.
Protect your rights and interests as a beneficiary
As a beneficiary, you have the right to make sure that the management and execution of the trust respect the settlor’s wishes and your interests. Don’t hesitate to take action and get the support you need.