When should a trust dispute be initiated?
As soon as possible…
The clock starts ticking when a trustee serves a 120 day notification. That happens when either of the following occurs:
- A revocable trust or any portion of it becomes irrevocable because of the death of one or more of the settlors of the trust. The trust can also become irrevocable within 1 year of the death of the settlor because of a contingency related to the settlor’s death as expressly stated in the trust;
- There is a change of trustee of an irrevocable trust.
A power of appointment retained by a settlor is effective or lapses upon death of the settlor with respect to an inter vivos trust which was or purported to be irrevocable upon its creation.
Probate Code 1606.7 provides that a trust contest must be brought no more than 120 days after notification has been served or 60 days from the day on which a copy of the terms of the trust is mailed to the beneficiary during that 120-day period, whichever is later. “Terms of the trust” is defined to include any document irrevocably exercising a power of appointment. To be effective, the notice must warn the beneficiary of the limitations period in a separate paragraph using 10-point boldface type or a reasonable equivalent.
The trustee has a duty to serve this notification within 60 days of the triggering event. However, the trustee’s delay does not invalidate the notice and render the shortened limitations period inapplicable. That is, the notice starts the shortened limitations period even if the trustee does not serve that notice within the time required. Seek attorney advice.
When the trustee fails to give notification to a beneficiary as required, the trustee may be responsible for damages, attorney fees, and costs caused by the failure unless the trustee has made a reasonably diligent effort to comply with the notification requirements. If the failure affects an heir whose identity is known to the trustee, the trustee may be responsible for damages.