STRESS TESTING ESTATE PLANS
Kandis Schnell | Aug 06 2026 16:09
By: Shannon L. Evans, Esq.
Telephone: 702-699- 7333
1. Most litigation occurs after the death of the Settlor (owner/drafter of the will/trust) when persons or charities who expected to receive a bequest are not actually included.
- Trusts: a trust can be from any state, even if the Settlor moves to another state. Generally, the laws of the state where the trust was formed are to be applied.
- Most states have statutory procedures whereby the probate court is petitioned to have jurisdiction over the trust. This causes the trust itself & its assets to become public knowledge. Barring litigation, trusts are private & the terms cannot be discovered by non-beneficiaries.
- Wills: when a person dies & there are assets that are in the person’s name without beneficiary designations (POD/TOD) or Joint with another person, a court process called “probate” is required to ensure that the will’s terms are followed. This court process can take unnecessary time & legal fees. This is a public record & interested parties may “contest” the disposition.
- Intestate: when a person dies & has NO will, and there are assets in the person’s name without beneficiary designations (POD/TOD) or Joint with another person, the same court process as required for processing a will is required for the estate, but it will be under the state’s “Intestacy rules” which outline who should inherit by statue. This is a public record & interested parties may “contest” the disposition.
2. Dangers when Settlors omit persons who would usually expect to inherit:
- Settlors may intentionally “OMIT” a person entirely from a trust or will.
- Settlors may LIMIT a beneficiary’s share or bequest to a much lesser amount than may be expected.
- Settlors may REDUCE a beneficiary’s share & may add new unexpected persons, such as a caretaker or romantic partner.
- When
does
this
cause
a
problem?
Usually
the
change
is
not
discovered
until
the
Settlor dies,
&
the
assets
are
going
to be
distributed.
Since trusts are
private
documents
& not recorded anywhere,
no
one can find
out
what the distribution will be until it
is actually happening.
- Will/Trust contests in probate court often are filed at this point.
- No-Contest clauses in trusts or wills sometimes cause disgruntled beneficiaries from filing probate procedure. But “no-contest” does NOT prohibit someone from claiming that the Settlor was not competent or acting under duress at the time of signing.
3. Ways to Discourage Litigation:
- If a Settlor is older & reducing or omitting an heir’s expected share, get a competency letter from treating physician around the time of signing.
- No-Contest Clause discourages litigation but does not apply if there are challenges due to Settlor’s competence.
- Judicial
Pre-Mortem
Validation
of
Will
or
Trust:
this
is
a
rarely
used
method
of
getting
a court order or formal approval BEFORE DEATH.
- BENEFITS: very hard to litigate the trust or will distribution terms if a court already has “blessed” the document.
- DISADVANTEGES: most states require notice to be sent to specific people who are being affected or to all of the beneficiaries named & also family members who would be an heir per intestate succession rules. So this court procedure changes a private trust into a public document & opens the door to litigation before death.
- Also this process requires legal fees & attorneys. No one chooses that!
- Non-Judicial
Pre-Morten Validation of Will or Trust:
2 states allow a notice procedure
which
does
NOT
require
any
court
involvement
UNLESS
a
person
who received a notice files a challenge with the court in the limitation period.
- South Dakota: allows this procedure only for trusts.
- Delaware: allows this procedure for Trusts, Wills & Powers of Attorney (POAs).
- BENEFITS: less expensive that Judicial Validation & slight less attorneys’ fee.
- DISADVANTAGES: same notice requirements to persons & opens door to litigation before death.
4. Options to Handle Disputes after Settlor’s death:
- Probate court process: each state has a court system for disputes.
- Arbitration/Mediation: rarely used, since expensive & non- binding.
- Family Settlement Agreement: only useful when named beneficiaries & omitted persons are willing to negotiate terms.
-