An increasing number of people are designing their estate plans with their Revocable Trust as its principal component. This is because the Revocable Trust offers certain advantages over a Will, including greater privacy for the plan and avoidance of probate. As a result of this increasing Revocable Trust usage, the issue of when and whether the beneficiaries under a Revocable Trust are entitled to enforce or challenge the Trust and its administration is arising with increasing frequency around the country. When a Revocable Trust is substantially funded during the Settlor's lifetime, the lifetime administration of the Trust can raise significant issues.

In a recent Florida case, a District Court of Appeals rejected a suit by the son of the Settlor of a Revocable Trust filed during the Settlor's lifetime to challenge the validity of an Amendment to the Revocable Trust. This amendment was made after the Settlor's wife had died and he had remarried. The son asserted lack of the Settlor's capacity and undue influence by the Trustees, along with tortious interference with his inheritance under the original Trust.

The Court decided the case under a Florida statute directly on point. That statute precludes the filing of a Revocable Trust contest during the Settlor's lifetime or until the trust had sooner become irrevocable by its terms, with the exception of a suit filed by the Settlor's guardian. Because the son of the Settlor was not the Settlor's guardian, the Settlor's son was precluded from contesting the Trust during the Settlor’s lifetime, even on grounds of lack of capacity.  

The Court also concluded that the tortious interference with inheritance claim should be brought after death, based on the preference for such timing under prior Florida case law and based on the Court's reluctance to entertain such claims if alternative remedies are available.

The Uniform Trust Code (UTC), which is applicable in Kentucky and many other states, does provide that the trustee only has duties to the Settlor while the Trust is revocable (and the trustee reasonably believes that the Settlor has capacity to revoke the Trust), and the rights of the beneficiaries are subject to the Settlor's control during that same time frame. However, the statute does not go further and expressly preclude a Trust contest during that time period of revocability. Further, the UTC provision does leave the issue open of whether the trustee reasonably believes that the Settlor retains sufficient capacity to revoke the Trust, an issue precluded by the Florida lifetime trust contest statute.

Although Indiana has not enacted a complete version of the UTC, it has enacted many similar or materially identical provisions, including the above-referenced UTC provision adopted in Kentucky. However, Indiana’s statute further provides that if the trustee reasonably believes the Settlor lacks capacity to revoke a trust, then the trustee is authorized to (although not required to) provide the trust's financial information to the Settlor’s designated agent or to any beneficiary receiving such trust information if the Settlor were deceased. Presumably, if notified, the designated agent or beneficiary could commence a suit during the settlor’s lifetime challenging an amendment to the Trust made by the Settlor while incapacitated.