My father accidentally set up a revocable trust leaving everything to my stepmom.

This would effectively exclude me and my siblings from any part of my father’s estate. Everything, including the house, had to go into a trust, and when my father and stepmother both passed away, the house was to be sold and all proceeds distributed equally to all beneficiaries, including me and my siblings. Is there anything we can do to make our father’s wish come true?

daughter/stepdaughter

Related: My property is worth millions of dollars. How do I keep my daughter’s husband out of it?

Dear daughter,

It’s stories like this that give all the good stepmothers out there a bad rap.

There are several possibilities here: 1) Your father accidentally set up a revocable trust and didn’t really understand the difference between the two. 2) He set up an irrevocable joint trust for only a portion of his assets upon his death. or 3) at some point he changed his mind and set up a revocable trust and left the assets to his second wife to distribute to their respective heirs. Even if issue #1 arises, if you challenge the terms of this trust, it will be up to you to prove it in court with the help of an attorney. There are many variables that go into creating trust, so it very much depends on the terms presented.

But many obstacles lie ahead. The burden of proof lies at your doorstep and you should be aware of your state’s statute of limitations. “Trust contests must occur within a certain period of time after the grantor’s death,” says Brian Liberis, senior estate planner at EP Wealth Advisors in Boston, Massachusetts. So if court action is necessary, you should act as quickly as possible. possible. Moreover, there will be the burden of proving that the trust did not reflect the father’s intentions and that there was in fact a mistake.”

“However, some revocable trusts are written to remain revocable until the creator dies. second spouse,” Liberis told MarketWatch. “If so, your stepmother would have the power to change the entire trust and pass the assets to your children. If this is how this trust was drafted, then your only recourse would be to challenge the trust in court on the basis that a ‘mistake’ was made and the trust should be amended/amended. In other words, the trust created did not reflect the father’s intentions.”

Principle of Fairness

Obtain a copy of the trust so that your attorney can review the terms and see if there is evidence that the trust was poorly structured and/or that only a portion of the assets can be revoked. “We will ask the court to modify/reform the trust according to the principles of ‘equity’ or fairness,” Liberis adds. “If at the time of execution it was intended that upon the death of the second spouse the assets would pass 50/50 to the children of each spouse, the trust should be reformed in accordance with the principles of fairness to ensure that: Result – at least that’s what you would claim.”

It appears that your stepmother intends for the assets in the revocable trust (or a portion of the revocable trust) to be passed on to her son. It could be a costly lesson for you and your father. The surviving spouse does not always follow the wishes of the deceased spouse. Whether the money is large or small, the second wife or husband may be led to believe that she is entitled to or entitled to the entire estate of her deceased partner. We can debate the ethics of leaving you out of the picture, but your focus should be on her legal rights.

If your efforts are successful, remember that assets placed in a revocable trust will generally receive a basis increase, effectively eliminating any capital gains. Of course, that will help your stepmother. So if you leave a $1 million home that you originally bought for $500,000, your father will save money if he sells the home because the capital gains are calculated based on the home’s value at the time of his death. However, assets in an irrevocable trust cannot receive a basis increase if they are not included in the father’s taxable estate.

If men are more likely to outlive their wives (women tend to outlive men by about 6 years, a difference that may narrow or widen depending on the age difference between the couple), then stepchildren may live longer than their stepfathers. I will write more letters about this. Letters from stepmothers about emptying their bank accounts are more prevalent in this column than letters from stepfathers. However, children are likely to disagree with their father’s wishes if they think he has been too generous with his second wife. In the meantime, I hope you find a painless resolution to your trust breakdown.

If you have any financial or ethical questions, you can email The Moneyist at qfottrell@marketwatch.com and you can follow Quentin Fottrell on X, a platform previously known as Twitter.

Moneyist regrets that we are unable to answer questions individually.

Quentin Fottrell’s previous columns:

‘I grew up pretty poor’: I got an annual bonus. After paying off your credit card, you will have $10,000 left over. What should I do?

‘I received a check for a $22,000 insurance claim’: Why on earth does it take 5 days for my check to process?

‘I want to protect my family’: A wealthy father (49 years old) marries his third wife. How do I deal with my inheritance issues?

Please confirm Moneyist personal Facebook This is a group looking for answers to life’s trickiest money questions. Post a question or contribute to the latest Moneyist column.

By emailing your question to Moneyist or posting your dilemma to the Moneyist Facebook group, you agree to have your question posted anonymously on MarketWatch.

By submitting your story to Dow Jones & Co., publisher of MarketWatch, you understand and agree that we may use your story, or a version of it, in any media and platform, including through third parties.