San Diego Estate Planning Lawyer Blog
Many wills and trusts contain a “no-contest” clause designed to discourage unnecessary litigation among family members after a person’s death. Basically, a no-contest clause disinherits anyone who files a lawsuit subsequently challenging the validity of the will or trust in court. But a recent San Diego case offered an unique spin on this legal principle: What happens when someone files a lawsuit claiming a trust is valid, notwithstanding the contrary claims of the trustee?
Court Revives Son’s Claim Against Mother Over Grandmother’s Trust
The litigants in this case are a mother and son. The dispute is over the terms of a revocable living trust established by the mother’s mother (i.e., the son’s grandmother). The grandmother originally created the trust in 1990. She purportedly signed two amendments to the trust, the first in 1999 and the second in 2013, several months before her death.
Under the second amended trust, the grandmother’s house would go the grandson upon her death. Under the first amended trust, there was no specific gift of the house, but the remainder of the trust estate was to be equally divided among the grandmother’s three daughters, which included the mother. So the mother therefore stood to inherit a greater share of her mother’s estate under the first amendment than under the second amendment.
After the grandmother died, the mother, acting as successor trustee, sent the grandson a notice regarding the status of the trust. This notice is required by California law and must contain a “complete copy of the trust agreement.” Here, the mother’s notice only included the first trust amendment, but not the second, which she later claimed was “invalid.”
The grandson then went to court. He filed a petition asking a probate judge to remove his mother as trustee, and to appoint a new trustee who would issue a revised notice including the second amendment. The mother argued that the son’s petition was barred by California’s statute of limitations for trust contests, which is 120 days from the date she provide him with the notice.
The probate judge granted summary judgment to the mother, but the California Fourth District Court of Appeal reversed, finding the son could proceed with his petition. The appeals court did not settle the question of whether the second amendment was a valid part of the trust, only that the son’s claim should not have been dismissed without a hearing.
The 120-day time limit only applies to trust contests. The Fourth District said this was not a contest. After all, the son alleges the second amended trust is valid; it is the trustee who is attempting to argue it is invalid. Rather, the son’s claim is that the trustee’s notice was defective because it excluded part of the trust. If the son’s claims are correct—and they must be presumed so for purposes of deciding a summary judgment motion—then he never received proper notice to begin with, so the 120-day time limit had not even begun.
Can a Trustee Declare Part of a Trust Invalid?
Another critical point in the Fourth District’s decision: A trustee does not have the unilateral authority, under California law, to “define the terms of the trust by choosing to include only certain documents in the notice.” Otherwise a successor trustee could easily thwart the intentions of of the deceased by selectively choosing to not enforce certain parts of a trust.
When you make a will or trust, you must have complete confidence that the agents you name in those documents will actually do as you direct. If you need to speak with an experienced San Diego estate planning attorney on the best way to ensure your wishes are respected, contact the Law Office of Scott C. Soady right away.