California Trust, Estate & Probate Litigation

We posted over 100 blog articles in 2011.  While we enjoy writing each of them, there are a few favorites we have over the course of the year.  Each of the posts that made our top 11 list was also very popular with readers based on comments and feedback we received.  Here is a list of our top 11 blog posts in 2011:

1.         Top 10 Books for Trial Attorneys.  We receive quite a bit of feedback from this post.  And it remains a very good list of great books to read—must reads really—for any trial attorney.

2.         Justice Isn’t Fair.  A little post on the difference between fighting for justice (which can be expensive and emotionally draining) versus obtaining a fair result from a financial perspective. 

3.         Legal Lingerie: Fighting Over Personal Property In California Trusts and Wills.  Having the word “lingerie” in a law blog title seems to get you noticed.  But still an interesting post on what happens to the tangible personal property in an estate. 

4.         Capacity Lite—How Undue Influence Can be Used To Overturn a California Will or Trust When Lack of Capacity Allegations Fall Short.  This is one of our favorite posts on how undue influence can be used to overturn Wills and Trusts—a very popular post. 

5.         Court Decision Causes Consternation for Arbitration Clauses in Trusts.  The growing use of arbitration clauses in things like insurance contracts can be a real problem for unsuspecting parties, but the use of arbitration clauses in Trusts hit a roadblock this year with the Court’s decision in Diaz v. Burkey.  This post is a quick recap of the Court’s interesting ruling.

6.         Which Will Wins the Race?  The Documents Required For a Proper Will Contest Lawsuit.  Few things are more confusing than properly filing a Will contest in California.  This post was a big hit with lawyers and laypeople alike. 

7.         Influencing the Court to Find for Undue Influence in California.  This is our second blog post of the subject of undue influence that made our top 11 list.  This is a more in-depth look at the subject of undue influence and how it can be proven in Court. 

8.         No-Contest Clauses Do Not Apply to Challenging a Trustee’s (or Executor’s) Actions.  No-Contest clauses are a very confusing area of Trust and Will litigation practice.  But one of the areas where they do NOT apply is in challenging the bad acts of a Trustee—yet so many people don’t realize their proper application.  We received a lot of feedback on this explanatory post.

9.         The Beneficiary’s Burden.  California Trust and Will lawsuits are hard on everyone, especially the beneficiaries.  While the beneficiaries don’t have any legal duties, they do have a burden in bringing the lawsuit all the same.

10.       The Settlor Made Me Do It.  The California Court of Appeals clarified in “Estate of Giraldin” when a beneficiary is entitled to an accounting and damages for breach of trust for actions taken while the trust creator is still living.  This was new law for California.  And it also prompted a call from one of the Giraldin children, which I very much enjoyed!

11.      Motions to Compel = A Necessary Evil.  When you hold the opposing party to the requirements of the Discovery Act, you’re going to have to file a few motions to compel.  Seems everyone (well not everyone, but many people) want to bend the rules of properly responding to discovery.  This is our take on filing motions to compel when necessary.

Honorable Mention.

We have just a few more favorites—it’s hard to narrow over 100 posts down to 11 (but “top 11 in 2011” is a better title than top 15 in 2011).  So here are a few extra posts that we call our “honorable mentions:”

12.       Our Video Series.  We were, and still are, very excited to post our first series of videos on our blog in 2011.  We received tremendous positive feedback on our videos (although we may look a little stiff).  This is just the beginning; we have a few video surprises in store for 2012.  Here are all of our 2011 video series.

13.       Becoming a Discovery Ninja.  Responding to discovery thoroughly and promptly is a goal of ours in every case.  Here are a few tips on how to make that happen on a regular basis.

13.       The Wayward Will of Irving Duke.  So you want to draft your own Will?  Take a lesson from Irving Duke, his use of the words “at the same moment” caused his two favored charities to lose $5 million—passing instead to his two nephews who are not even mentioned in the Will!  A lesson on the trickery of the English language.

14.       Will Capacity vs. Trust Capacity: The Mental Measuring Stick under California Law.  Well this post is not from 2011, it was posted in December 2010, but still a useful discussion on the different types of capacity.

15.       The Intentionalities and Formalities of California Will Creation.  This is also a 2010 post that gives a basic primer on the elements required to create a valid California Will.  This is the same format we use to teach law students in our class at Chapman Law School.

We hope you enjoy these posts, and many others we have provided in 2011.  We look forward to giving you even more useful information in 2012.  

Happy New Year!

The omnipresent no-contest clause (originally called in terrorum clauses--as in to terrify one's beneficiaries) is meant to prevent lawsuits. The idea being that if a beneficiary contests a California Will or Trust containing the clause, then that beneficiary is entirely disinherited and loses his gift under the document (see our previous blog post on how no contest clauses work and their practical application).

But does a no contest clause apply to a beneficiary's challenge of a Trustee's actions as Trustee (i.e., challenging the management of the Trust)?  The simple answer is no.  As a matter of public policy, California law specifically precludes the application of no contest clause to the actions of fiduciaries, including Trustees and Executors (or Administrators) of Wills. In fact, the law wants beneficiaries to have the right to question fiduciaries and to contest a fiduciary's actions in managing a Trust or administering a Will, provided the contest is not frivolous.

What does this mean for beneficiaries?  Question your Trustee or Executor all you want. Nothing in the Trust or Will can stop a California beneficiary from asking about the management, investment, distributions, bookkeeping, professional fees, etc., of a Trust or Will. 

Unfortunately, many fiduciaries, especially when they are individuals, do not understand that the no-contest clause does not apply to questioning their actions and they will threaten a beneficiary with the no contest clause as a way to prevent questioning.  But this is an empty threat.

What does this mean for fiduciaries?  You must be completely transparent in your actions as Trustee or Executor. Everything you do is subject to review and questioning. Worse yet, it is the Trustee's duty to prove they acted reasonably (see our prior blog post on trustees duty). 

Being a fiduciary can be a thankless job because the fiduciary has all the burdens and responsibilities and very few benefits.

In an earlier post we discussed the terrorizing effects of no contest clauses. For all the uncertainty the new no contest law has created—and the very real possibility that such clauses are rarely enforceable—many decedent’s doom the effectiveness of their own no contest clause themselves when including a no contest clause in their will or trust. This is because many decedents fail to provide a meaningful threat of disinheritance under the trust or will.

For example, let’s say that I am a trust beneficiary and the trust has total assets worth $4,000,000. The trust is created by my father and provides for an equal distribution of assets between my brother and me—a 50/50 split. Shortly before my father’s death, he changes the trust terms leaving me a specific gift of $10,000 and leaving the rest to my brother. The newly revised trust has a no contest clause that states that I am disinherited (i.e., I lose my $10,000 gift) if I challenge the trust terms. But if I challenge the trust terms and win, I stand to receive half of $4 million, or $2,000,000. Will I risk losing $10,000 to contest the trust and hopefully receive $2 million? Most likely, yes. In this scenario I have no reason not to contest the trust. Thus, from a practical perspective, the trust’s no contest clause has failed to prevent a contest. The gift is too small and the threat of disinheritance too irrelevant when compared to the overall trust value.

So how big must a gift be to prevent a contest? That’s a relative question of course, but it should be big enough to cause a beneficiary to stop and think. In the example above, a specific gift of $500,000 certainly could have changed the decision. A gift of $1 million probably would have prevented a contest.

The overall value of a particular trust may be smaller than $4,000,000, but the analysis is the same—what amount is enough to prevent a contest. Giving a potential contestant nothing under the will or trust will definitely invite a contest because that person will have nothing to lose. Yet all too often that is exactly what occurs—a zero gift is a certain contest. But a gift of substance when compared to the overall value of the trust or estate is a different story. So give it some thought a try to plan with a realistic number so that the no contest clause has some practical effect behind it.