It’s not everyday that the California Court of Appeals hands down new law in the area of trusts and wills.  Most of our laws and rules in this area have been in place for centuries. 

This month, however, the Fourth Appellate District recognized a new claim for California beneficiaries called “Intentional Interference with Expected Inheritance” (referred to in acronym form as “IIEI”—if you want to be confusing).   The names sounds confusing, but the concept is fairly straightforward, albeit limited in its application.

Prior to this ruling, if a person thought they were going to inherit property from a decedent under a California Trust or Will, but they were cut out at the last minute, the only remedy would be in probate court. The disinherited person would have to sue to overturn the Trust or Will.  That works well enough if you are the type of person who has standing to bring such a lawsuit, but not everyone has that standing.

Where disinherited parties are related by blood to the decedent, such as children for example, then having standing to sue is relatively easy to establish because children oftentimes would receive an inheritance were it not for some intervening Will or Trust.  So if a child doesn’t like a Will or Trust, they can usually sue quite easily.  That does not mean the child will win, but a lawsuit can at least be filed and maintained.

Standing is not so easy to establish for those who are not related by blood to the decedent.  This includes friends, more distant relatives, and unmarried partners.  So what if you were going to receive an inheritance under a Will, but someone intervened and convinced the Decedent not to create the Will at all, thereby leaving assets to the Decedent’s family members instead?  Well you can’t sue in Probate Court because you wouldn’t have any standing.

But that has now changed with the Court’s decision in Beckwith v. Dahl.  Beckwith dealt with a decedent, his longtime unmarried partner, and the decedent’s sister.  The decent wanted to leave half of his estate to the partner and had even drafted his own will on the computer, but never printed the will out or signed it.  Shortly before going in to have lung surgery, the decedent asked his partner to draft a will leaving half his estate to the partner and half to his sister (meaning the decedent’s sister).  The partner did as instructed, but called the sister before taking the new will to the hospital for decent to sign (big mistake).  Sister told him NOT to take the will to the hospital because she was going to call a lawyer friend of hers and have a trust created instead.  And since Trusts are so much better than Wills, it would be worth it to have a Trust instead of a Will.  Sister then has NEITHER a Trust nor a Will prepared.

Decedent then has surgery, incurs complications, and dies shortly afterward with no Will and no Trust.  Under California’s intestate laws, that means that the entire estate of Decedent passes to his next of kin—who just happened to be his sister.  The partner, of course, objects to this result because he knew what the Decedent wanted.  But partner is not married to Decedent, was not a registered domestic partner of Decedent, and is not a blood-relative of Decedent.  So partner has no standing to even file a lawsuit in Probate Court against sister to challenge the lack of a Will.

So instead of bringing a lawsuit in Probate Court, he sues sister directly in civil court under the doctrine of IIEI–a concept, as yet, unrecognized in California.

IIEI, as a concept, simply means that you are suing someone (here it’s the sister) for her wrongful actions in interfering with an expected inheritance.  In other words, if it had not been for sisters intervention, the Will would have been created and partner would have received half of  Decedent’s estate.  The Court actually articulates five (5) distinct elements to this claim, which includes:

1.         An reasonable expectation of receiving an inheritance,

2.         Some intentional interference with that expectancy by a third party (the wrongdoer),

3.         the interfering act was independently wrongful or tortious (the wrongdoer’s actions must have been a bad thing such as fraud, or undue influence),

4.         there was a reasonable certainty that but for the interference, the plaintiff would have received the inheritance, and

5.         damages (some loss of economic value).

But here’s the catch—and it’s a BIG catch—it only applies to parties who cannot bring a Trust or Will contest (or some other type of claim) in Probate Court.  In other words, parties have to exhaust all possible remedies in Probate Court first.  That means there are a vast majority of cases, where family members are contesting Trusts and Wills, that cannot use this IIEI concept. 

In Beckwith, the Court ultimately decides that while California law now recognizes the claim of IIEI, it does not apply to partner because the actions of sister (telling him not to complete the Will) were directed a partner and NOT at the decedent.  In other words, the wrongful act must have been done as against the Decedent.  Partner does have a claim for fraud, however, and can sue sister on the basis that she lied to him about creating the Trust for Decedent. 

The bottom line: it never hurts to know about IIEI, but it will not apply in very many cases.  While it would be nice to be able to sue opposing beneficiaries directly in civil court, it’s not going to work too often.

But still, a little new Trust and Will law now and then makes this practice area exciting—relatively speaking of course.