"Statute of Limitations"

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Hi, this is Stewart Albertson with Albertson & Davidson and I want to talk to you about an issue that we are seeing more and more of and that has to do with statute of limitation.  Statute of limitation being the time period that you’re allowed to bring a lawsuit, whether it’s in probate court or civil court.

What we’re seeing and this video may be more to the practicing attorneys out there, but it’s also something the beneficiaries will want to be aware of.  We’re seeing people miss these statute of limitations in trust and will cases and we believe the reason for that is is because it’s a complex analysis to determine what particular statute of limitation applies at what particular time at what particular proceeding in a trust and will contest matter.

Let me give you an example from another area of law to show you why we’re having issues with the trust and estates statutes and we’re seeing those come up more often where people are making mistakes.

Let’s talk about personal injury.  Personal injury is very simple.  If somebody crashes into you in a car.  If somebody punches you in the face, you have two years to bring a lawsuit against that person before the statute of limitation runs.  In other words, you can do anything you want for up to two years, as long as you file your lawsuit before the end of two years.  You can bring a personal injury action against the person who hurt you.

Well, let’s come back to trust and estate law now.  It’s not that simple.  There’s various statute of limits that apply at times.  Let’s talk about the bright line statute of limitations pertaining to decedents.  The general rule is that when someone dies, and everyone should know when someone dies, that’s pretty easy to ascertain.  You have one year to make a claim against that person.  But that year can be shortened to as little as 120 days, depending on the circumstances.

If a petition for probate goes out and you have a will that’s admitted into probate.  Once that’s admitted into probate, now you have 120 days to file a claim against the decedent.  To make matters worse, if you’re doing a certain type of claim against the decedent, you’re going to have what we call a creditor’s claim in the probate estate of the decedent and you’re going to have to file a lawsuit all before the end of the claim period running.

In other types of cases, you only have to file the creditor’s claim but you can file the lawsuit after a year.  And so this becomes confusing to many lawyers as it may be to you now as I’m trying to explain it.

There’s also another complication where you have financial elder abuse claims.  This is where someone has a done a wrongful taking against somebody that’s a dependent adult or somebody that’s older than 65 years of age in California. We don’t want people abusing our elders.  We don’t want them taking their finances in a wrongful taking.  So the statute allows us to sue somebody, the wrongdoer in that case, for up to four years after the wrongful taking.  So we literally can have four years going by, and as long as we get the financial elder abuse case on file before the four years runs, chances are, we beat that statute of limitations.  However, if you were given statutory notice under a trust, which gives you 120 days within which to file a trust contest, and you do not file that trust contest within 120 days, you may be precluded from filing a financial elder abuse claim even though it gives you four years.

One more thing to add and that would be what if the drafting attorney, the attorney that drafts the trust or will, what if they have made a mistake and they hurt you as an intended beneficiary of that estate plan.  In that case, you have one year from date of notice that you knew you were harmed by the attorney’s drafting, to file a legal malpractice case against that attorney.  If you don’t have notice and you discover it later, more than one year after the event took place, you may be able to argue you didn’t have actual knowledge or that you shouldn’t have known about the harm that took place, and you may be able to use a four year statute of limitations to sue the attorney for legal malpractice.

The whole point of this video is not for you to understand all of these varied statute of limitations, some as short as 120 days, some as a long as a year, some as long as four years, is to show you that there’s complexity in each one of these trust and estate cases, you need to have expert analysis of your case so that somebody can see what the facts and circumstances are and what statute of limitations are going to apply to your case moving forward.

If you miss a statute, chances are you’re going to be barred forever from bringing your claim forward.  So even those these are complex, difficult to understand, it’s something at the very beginning of a case you have to spend the time to understand, make sure you’re not missing anything, especially on the shorter ones such as the 120 days, because that one comes and goes very quickly.

Hopefully I haven’t confused you too much.  I’ve confused myself a little bit in going over all this.  All I want to point out is, this is a complex areas, these statute of limitations in trust and estate matters, make sure you get somebody that’s qualified to explain them to you and you understand the time limits you have to bring your claim forward in either probate court or civil court.

Is an oral promise to make a will or trust enforceable under California law? Contrary to what many believe, California law provides for the enforcement of oral promises to make a will or trust.

How does the promise to make a will or trust arise? Generally, a parent orally promises a child, a friend, or a caretaker some or all of their assets once they die, if the child, friend, or caretaker agrees to do something for the parent. The “something” can be anything of value, but usually takes the form of the child, friend, or caretaker taking care of the parent until the parent’s death.

But what if the parent didn’t get around to writing a will or trust that states the child, friend, or caretaker gets some or all of the parent’s assets after they die? Or what if the parent never intended to write a will or trust reflecting the promise to the child, friend, or caretaker? Can the child, friend, or caretaker enforce the now deceased parent’s oral promise to give them assets? The answer is ‘yes’.

California Probate Code section 21700, entitled “Contract to make will” has a provision that allows a person to establish an oral promise by establishing that there was an agreement between the parent and the child, friend, or caretaker that the parent would leave some or all of their assets to the child, friend, or caretaker after they died.

But this is where it gets a bit tricky. The procedural hoops one must jump through to make a an initial claim to enforce an oral promise to make a trust or will under California requires the following:

  • First, one has to pay attention to the applicable statute of limitations. The statute of limitations simply tells us how long we have to file a lawsuit to enforce an oral promise. The applicable statute of limitations for filing a lawsuit to enforce an oral promise to make a will or trust is one year from the date of death of the parent. So if the parent dies on January 1, 2014, then the child, friend, or caregiver would have one year (to December 31, 2014) to file an actual lawsuit to enforce the claim.
  • Second, it gets even trickier. Before one can file a lawsuit based on a broken promise to make a will or trust, one must file a “creditor’s claim” in the estate of the deceased parent. The creditor’s claim is not difficult to complete and file, but if one fails to complete this step, and one year passes from the date of death of the parent, one is very likely barred forever from filing an actual lawsuit to enforce the parent’s promise.
  • Third, it’s still tricky. What if nobody has opened the deceased parent’s estate with the probate court? Can one simply wait until an estate is opened, whether that’s one or two years from now, and then file their creditor’s claim? The answer is very likely ‘no’. The applicable statute of limitations states that to enforce an oral promise to make a will or trust, a lawsuit must be filed within one year of the date of death of the parent. So if the probate estate is not opened, then one needs to file a petition for probate to open the parent’s estate with the probate court, file a creditor’s claim, and then file a lawsuit—all before the one year passes from the parent’s date of death.

Each of these steps must be completed before one can have their day in court to prove a claim based on an oral promise to make a California will or trust. If the one-year statute of limitations (calculated from the deceased parent’s date of death) is blown for any reason, the claim to enforce the oral promise is barred forever from being heard. Thus, it’s very important for one to understand and meet the procedural loopholes required to make a claim to enforce an oral promise.

Death is final. And when a person who is a party to a lawsuit dies, death can be final for the opposing party too unless they take action quickly.

Dead people cannot be sued by law.  Therefore, any claims against a decedent (including those already in progress by way of an existing lawsuit) must be brought in the decedent’s estate.  By estate, I am referring to a probate estate.  This is true even where a decedent died with everything he owns held in a Trust.  Why the probate estate?  Because that is where all claims against a decedent must start. 

And there are two very important deadlines you must remember when trying to preserve a claim against a decedent.  First, is the overall one-year statute of limitations under CCP 366.2.  This harsh rule states that any claims against a decedent must be brought within a year of the decedent’s death or they are forever barred.  This is true even though the statute of limitations would have been longer had the person survived.  For example, the statute of limitations for breach of a written contract is 4 years, but if the breaching party dies, then the statute is cut down to a one year limit.  And this rule applies regardless of whether you knew the person died or not!

Second, if a decedent dies and his heirs/beneficiaries open a probate estate, then any creditor has only 4 months from the date an executor is officially appointed to file a claim in probate.

The lifecycle of a claim

When there is a claim against a decedent, or an ongoing lawsuit against a deceased defendant, the first step any creditor must take is to file a “Creditor’s Claim” in the decedent’s probate estate.

If a probate estate is not opened (and this happens often where the decedent died with a trust because no probate is necessary to transfer his assets), then the creditor must file to open a probate (creditors have the right to do this as interested parties of the decedent’s estate).  Once the estate is opened, then the claim is filed with the estate.

The estate representative (i.e., the Executor of Administrator) then has to either accept the claim, and thereby agree to pay it, or reject the claim.  After 30 days the creditor can deem the claim rejected.  Once a claim is rejected, the creditor must then file a lawsuit against the estate to force the estate to pay the claim.  If a lawsuit is already pending against a dead defendant, then once the claim is rejected by his estate the estate representative must be substituted in as the party to the lawsuit.  The lawsuit can then continue. 

If a judgment is achieved as part of the lawsuit, then that judgment can be enforced against the estate.  If there are no assets in the estate, then the creditor can go after the decedent’s trust.

Sound confusing?  It is, and the procedural requirements are strictly enforced so any mistake along the way can be fatal to the creditor in attempting to collect a debt.  So beware, any death of a party to a lawsuit, or any death of a debtor, can be fatal to your claim too.

One of my first litigation cases was against attorney Thomas W. Dominick in San Bernardino County Probate Court. Tom is one of the best estate and trust litigators in California. To say the least, I was scared. The issue in that case revolved around whether my client had a right to his girlfriend’s real property after her death. She promised my client the property during her lifetime and he had spent money on the property, but nothing was in writing and the two were never legally married. I remember being frustrated that I could not find a legal doctrine to support my client’s claim after his girlfriend died. I was shocked that there appeared to be no real protection for long-term nonmarital partners after the death of the other partner. I ended up alleging several causes of action that were weak at best (i.e. oral promise to enforce trust in real property, quiet title, specific performance, constructive trust, and unjust enrichment—known generally as Marvin claims based on a case of the same name). Unfortunately, these claims must be brought within one year of the decedent’s date of death or they are forever time barred under the statute of limitations applied to decedents’ estates. And, the girlfriend’s family waited over eight years to file a petition for probate, knowing all the while that my client continued to live in what he believed was his house (the eight year time-frame made most of my client’s claims moot).

But I had equity on my side as my client had lived with his girlfriend for almost 30 years and he had invested his own money into the home over the years. Thankfully, the case settled after Thomas and I worked out a settlement, on behalf of our respective clients, which allowed my client to occupy the home for his lifetime.

A recent Court decision would have made my job much easier in the above-referenced case.  In McMackin v. Ehrheart (decided April 8, 2011) Presiding Justice Robert M. Mallano, writing for California’s Second Appellate District, Division One, discussed (as a matter of first impression) whether a Marvin claim based on a decedent’s promise to leave her nonmarital partner a life estate in real property requires the nonmarital partner to file a lawsuit within one year of her partners death, and if so, whether the doctrine of equitable estoppel can be applied to preclude assertion of the one year statute of limitations. The court concluded that the Marvin claim is governed by a one year statute of limitations, but that, depending on the circumstances of each case, the doctrine of equitable estoppel may be applied to preclude a party from asserting the one year statute of limitations. 

The pertinent facts of McMackin established that nonmarital partners—Hugh and Patricia—lived together in Patricia’s home from 1987 to 2004. Hugh was never on title to Patricia’s home, but continued to occupy her home after her death. More than three years after Patricia’s death, her children filed a petition for probate, which would effectively kick Hugh out of the home leaving him with no interest in Patricia’s estate. In reply, Hugh filed a lawsuit alleging that Patricia had promised him a life estate in the home upon her death in consideration for 17 years of his “love, affection, care and companionship.” Hugh argued that the one year statute of limitations did not apply. Of course Patricia’s daughters argued that the limitation statute applied (as three years had passed). In response, Hugh argued that even if the one year statute of limitations applies, the doctrine of equitable estoppel precluded Patricia’s daughters from using it against him. The court of appeal agreed, stating the one year statute of limitation applies, but that equitable estoppel may preclude the daughters from raising it as a defense. The court of appeal then sent the case back to the trial court for determination of these issues.

Overall, McMackin is a great case to review if you run into nonmarital partner estate issues. Justice Mallano did a great job in articulating the legal analysis pertaining to Code of Civil Procedure section 366.3 and the doctrine of equitable estoppel. I think this case will be used as more people choose to live together rather than get married. Of course all of the Marvin claim messes can be avoided by proper estate planning (i.e. creating California trusts and wills).