Common Types of Trust Litigation
Buffington Law Firm’s trust dispute attorneys have successfully prosecuted and defended many disputes involving the validity (or invalidity) of a revocable (“living”) trust. This is commonly known as a “trust contest.” The basic notion of a trust contest is that for one reason or another, a beneficiary or other person with standing seeks to invalidate either an entire trust instrument, or possibly only one provision or amendment of the trust. There are many reasons why this sometimes is done, and certainly this brief Blog article cannot cover all of the various grounds for trust disputes. However, we will discuss some of the more common scenarios, which unfortunately recur with amazing frequency.
1. Basic Incompetence. Perhaps the simplest form of a trust dispute arises from a situation where the maker of the trust, trust provision, or trust amendment, simply lacked the mental capacity to create the provision in question at the time it was executed. Probate Code Sec. 6100.5 governs the capacity to make wills or codicils, but generally also implicitly sets forth the standard for testamentary capacity necessary to make or amend a testamentary trust (a trust created by will). Civil Code Sec. 1556 and 38-40 govern the capacity to contract. A person “entirely without understanding” has no power to make or enter into a contract and therefore lacks the capacity to make or amend a trust. This is not infrequently the grounds for contesting a trust or trust provision. The term “unsound mind” is ill defined and subject to differing interpretation. Nonetheless, authority exists to the effect that the test for capacity to make a trust or a contract is the same as the test to make a will.
2. Undue Influence. A trust or portion of a trust may be set aside if procured by undue influence. Undue influence is “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” [Prob. Code Sec. 86]. This can occur even where the maker of the trust still possesses “capacity.” Undue influence can occur in situations in which a stronger, perhaps younger person is in a position to coerce or wrongly influence a weaker person, perhaps due to that person’s illness, disability, age, education, emotional distress, isolation or dependency, or similar situations. Where this results an inequitable trust provision, for example disinheriting the trustor’s original beneficiary in favor of the person exerting the influence, courts will set aside the inequitable provisions. This legal theory can be powerful in litigation because it is not dependent upon proving mental incapacity by the trustor — only vulnerability to and the exercise of undue influence.
3. Forgery. Sometimes trusts or trust amendments are simply forged. If proven in court, the court will set aside such instruments.
4. Menace or Duress. If a trust provision was obtained by menace or duress, this is grounds to invalidate the provision.
5. Presumptively Disqualified Persons. Under the law, certain persons are presumptively disqualified from taking under a trust instrument. A provision in a trust instrument making a gift ot the person who drafted the instrument, even if that person is not an attorney, is invalid. [Prob. Code Sec. 21350(a)(1)]. This also applies to gifts to a person who is related to the drafter in various ways, e.g. the drafter’s spouse, relatives within the third degree of the drafter or his or her spouse, and various other related parties. [See e.g. Prob. Code Sec. 21350(b)].
Presumptively disqualified beneficiaries can take a valid gift under a Trust when an “independent attorney” signs a certificate of independent review in the form specified by statue and delivers the original certificate to the settlor after a) reviewing the Trust; b) confidentially counseling the settlor about the nature and consequences of the intended gift; and c) determining that the gift is not the product of fraud or undue influence. [Prob. Code Sec. 21384(a)].
Unless an exception applies, a provision in a Trust instrument in favor of someone who is a “care custodian” of a settlor who is a “dependent adult” is invalid, if the care custodian provided services to the settlor during the period when the settlor executed the instrument or within 90 days of that period. [Probate Code Section 21380(a)(3)].
The basic notion behind this provision is that it is unfortunately common that an ill (often elderly) person sometimes is highly dependent upon, and thus vulnerable to coercive pressure by, the dependent adult’s care custodian. The care custodian is often in a position to exert powerful undue influence over the dependent adult, and this coercion can force a settlor to insert provisions into his or her trust that the settlor really does not want to do, but for the fear of retaliation (such as abandonment) by the care custodian. Buffington Law Firm’s trust litigation attorneys have litigated many cases involving these types of situations.
A “care custodian” is a person who provides health or social services to a dependent adult. [Prob. Code Section 21362(a)]. However, a “good Samaritan” exception exists under specified circumstances for a beneficiary who provided “care custodial” services without remuneration, if he or she had a personal relationship with the settlor. The exception applies provided that the personal relationship existed at each of the following times: (1) at least 90 days before the person provided services to the settlor; (2) at least 6 months before the settlor’s death; and (3) before the settlor was admitted to hospice care if indeed that occurred.
This issue comes up frequently, and as the “baby boom” generation ages we can expect it to become even more common. This is a frequent ground for meritorious Trust contests — it is simply a fact of life that care custodians are often in a position to exert undue influence over a dependent adult, and unfortunately this often actually occurs. Buffington Law Firm’s trust dispute attorneys recently successfully closed an egregious example of this scenario.
If you believe that you have grounds for a Trust dispute arising from undue influence or other causes, we invite you to call Buffington Law Firm for a free legal consultation. There is never any charge or obligation, and you will speak directly to one of our experienced Trust litigation attorneys. All such meetings are entirely confidential and protected by the Attorney-Client Privilege.