Articles Posted in Trust Litigation

By California Trust Litigation Attorney – Ted Hankin

Over the years I have watched many attorney-themed television programs.  I understand, given the time allotted, one must take the case and try it to conclusion within the obligatory one hour format.  Unfortunately, this perception of a sprint to the finish line is not reality; litigation is more in the nature of an endurance contest in California.

Much of the time involved in a litigated case (let’s take a business case as an example) involves discussion with the attorney to insure that he/she has a complete understanding of the facts, analysis by the attorney to determine what rights have been violated by the actions of the other side, and drafting a complaint.

Once the complaint has been drafted and approved by the client, it then is filed, with an accompanying summons, with the court.  After filing, it is sent out for service on the defendant.  Once the defendant has been served, the defendant, in California, has thirty days in which to respond.  A response can be an answer (the case is then “at issue”) or a demurrer.  If a demurrer (everything in the complaint may be assumed to be true, but still doesn’t give the plaintiff a right to the relief sought), the court might set it out three or more months before scheduling a hearing (for oral argument).

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In California, over the years, I have handled many cases involving disputes between family members over the estates of a deceased relative. Brothers against sisters, sisters against brothers, uncles against nieces, nephews and others.  Some cases go to trial; other cases settle.  In all events, however, someone is going to be disappointed with the outcome, which disappointment can occur even if they prevail.

If you have been disinherited, you believe that the instrument that disinherited you was obtained by undue influence or when your deceased loved one (or relative) was incompetent, your recourse is the courts.  Let’s say that you succeed in getting the offending instrument (a will or a trust) thrown out.  What then?

The court may say that if there is no other earlier instrument, the estate will go by intestacy (as if the decedent died without a will) and it will then be divided among the heirs of the decedent.  However, if there is an earlier instrument (perhaps a will) in which you have also been disinherited, then prevailing in the trust contest only sets you up for the next contest, which is to challenge the will (presumably on the same grounds as you challenged the trust).

In California, a typical estate planning tool is the revocable trust. A husband and wife usually create one jointly, with the two of them serving as co-trustees until one dies. Then the other becomes the sole trustee. When the surviving spouse dies, the trust will usually name a successor trustee to take over the responsibilities of trustee.

A key feature of a revocable trust is to recognize that what was once a revocable trust becomes an irrevocable one when both of its creators/settlors/grantors die ( a portion of it could become irrevocable on the first death, depending on the language of the trust).

As the successor trustee, one of your responsibilities is to notify all named beneficiaries of the trust and heirs of the decedent that the trust has become irrevocable. This is as set forth in California Probate Code §16061.7, which prescribes the notice that is to be given by the successor trustee.

In California, Probate Code Sections 15300-15301 protect the principal and income of a spendthrift trust from judgment creditors. A spendthrift trust is one where there is a restraint written the trust instrument to prevent a transfer of a beneficiary’s interest. This protection does not exist with respect to distributions from a spendthrift trust, once the distributions become due and payable (Probate Code Section 15301(b)); it also does not exist with respect to support orders for spousal or child support that exist against the beneficiary of the trust (Probate Code Section 15305).

Further, under Probate Code Section 15306.5, up to 25% (but no more) of the principal of a spendthrift trust may be reached by judgment creditors. Additional rules apply if there are both support orders and judgment creditors, with the general rule being that the support orders have a priority over those of judgment creditors.

The take away is that while spendthrift trusts are useful, they are not 100% bulletproof. Some portion of them will be made available to creditors regardless of the grantor’s intent.

I have represented three sisters against their brother over their mother’s will.

I’ve represented a child who was adopted and thought she had a great relationship with her presumed half-sister and then found out the sister wanted all of the deceased father’s estate. We had to find tissue and get DNA testing to resolve that matter despite all of the family photographs.

I’ve represented cousins against a decedent’s lover, who got the decedent to leave his entire multi-million dollar estate to the lover. We showed up for trial at 1PM. The judge sent us to discuss settlement … three different times I announced that I would proceed with the trial because there could be no settlement, and three different times the other side blinked. We finally settled at 7:30 PM (kudos to the judge and his staff for staying so late).

A typical case will involve a family member contacting me to complain about the dispositions in a will or trust of a deceased relative, with allegations that another family member or a caregiver “got” to the deceased relative to unduly benefit themselves at the expense of the other family members.

To properly analyze the case, I obtain copies of all prior testamentary documents (to determine if the terms are at variance with the current documents, and how great a variance there is).

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California defines undue influence in the Civil Code. Specifically, Civil Code Section 1575 states:

“Undue influence consists:

1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

There are times when a will is challenged in California. There are many reason why this happens and the law sets forth the procedures to follow in making a challenge. Some reasons a will may be challenged include:

The will is fraudulent.

The will wasn’t properly executed.

thumbnail%20inland%20empire.jpgLytton Williams Messina & Hankin LLP (the “Firm”) maintain close relationships with their clients and continue to make personalized service their number one priority. Partners Lytton Willaims and Messina were all formerly partners in the Century city law firm of Kelly Lytton & Williams. Prior to joining Kelly Lytton, Sheldon Lytton and Richard Williams, each with more than 30 years of legal experience practiced at O’Melveny & Myers and Manatt, Phelps & Phillips, respectively, and were then partners in Finely Kumble Wagner Heine Underberg & Manley, one of the largest national law firms in the United States. John Messina, head of the Firm’s Temecula Valley Office, is a licensed real estate broker and was the head of a mortgage banking firm in the San Gabriel Valley before turning to the law. Ted Hankin, an attorney and CPA, heads the Firm’s Newport Beach Office and was formerly the Division Chair of the Estates, Probate and Trust Division of Alvarado Smith APC. Henry Holguin, of Counsel to the Firm, was formerly a name partner in Miller & Holguin, and is one of California’s most noted health care attorneys; he currently serves as the general counsel of AltaMed, the largest Federally qualified Community Health Center in the United States.

The Firm’s Practice Areas Include:

1. General Business Litigation and Resolution of Disputes, including Representation of Public Agencies, and Representation of Clients before Federal, State and Local Government Agencies.

Trust contests are very similar to will contests with similar allegations of incompetency and/or undue influence. The difference is that there may be only a very short time to decide if you are going to file a contest.

There is a procedure in the Probate Code (§16061.7) where the trustee gives notice to all beneficiaries that the trust has become irrevocable and a copy of the trust is provided; if that procedure is properly followed, then a contestant has only 4 months in which to bring a trust contest.

If the contestant waits too long, or there is a no contest clause, then they may be out of luck. That’s not to say that if you can prove the entire trust is invalid (and therefore the Probate Code §16061.7 notice is invalid) you can’t win; you might. It just makes a hard job harder.