When it comes to heading-off potential lawsuits, one of the most powerful weapons in a trustee’s arsenal is the “notification by the trustee.” By sending this notice to beneficiaries and heirs, the trustee can cut the timeframe for filing a trust contest down to a mere 120 days. Because of this, a solid understanding of the procedural issues involved with the notification is critical for both the trustee and potential contestants.

In handling a trust contest, it is important to recognize that procedural issues in probate cases are governed by both the Probate Code and the Code of Civil Procedure. This can lead to somewhat complicated—and not always obvious—consequences. What’s more, guidance from the courts regarding the overlap of these two codes is scant. Luckily, in the past few months the Courts of Appeal have issued two opinions specifically discussing procedural issues involving the 120-day statute of limitations triggered by a trustee’s notice.

From these cases, we learn that a trust contest is “brought” at the time it is filed (not when it is served) and that the 120-day window is not extended simply because the notice is sent by mail.

The Notification:

With a typical revocable trust, the trust becomes irrevocable when the settlor dies. The trustee then has sixty days to give notice to the beneficiaries and heirs that the trust is now irrevocable. The Probate Code also requires the trustee to include the following information: (1) the identity of the settlor and date the trust was signed; (2) the trustee’s contact information; (3) the “principal place of administration” of the trust (usually the trustee’s residential or business address); (4) that the recipient is entitled to a copy of the trust; and (5) any additional information the trust requires the trustee to include. Finally, since the trust is now irrevocable because of the settlor’s death, the notice must also include the following warning (in its own paragraph and in not less than 10-point boldface font):

“You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is mailed or personally delivered to you during that 120-day period, whichever is later.”

Continue Reading When Applying the 120-Day Statute of Limitations Under Probate Code § 16061.8, When is a Trust Contest “Brought?”

BrendanBIn most California civil cases, a party generally must wait until a trial court issues a final judgment before he or she can get through the doors of the Court of Appeal.  While there are a few exceptions, this rule (sometimes called the one-final-judgment rule) prevents litigants from complaining to the appellate court about every ruling in a given case in piecemeal fashion.  Even when they receive an appealable judgment, parties to an appeal often find that getting a decision from the reviewing court takes endurance and patience; e.g., the time from the notice of appeal to the decision frequently takes over a year.

Things work a bit differently in probate court.  In that forum, parties can appeal from a multitude of rulings that a trial court may issue well before any final judgment.  And litigants who feel like they are growing old dealing with other types of appeals may find less waiting when it comes to probate appeals.  That is because probate appeals are subject to statutory preference (i.e., hurry-up-and-get-it-over-with rules) under section 44 of the California Code of Civil Procedure.  Still, it is a good idea to file an application for calendar preference (to remind the appellate court that yours is one of those cases) in order to speed things along.

Continue Reading Don’t Make the Grave Mistake of Killing Your Appeal from an Order of the Probate Court

EdCTrust beneficiaries and litigators beware: the recent case of Drake V. Pinkham ((2013) 217 Cal.App.4th 400) highlights the dangers of waiting to file a trust contest until after the settlor’s death when questions regarding the settlor’s competency arise during the settlor’s lifetime.

Typically, revocable trusts are just that – revocable. A settlor can modify or terminate his or her revocable trust up until death, presuming that he or she retains the capacity to do so. Because a competent settlor has the legal right to change his or her revocable trust up until death, a beneficiary does not usually have the right to contest the revocable trust during the settlor’s lifetime.

The limitation on a beneficiary’s ability to contest a revocable trust during the settlor’s lifetime is contained in Probate Code section 15800. Section 15800 specifically provides that the person holding the power to revoke a trust (e.g. the settlor), and not the beneficiaries, holds the rights under the trust during the time the trust is revocable and the settlor is competent.

But if Probate Code section 15800 prevents a beneficiary from contesting a revocable trust when the settlor is competent, does that mean that a settlor must be formally deemed incompetent before a beneficiary can bring a contest during a settlor’s lifetime? And what happens if a beneficiary, believing a settlor to be incompetent, waits until after the settlor’s death to bring a contest – will that contest fail as untimely?

 

Continue Reading In Trust Disputes Where Competency of the Settlor is an Issue, Waiting Until After the Settlor’s Death to File A Trust Contest Can be Fatal

KayBAre you having trouble completing or updating your estate plan, although you are convinced you should?  Maybe you have a referral to an attorney recommended by a friend or other advisor, but you haven’t yet scheduled the first meeting?  Or you have attended the first meeting with your estate planning attorney, but you can’t quite seem to finish your action list for the next meeting?

Estate planning is not the top of anyone’s “to do” list.  As an estate planning attorney, part of my job is to help my clients complete their estate plans.  No one intends to delay the process, but many times the process stalls.

Here are some ideas that have helped my clients cross the finish line and enjoy the relief that a completed plan brings.  See if they work for you!

Continue Reading Overcoming Proscrastination – Tips for Starting and Completing Your Estate Plan

In my two previous posts, I discussed the value of comprehensive estate planning even if you have a small estate or you want everything to go to your spouse.  In this last installment, I will address the most common reason I hear from clients who say they don’t need an estate plan, which is, “I don’t need an estate plan because I have everything in beneficiary designation accounts.”

People often try to create a “do-it-yourself” estate plan by creating beneficiary designations on all of their assets.  This is typically done by titling assets with another person “with right of survivorship,” holding assets jointly, or creating “payable on death” (POD) or “transfer on death” (TOD) accounts.  I caution against using this approach for several reasons.

In California, you can have $150,000 in total assets (subject to a few exclusions) outside of a trust or without beneficiary designations without triggering a probate.  Additionally, the threshold amount for transferring real property without a probate in California is $50,000.  With TOD/POD accounts, if the designated beneficiary is deceased at your death and if no successor is named, the account goes back to your estate and counts toward the $150,000.  The same is true if you are the surviving owner of property that had been owned “with right of survivorship,” which often happens with real property.  If enough beneficiary designations fail or were never created, it is possible that a probate will be required.

Continue Reading You Need an Estate Plan (Even in Your 20s and 30s) (Part Three)