Sample petition to invalidate trust california

Sample petition to invalidate trust california DEFAULT

          A Trust is the original trust document together with all amendments.  Amendments, amongst other things, add and subtract beneficiaries and change inheritances to existing beneficiaries. 

          In California, when a revocable living trust becomes irrevocable — such as upon the death or incapacity of the settlor — the successor trustee is required to give notice to the deceased settlor’s heirs and all named beneficiaries.  This includes a statutorily prescribed paragraph giving the time period the recipient has to contest the terms of the Trust.

          Until a trust becomes irrevocable the named death beneficiaries have no standing to contest the trust.  In Drake v. Pinkham, 217 Cal.App.4th 400 (Cal. App. 2013), California’s Supreme Court said, “[u]nder sections 17200 and 15800 a beneficiary lacks standing to challenge a trust so long as the ‘trust is revocable and the person holding the power to revoke the trust is competent’.”   The California Supreme Court held that once the trust was irrevocable, the death beneficiaries then had standing to bring a petition under section 17200 of the Probate Code to contest the terms of the Trust.

          On January 23, 2020, the California Supreme Court in JOAN MAURI BAREFOOT v. JANA SUSAN JENNINGS et. al. [i.e., Barefoot v. Jennings], decided whether a person who is removed as a beneficiary by a trust amendment nonetheless has standing to contest the trust amendment that removed  her as beneficiary. 

          The decision by Court of Appeals, from which the appeal was taken, had, as the Supreme Court in Barefoot v. Jennings said, “interpreted Probate Code section 17200, subdivision (a),1 which provides that “a trustee or beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust,” as permitting only a currently named beneficiary to make such a petition.  The opinion further concluded that because the plaintiff was no longer a named beneficiary, she lacked standing to challenge the validity of the amendment that eliminated her interest under section 17200.”

          In Barefoot v. Jennings, the removed beneficiary contested the later amendments that excluded her by alleging that the deceased settlor had lacked capacity and had been the subject of undue influence when the contested amendments were signed. If she were successful in litigation, the removed beneficiary would invalidate these later amendments and thus restore herself as a beneficiary.

          In Barefoot v. Jennings, the California Supreme Court ruled that, “… when a plaintiff claims to be a rightful beneficiary of a trust if challenged amendments are deemed invalid, she has standing to petition the probate court under section 17200.”  The Court defended its position saying, “[t]o hold other than we do today would be to insulate those persons who improperly manipulate a trust settlor to benefit themselves against a probate petition.”

          A logical extension of Barefoot v. Jennings is that that any beneficiary named in an earlier version of the trust who is later removed in a subsequent amendment is also entitled to receive the statutory notice once the trust become irrevocable.   Otherwise, how would the removed beneficiary be put on notice regarding the administration of the trust, the beneficiary’s right to contest the trust and the time period to contest the trust?   

          As revocable trusts are usually administered without court supervision, there is no guarantee that the trustee will send the required statutory notice to the beneficiaries and heirs. A danger is that a bad actor will manipulate a dependent adult into signing a trust amendment expressing the wishes of the bad actor.   

          Thus, it is very important that the trust and all its amendments be safeguarded and not fall into the hands of self-serving individuals. 

          Anyone confronting the issues discussed above, be they a trustee or a beneficiary, should consult a qualified attorney and not draw any conclusions from the discussion above.


How to Petition to Invalidate a Trust in California


Steps to Invalidate a Trust

If you are considering petitioning the court to invalidate a Trust in California, you should consider a few crucial points regarding the trust litigation process. Yes, in California, you can sue a trust as long as you are a beneficiary of the Trust, i.e., receive some benefit.  You will, however, need a trust litigation attorney. 

Once again, only a beneficiary can petition the courts that the Trust is invalid. To do so, you should comply with a set of standards “prior” to petition the courts, or you may look unreasonable to the courts. 

A beneficiary will usually find counsel due to the complexity of the nature of contesting a trust. You will need to have a valid reason with supporting evidence before even attempting to petition the court. A California Petition to remove trustee will be the course of action.

Now, what determines if a Trust is invalid? Well, first of all, one of the higher points of the pecking order is “undue influence.” Undue influence is where you believe your loved one was instructed by another beneficiary, for example, to change the Trust to their advantage, leaving you without your inheritance. 

Example of Possible Invalid Trust Scenario

Example of siblings contesting a trust: A brother and sister will receive a parent’s inheritance once they pass away. During that time, the sister lives with the parent to manage their checkbooks, finances, etc. While the parent was on hospice care, the Trust had significant changes done to it. You may be able to show that the Trust amendment made was not consistent with your parent’s wishes based on past events.

When can I contest a Trust in California?

You see, when the settlor/ grantor is alive, the Trust is “revocable,” meaning it can be changed anytime as long as the settlor/grantor is still living. Once the settlor/ grantor dies, then the trust instrument becomes irrevocable straight away, and no changes can be made to the Trust. It’s at this point where you need to begin gathering the evidence as there are statutes of limitations. At this time, a successor trustee enters into the picture to manage the estate.  

The successor trustee has a fiduciary duty to the beneficiaries to keep abreast of all changes, including receiving a copy of the Trust. Note: There are many time limits. Therefore, consult an estate planning attorney for the best outcome.

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What does a trustee need to do when the settlor dies?

When the settlor dies, the trustee has other duties:

Written Acceptance of Trusteeship and/or Certification of Trust: If the settlor was acting as trustee of his or her own trust, the new trustee (called a “successor trustee”) should sign an Acceptance of Trusteeship confirming that he or she has accepted his or her nomination by the settlor to act as the successor trustee.

A successor trustee may also find it helpful to sign a Certification of Trust under Probate Code Section 18100.5 . Either of these may be used in effect as the successor’s “license” to act on behalf of the trust, i.e., one or both of these are often used to prove to financial institutions or other third parties that the person has the authority to act as trustee.

Notice to beneficiaries and heirs: If the trust becomes irrevocable when the settlor dies, the trustee has 60 days after becoming trustee or 60 days after the settlor's death, whichever happens later, to give written notice to all beneficiaries of the trust and to each heir of the decedent.

The notice must provide this information:
  • The settlor's name and the date the trust was signed;
  • The name, address and telephone number of each trustee of the trust;
  • The address where the administration of the trust will take place;
  • Any additional information the trust document might require;
  • That the recipient can ask for and receive from the trustee a complete copy of the trust; and
  • That the recipient has a deadline of 120 days after receiving the notice, or 60 days after a copy of the trust is mailed or served upon the recipient, whichever is later, to start a legal action to object to the trust.

For more information, see California Probate Code Section 16061.7.

Notice to Assessor's Office: If the trust property includes real estate or a manufactured (e.g. mobile) home that is subject to property taxation in California, the trustee must give written notice to the Assessor's Office of the county where such property is located within 150 days of the settlor's death.

For more information, see California Revenue and Taxation Code Section 480(b).

Notices to Victim Compensation Board and Director of Health Services: If the settlor may have received health care benefits from the State of California (e.g., from Medi-Cal), the trustee must give written notice of the Settlor’s death to the Director of Health Services within 90 days after the settlor’s death (Probate Code Code Section 215 ).

Further, if any of the any of the settlor’s heirs (e.g., trust beneficiaries) are confined in a prison or other correctional facility, the trustee must give written notice to the Director of the California Victim Compensation and Government Claims Board within 90 days of the settlor’s death (Probate Code Section 216 ).

Inventory and determine value of assets: If there is no court-appointed executor for the estate of the deceased settlor, in most case the trustee must make an inventory and determine the value of all the settlor's assets as of the date of death (whether or not the assets were in the trust). This may often require formal appraisals of assets that do not have a readily determinable value, such as real estate or business interests.

The trustee does this to see if federal and/or state estate tax returns need to be filed. If they do, the trustee will need to make sure the return(s) get filed and that any taxes owing get paid within nine months of the settlor's death.

The inventory and valuation of the trust assets are also important for purposes of fulfilling the trustee’s duty to ultimately prepare and submit to the beneficiaries an appropriate written accounting as required under Probate Code Sections 16062-16064 .

Follow trust instructions: The trustee also must do anything the trust instructs (unless what is instructed might be against the law). Often, the trust says the successor trustee will take care of paying for the settlor's funeral expenses, and the settlor's outstanding debts (like, recent medical expenses and credit card bills), and then distribute what is left to the beneficiaries of the trust.

Sometimes, the beneficiaries have the right to get most or all their inheritance through the trust within days or weeks of the settlor's death.

In other cases, the trustee may delay distributing property in order to:

  • Sell property to pay the settlor's final bills or taxes,
  • Calculate the distribution required by the trust, or
  • Determine if there will be other debts or taxes to pay at a later date.

Some trusts say the trustee cannot distribute the assets for a certain number of years, or until the death of someone else. In these cases, the trustee is responsible for investing the assets of the trust, perhaps making periodic distributions to the beneficiaries (if allowed or required by the trust), until all assets of the trust are distributed to the beneficiaries.

Attend to Tax Issues: Unless there is a court appointed executor of the settlor’s estate (e.g., in order to administer assets that the settlor did not have in his or her trust), as mentioned above, the trustee will be responsible to evaluate whether any estate tax returns are required to be filed, and to make sure that they are properly and timely prepared and filed, and that any estate taxes owing are paid within 9 months of the settlor’s death.

In addition, the trustee will likely have the duty to ensure that the settlor’s income tax returns (e.g., final State and Federal income tax returns for the calendar year during which the settlor died) are duly filed and prepared, and that any income taxes due are timely paid. Further, the trustee will need to arrange for the preparation and filing of the trust’s income tax returns to properly report income that was earned after the settlor died and before the trust assets are all distributed out to the beneficiaries.

Incident to doing this it will usually be necessary to apply for and obtain a new tax ID number for the trust from the IRS (kind of like a “social security number” for the trust). That number should be given to the financial institutions holding the trust’s assets so that each financial institution will ultimately report the interest and dividend income on the trust’s tax ID number (instead of, for example, the settlor’s or the successor trustee’s social security number).

Can a trust be canceled or amended?

Unless the settlor made the trust irrevocable when s/he created the trust, the settlor can cancel or change the trust. Even if a trust is irrevocable, it is possible that it can be changed in one of the following situations:

If all beneficiaries consent:

The law says that if all beneficiaries consent, they can petition the Court to change or end the trust.

The Court will consider:
  • if the trust must continue in order to carry out the purpose of the trust
  • if the reason for changing or ending the trust outweighs the interest in carrying out the purpose of the trust

If the settlor and all beneficiaries consent:

The law says if the settlor and all beneficiaries consent, they can change or end the trust.

If any beneficiary does not consent to change or end the trust, the other beneficiaries, with the consent of the settlor, can petition the Court to partially change or end the trust as long as the interests of the beneficiaries who do not consent are not seriously affected.

If the trust has uneconomically low principal

If the Court decides it is costing more to administer the trust than the trust is worth, the beneficiary or trustee can ask the Court to end or change the trust, or appoint a new trustee.

If the trust principal is worth $20,000 or less, the trustee can end the trust.

Change or end the trust if circumstances change:

The law says the Court may change or end a trust if circumstances have changed and continuing the trust would defeat or weaken the trust.

A Trustee’s Duty To Account To Beneficiaries

The 8 Stages of California Estate & Trust Litigation: Pleading

Estate, Trust, and Elder Abuse litigation begins with the pleading stage, in which the parties formally state their claims and defenses. A lawsuit is formally commenced when the Plaintiff (or Petitioner in a probate case) files a document called a complaint (or petition), stating his or her claims against the Defendant.

Each claim is called a “cause of action,” and each cause of action entitles the plaintiff to some form of recovery. The most recent pleading we filed, for a client in Walnut Creek, included causes of action for fraud and undue influence. This week we will file a complaint in Contra Costa County containing “civil” (meaning non-probate) causes of action for financial elder abuse, fraudulent misrepresentation, negligent misrepresentation, conversion, breach of fiduciary duty, and unjust enrichment; and a “probate” cause of action to return assets wrongfully obtained from a trust.

In “civil” cases (which include most cases other than probate cases and divorce cases) the Defendant responds by filing an answer, in which he must admit or deny the allegations in the complaint. The Defendant also presents various defenses to the allegations (called “affirmative defenses”) that the Defendant believes absolve or mitigate his or her responsibility. For example, a common affirmative defense is that a claim is barred by the statute of limitations – that the time the plaintiff had to file a complaint has expired.

Cases involving wills, trusts, powers of attorney, conservatorships, and guardianships are usually filed in probate court, and are called “probate cases.” The Plaintiff in a probate case is called the Petitioner, who initiates the litigation by filing a petition. The Defendant in a probate case is called the Objector or Respondent, depending on whether he files a “response” or an “objection” to the petition. The option to file a response or an objection provides a Defendant in a probate case with more latitude than a Defendant in a civil case. If the Defendant disputes the allegations in the petition he would object; if he wanted to tell “the other side of the story” he might file a Response, informing the judge of relevant facts not stated in the petition.

Each cause of action is supported by facts that support the causes of action. At the pleading stage, the Plaintiff is not required to have proof that every factual allegation is true; rather he can allege that he is “informed and believes” that an allegation is true, and that in the course of litigation (during the “discovery phase”) he will obtain evidence proving that the alleged facts are true.

A complaint or petition ends with a “prayer,” which a statement of what monetary or other damages the plaintiff is requesting. A typical prayer in a trust or estate case might be:

  1. For a Court Order directing Defendants to return all assets wrongfully taken from the Family Trust;
  2. For judgment in favor of the Plaintiff on all causes of action;
  3. For actual damages according to proof;
  4. For punitive damages;
  5. For attorney’s fees and costs;
  6. For double damages under Cal. Probate Code § 859;
  7. For such other relief as the Court deems fair and proper.

Once the pleading stage is complete, the case is “at issue” and the next phase – discovery—begins.

by Loren Barr
Updated: October 28, 2020


California trust petition sample invalidate to

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A Trustee’s Duty To Account To Beneficiaries

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