Trust Contests – Litigation

A trust contest occurs when someone believes that the “trustor” (the deceased person that made the trust) was mentally incapacitated and/or unduly influenced when s/he signed the trust document. A contest petition is filed in court, and requests that the improper trust instructions be stricken.

One BIG caveat:  Most living trusts contain a clause that states that any beneficiary who challenges any of the terms of the trust will be automatically disinherited.  This is called a “no contest” clause. In California, the law regarding “no contest” clauses, and challenges to them, has significantly changed (January 1, 2010). Previously, a disgruntled beneficiary had the right to seek prior approval from the court to determine whether a proposed challenge to a trust would be considered a violation of the “no contest” clause.  If the court ruled in favor of the beneficiary’s request, then the “no contest” clause would not be violated.  If the court ruled against the beneficiary’s request, then that beneficiary would simply back off – knowing that if s/he did file a challenge to the trust, then they would have violated the “no contest” clause and be automatically disinherited. This was known as a “safe harbor” petition.

The new law repeals the “safe harbor” petition and allows, under certain circumstances, for the filing of a petition to challenge the terms of a trust, so long as the court ultimately determines that the petitioner (beneficiary) had “probable cause” to believe that the facts warranted a reasonable person into concluding that the trusts terms were obtained through mental incapacity, undue influence, or a variety of other improper means.

There are many cases where the trustor was susceptible to undue influence or lacked the mental capacity to understand what they were doing when they signed the trust document.   When this occurs, a trust contest can be filed to challenge the document’s validity. The evidence must be focused on proving the trustor’s mental state at the time the document was signed.  This can be difficult, especially when the only witness present during the signing may be the person who unduly influenced the trustor.

The test for determining whether sufficient mental capacity existed to make a trust is not a high standard, but the test is greater than that required to simply create a will.  As stated, the court will bend over backwards to honor the written instructions of the trustor and to presume this is what the trustor’s wishes were.  It must be shown that the trustor knew what his/her estate consisted of (house, bank accounts, furniture, etc.) and was aware of the “natural objects of his bounty”.  These natural objects would be a spouse, children, brothers, sisters, etc. If the trust made no mention of these people and, instead, instructed that all estate assets were to be given to a person that the trustor had only met a few times, a red flag would raise indicating foul play and the liklihood of undue influence.

A successful trust challenge must prove that the trustor lacked legal mental capacity.  Legal mental capacity is, in large part, determined by Probate Code Section 811, which identifies numerous mental/psychological categories that must be examined to determine whether the trustor possessed the required mental capacity. Medical records are a great source of evidence, if they have discussed the trustor’s mental capacity at or near the time that the questionable trust document was signed.  It’s unlikely that you’ll find a medical document that attests to the trustor’s lack of mental capacity, and was prepared on the same day the questioned trust document was signed.

However, these records can be subpoened and then examined to determine whether they support the case of undue influence or lack of mental capacity. Family members and friends can also be a valuable source of evidence, particularly if these people spent a great deal of time with the trustor and were intimately familiar with his or her beliefs, wishes, mental state, and relationships with family members and others.  This personal knowledge can greatly assist the court in determining whether the trustor possessed the requisite mental capacity. Expert witnesses can also assist.

Great care needs to be exercised in the selection of such an expert.  This person must be thoroughly qualified and reputable in order to provide a meaningful and persuasive opinion as to mental capacity. Given these difficulties of sufficient evidence, the law does provide a remedy when the truth is that the trustor lacked mental capacity or was unduly influenced into signing the trust document.

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