Friday, January 24, 2020
California Supreme Court:
Disinherited Beneficiaries Have Standing to Challenge Trust
By a MetNews Staff Writer
The Probate Code grants standing to individuals who claim that trust amendments made shortly before the settlor’s death—eliminating their beneficiary status—stemmed from incompetence, undue influence, or fraud, the California Supreme Court held yesterday.
Written by Justice Ming W. Chin for a unanimous court, the opinion reverses a decision of the Fifth District Court of Appeal which affirmed an order by Tuolumne Superior Court Judge Kate P. Segerstrom dismissing a petition to set aside trust amendments.
The decision proclaims:
“Today’s narrow holding in fact provides an orderly and expeditious mechanism for limited challenges like plaintiff’s to be litigated early in the probate process, in probate court, and to ensure that the settlor’s intent is honored.”
Disinheriting Trust Amendments
Plaintiff Joan Mauri Barefoot was a beneficiary and successor trustee of the Maynord Family Trust until several amendments, made by her mother shortly before her death, expressly disinherited Barefoot, replaced her as a successor trustee with one of her sisters, and allocated to that sister a larger share of the trust.
After her mother’s death, Barefoot filed a petition in Probate Court alleging that the amendments disinheriting her from the trust were invalid; she asserted her mother was incompetent to make the amendments, and the amendments were the product of her sisters’ undue influence and fraud.
Barefoot’s sisters then successfully moved for a dismissal of the petition, citing Probate Code §17200, which provides, with an exception that was not applicable, 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.”
The sisters argued that Barefoot lacked standing because she was neither a beneficiary nor a trustee under the amended trust.
Probate Court Standing
Presiding Justice Brad R. Hill, writing for the Fifth District, said:
“Appellant’s petition alleges standing exists because she was a beneficiary and trustee of a prior version of the Trust. We conclude this basis is insufficient to support a petition under section 17200.”
In his opinion reversing the Court of Appeal, Chin wrote:
“Reading the Probate Code section consistent with the statutory scheme as a whole, and examining the statutory language to give it commonsense meaning, we conclude that claims that trust provisions or amendments are the product of incompetence, undue influence, or fraud, as is alleged here, should be decided by the probate court, if the invalidity of those provisions or amendments would render the challenger a beneficiary of the trust.”
No ‘Chaos’ Invited
Chin went on to say:
“Defendants argue that interpreting section 17200 to permit purported beneficiaries to challenge a trust or its amendments would ‘invite chaos’ because it would permit individuals with no present interest in the trust to “meddle” with its administration. We think defendants overstate the matter. Our holding does not allow individuals with no interest in a trust to bring a claim against the trust. Instead, we permit those whose well-pleaded allegations show that they have an interest in a trust—because the amendments purporting to disinherit them are invalid—to petition the probate court.”
The jurist remarked
“To 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.”
The case is Barefoot v. Jennings, 2020 S.O.S.
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