Ability of Disinherited Beneficiaries to Challenge A Trust – Part 1
A critical issue in Trust and Estate litigation is the determining who has the ability to challenge a trust. This is especially relevant in cases where the trust-maker may have been in circumstances where there competence is at question and there are changes to a previously determined estate plan. This issue arose in a recent decision of the California Supreme Court, in the case of Barefoot v Jennings. The decision written by the Honorable Justice Chin overturned a decision of the California Court of Appeal and found that the Probate Code allows persons who had their beneficiary status revoked by way of amendment to challenge the amendment if they allege the change came as a result of incompetence, undue influence or fraud. It should be noted that this decision did not consider whether an heir who never had beneficiary status could make the challenge.
In discussing a number of changes made to the trust and the statutory scheme underlying the probate court, the court made the following relevant comment:
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
The defendants opposing the challenge argued that this interpretation would be detrimental to the execution of trusts as it would enable persons with no present interest (meaning no beneficiary status to challenge trusts and could create a raft of litigation. In part two of this blog, we will discuss the Court’s response to the argument of the Defendants.
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