Ability of Disinherited Beneficiaries to Challenge A Trust – Part 2
A critical issue at the beginning of any matter in Estate or Trust litigation is determining whether the party who wishes to challenge the estate has the standing (meaning the legal right) to sue. The courts and the Probate code impose limits on who has the ability to sue to respect the administration and wishes of trust and will-makers. This issue was recently considered by the California Supreme Court in the decision of Barefoot v. Jennings. Part one of this blog discussed the Court’s rationale for broadly interpreting the relevant provisions of the Probate Code. The Defendants had argued that allowing a beneficiary whose interest was terminated by subsequent trust amendment to sue, would “invite chaos” and would permit disinterested parties (meaning parties with no legal interest) to “meddle” in the administration of the trust.
The court did not accede to the argument raised by the defendants and made the following comments regarding the interpretation of the Probate Code:
Indeed, the probate court is given broad jurisdiction “ ‘over practically all controversies that might arise between the trustees and those claiming to be beneficiaries of the trust.’ ”
(Id. at p. 765, quoting Estate of Marre, supra, 18 Cal.2d at p. 187.) Using such discretion, the court can preserve trust assets and the rights of all purported beneficiaries while it adjudicates the standing issue. As one court explained, interpreting section 17200 as we do here “not only makes sense as a matter of judicial economy, but it also recognizes the probate court’s inherent power to decide all incidental issues necessary to carry out its
express powers to supervise the administration of the trust.”
(Estate of Heggstad, supra, 16 Cal.App.4th at p. 951.)3
The court also noted that the ruling in this case was limited in scope as the Plaintiff was not challenging the transfer of property in or out of the Trust but was rather seeking to have their beneficiary status restored. The challenge of property transfers by a disinherited plaintiff was viewed as a separate legal issue.