As with most legal remedies, trust litigation is also subject to strict procedural guidelines. Remedies will not remain available indefinitely. And in the estate planning field, the underlying interest will be finality to the administration of a person’s estate – whether it is through probate or outside of probate.
So if you are looking into contesting a trust based on substantive grounds, you should also be looking at the procedural rules and statutory timelines within which you can avail of the remedies available to you.
The Notice of Irrevocability and the 120-Day Window
In California, the general presumption is that a living trust is revocable. This is a rebuttable presumption by the trust instrument expressly stating that the trust is irrevocable. Once it is irrevocable, the trust can no longer be modified, amended, or revoked.
Under California Probate Code §16061.7, however, a triggering event can cause a revocable living trust to become irrevocable. These triggering events include:
- The death of one or more of the settlors of the trust; or
- When, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust
This means that the trust may become irrevocable when one or more of the settlors pass away. Or the irrevocability is delayed by the express terms of the trust so that irrevocability takes place within a year from the death of a settlor, based on an express contingency provided for in the trust instrument.
In both cases, a mandatory notice is required to be given by the trustee to the beneficiaries, heirs of the deceased settlor, or the Attorney General, if the trust is a charitable trust under the Attorney General’s supervision.
A similar mandatory notice is also required for irrevocable trusts, whenever there is a change of the trustee.
The notice required in all these instances is a notice of irrevocability. That is, interested persons are given sufficient notice and a window of 120-Days to contest the trust, otherwise the trust becomes irrevocable.
The No-Contest Clause and the Probable Cause Requirement
So, living trusts can be contested at least within 120 days of notice of irrevocability.
But this is not the only challenge facing disputants of the trust.
Most living trusts in California contain what is called the “no-contest clause.” This is a standard clause included in the trust instruments providing that should a person contest the trust, that person risks forfeiting his or her entire interest in the trust.
Does this mean that trusts with a no-contest clause are impervious to good faith disputes?
Not necessarily.
Under Probate Code §21311, a no contest clause shall only be enforced against direct contests that are brought without probable cause.
So if the trust instrument contains a no contest clause, this clause will only apply against you if you bring a direct contest and you don’t have probable cause. If you do have probable cause, the no-contest clause does not apply.
The next logical question is, what is probable cause?
Probate Code §21311 states: “…probable cause exists if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery.”
In the case of ESTATE OF GONZALEZ (2002), probable cause was deemed synonymous with reasonable cause, which under an objective standard is defined as “whether any reasonable attorney would have thought the claim tenable.” It means that the party filing the action, proceeding, contest or objections has possession of facts that would cause a reasonable person to believe that the allegations and other factual contentions in the matter filed with the court may be proven or, if specifically so identified, are likely to be proven after a reasonable opportunity for further investigation or discovery.
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If you are considering contesting a trust, speed is important, but so is a careful substantive legal assessment. We highly recommend consulting with an experienced estate planning or trust litigation attorney to evaluate both the procedural viability of your claim and the underlying legal merits.