ASSESSING AND LITIGATING PRE-DEATH TRUST CONTESTS: PERILS, PITFALLS, AND STRATEGIES
By Howard L. Horwitz, Esq.,* David G. Knitter, Esq.,** and Mary K. deLeo, Esq.***
I. INTRODUCTION
In probate litigation, contests to invalidate a trust instrument are common. Among the many issues facing a litigant is when to file a trust contest. File too soon, and the litigant’s suit is subject to demurrer for lack of standing. File too late, and the suit may be barred by either the statute of limitations or by the doctrine of laches.
Until the California Court of Appeal, Third District’s decision in the matter of Drake v. Pinkham1 ("Drake"), conventional wisdom dictated that a litigant seeking to contest a trust must wait until after the settlor’s death. Because a settlor could amend or revoke his or her trust, most practitioners assumed a trust contest brought before the settlor’s death would be premature and would fail from lack of standing.
The Drake decision changed the landscape. In Drake, a beneficiary sought to invalidate trust amendments after the settlor’s death, contending the settlor lacked capacity at the time of execution. The appellate court disagreed, holding that, because the beneficiary had raised allegations of the settlor’s incapacity, the beneficiary should have sought to set aside the trust amendments during the settlor’s lifetime, rather than waiting until the settlor’s death. The Drake court held the trust contest was barred under the doctrine of laches.
The Drake decision paved the way for pre-death trust contests. This article explores Drake’s holding, highlights the differences between litigating pre-death contests and post-death contests, and offers practical guidance for navigating this new landscape.
II. THE PRE-DRAKE WORLD
Prior to Drake, it was presumed that a beneficiary lacked standing to challenge a trust instrument during a settlor’s lifetime. This assumption appeared both facially reasonable, as the settlor could always amend his or her revocable trust, and grounded in statute and case law. Under Probate Code section 15800, during the time that a trust is revocable and the person holding the power to revoke the trust is competent, typically "the person holding the power to revoke, and not the beneficiary, has the rights afforded the beneficiaries."2 Moreover, Probate Code section 15800 expressly states that "the duties of the trustee are owed to the person holding the power to revoke."3 Under Probate Code section 16069, there is no obligation for a trustee to account to a beneficiary of a revocable trust, to provide terms of the trust, or to share any information regarding the trust during the period in which the trust may be revoked.4 Finally, under Probate Code section 16061.7, a trustee is obligated to provide notice to the beneficiaries of "a revocable trust when the revocable trust or any portion thereof becomes irrevocable because of the death of one or more of the settlors."5 Taken together, these statutes appeared to indicate that a beneficiary of a revocable trust would not have standing to contest a trust while the settlor is still living.
Conventional wisdom was further buttressed by case law. For example, in Estate of Giraldin, the California Supreme Court cited the long-standing principle that "[p]roperty transferred into a revocable inter vivos trust is considered the property of the settlor for the settlor’s lifetime," and, thus, ‘the beneficiaries’ interest in that property is ‘merely potential’ and can ‘evaporate in a moment at the whim of the [settlor].’"6 Similarly, in Steinhart v. County of Los Angeles, the California Supreme Court noted that property transferred to a trust revocable by the settlor remained solely the property of the settlor, who retained full ownership and control over the trust property.7 And in Johnson v. Kotyck ? a case where the settlor was incapacitated and under conservatorship ? the court held that, because the settlor’s conservator could petition the court under Probate Code section 2580 to revoke the settlor’s revocable trust, the trust’s beneficiaries had no rights regarding the trust, notwithstanding the language of Probate Code section 15800.8 The Johnson court reasoned that since the settlor’s revocable trust instrument did not preclude the conservator from seeking a revocation of the settlor’s trust, the conservator, "working together with the superior court as the conservatee’s decision making surrogate, is a ‘person holding the power to revoke the trust.’"9 These and similar authorities cemented the idea that because the settlor of a revocable trust could revoke the trust up until the moment of his or her death, a beneficiary lacked standing to challenge the trust during the settlor’s lifetime.
Armed with this conventional wisdom, practitioners routinely advised their clients that they lacked standing to challenge a revocable trust while the settlor was alive. Overlooked (understandably so, particularly given the Johnson case) was the fact that, under Probate Code section 15800, the shifting of rights away from the settlor could also be triggered by another event ? the settlor’s incapacity.10 True, the California Supreme Court emphasized the incapacity factor in the Giraldin case, "'[Probate Code section 15800] makes clear that the beneficiaries of a revocable living trust do not have the right to petition the court concerning the internal affairs of the trust until such time as the settlor, or other person holding the power to revoke, is unable to exercise a power of revocation, whether due to incompetence or death."11 However, since the Giraldin settlor was deceased, the case did not address whether the shifting of rights under Probate Code section 15800 upon a settlor’s incapacity includes the right of a beneficiary to challenge a revocable trust during the incapacitated settlor’s lifetime. Although Giraldin hinted that a beneficiary might have the right to challenge a revocable trust during an incapacitated settlor’s lifetime, when the trust could no longer be revoked,12 the hint was insufficient to combat the widespread belief that only the settlor’s death could confer standing for a trust contest.
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III. ENTER THE DRAKE CASE
A. Facts of Drake v. Pinkham
Theodore ("Theodore") and Josephine ("Josephine") Citta had two children, Janice Pinkham ("Janice") and Rosina Jeanne Gina Drake ("Gina").13 In 1998, Theodore and Josephine established a trust that divided into a Survivor’s Trust and a Family Trust (Credit Shelter Trust) upon the death of the first spouse to die.14 After the death of the surviving spouse, the trust estate was to be divided equally between Janice and Gina.15
Theodore passed away in 1999.16 Thereafter, Josephine executed two amendments to her Survivor’s Trust. The Fourth Amendment, executed in 2001, eliminated Gina as a beneficiary and named Janice as sole successor trustee. The Fifth Amendment, executed in 2004, designated Janice as acting co-trustee (along with Josephine) and as sole successor trustee.17
In 2005, Gina filed a petition seeking her appointment as cotrustee of the trust, as amended by the first three amendments, alleging that Josephine lacked the ability to care for herself or act as trustee and that Janice was asserting undue influence over her.18 Josephine objected to Gina’s petition, denying Gina’s allegations.19 In her objections, Josephine stated that she had amended her Survivor’s Trust and that neither the Fourth nor Fifth Amendment provided for Gina to act as a trustee or co-trustee.20 Josephine attached copies of both the Fourth and Fifth Amendments as exhibits to her objections.21
Gina did not contest the Fourth or Fifth Amendments but instead entered into a settlement agreement with Josephine, under which Josephine represented that she was the sole acting trustee of the Family Trust and agreed not to take certain actions with respect to real properties held by the Family Trust without prior notice to Gina and Janice.22
Josephine died on October 29, 2009.23 On March 9, 2010, Gina filed a petition seeking, among other things, to invalidate the Fourth and Fifth Amendments to the Survivor’s Trust based on lack of capacity and undue influence by Janice.24 In her response to Gina’s petition, Janice asserted various affirmative defenses, including statutes of limitations, the doctrine of res judicata, and the doctrine of laches.25
Janice brought a motion for summary judgment, which the trial court granted on the basis of collateral estoppel as to the lack-of-capacity and undue-influence causes of action and on the basis of statutes of limitations for the remaining causes of action.26 The trial court did not reach the issue of laches.27 Gina appealed.
On appeal, Janice relied on the following undisputed facts to support her affirmative defenses, including the defense of laches: (1) Gina was aware of Janice’s alleged wrongdoing and Josephine’s alleged incapacity at the time she filed her 2005 petition; (2) Gina became aware of the Fourth and Fifth Amendments to Josephine’s Survivor’s Trust in the process of litigating the 2005 petition; (3) Josephine died in October 2009; and (4) Gina filed her action to invalidate the Fourth and Fifth Amendments on March 9, 2010.28 Gina conceded that she was aware of the Fourth and Fifth Amendments at the time of the 2006 settlement agreement with Josephine.29
To avoid Janice’s laches defense, Gina contended on appeal that she had not delayed in asserting her rights because, at the time of the 2005 proceedings, the Survivor’s Trust was revocable and there had been no determination of Josephine’s incapacity.30 Therefore, Gina contended, Josephine retained the power to revoke and, under Probate Code sections 17200 and 15800, Gina had no standing to challenge the validity of the Fourth and Fifth Amendments until Josephine’s death.31
The appellate court disagreed.32 Probate Code section 17200, subdivision (a), provides that a beneficiary of a trust may petition the court concerning the trust’s internal affairs except as provided in Probate Code section 15800.33 Under section 15800, a beneficiary lacks standing to challenge a trust as long as the "trust is revocable and the person holding the power to revoke the trust is competent" (emphasis added).34 In interpreting this language, the appellate court looked to the Law Revision Commission commentary, which indicated that the effect of Section 15800 was to "postpone the enjoyment of rights of beneficiaries until the death or incompetence of the settlor or other person holding the power to revoke."35 This point was reinforced by the Restatement Third of Trusts which provides: "When the settlor or donee lacks the requisite mental capacity, the other beneficiaries are ordinarily entitled to exercise, on their own behalf, the usual rights of trust beneficiaries and the trustee is ordinarily under a duty to provide them with accountings and other information concerning the trust and its administration."36 Based upon these authorities, the appellate court concluded that the right to challenge competency, and, if established, the right to contest a trust document, passed to the beneficiaries under sections 17200 and 15800 if the settlor or person holding the power to revoke was not competent.37
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Applying this analysis, the appellate court concluded that because Gina alleged Josephine’s incompetency at the time of the execution of the Fourth and Fifth Amendments, Gina was not precluded under either Probate Code section 17200 or 15800 from bringing an action during Josephine’s lifetime contesting the validity of the amendments. 38
The appellate court then held that Gina’s claims were barred as a result of laches.39 The appellate court noted there was no dispute that Gina knew or should have known of the existence of the Fourth and Fifth Amendments during Josephine’s lifetime, yet she had delayed in filing her petition to invalidate the amendments until after Josephine’s death.40 The court held that Gina’s failure to bring the action until after Josephine’s death was necessarily prejudicial: "each and every cause of action set forth in the underlying petition centered on Josephine – her mental capacity, defendants’ influence over her, and her understanding of the Fourth and Fifth Amendments and her estate."41
B. The Post-Drake World
While the Drake decision clarified that pre-death trust contests may be permissible, the holding itself raises significant issues.
1. Does Drake Automatically Confer Standing?
The Drake case has caused substantial confusion regarding the issue of standing. Probate Code section 15800 triggers the shifting of rights from the settlor (or other person holding the power to revoke) to the beneficiaries. Probate Code section 15800 is silent, however, as to whether a judicial ruling of incapacity is needed for those rights to transfer. The Drake court did not address this issue. Therefore, the question remains, does Drake automatically confer standing on a beneficiary (or former beneficiary) to bring a pre-death contest so long as he or she merely alleges that the settlor is incapacitated or must the contestant first establish the settlor’s incapacity before pursuing the suit?
From the contestant’s perspective, the answer is both "yes" and "no." "Standing" means the right of a person to challenge another person’s conduct in court.42 Under Drake, a contestant who alleges that the settlor of an otherwise revocable trust lacks capacity risks the contest being barred if not brought during the settlor’s lifetime.43 Therefore, it follows that such a contest may be brought during the settlor’s lifetime. Accordingly, as a purely practical matter, a Drake contestant might be considered to possess "standing."
On the other hand, Drake states, "[t]hat [contestant] would have had the burden of proving Josephine’s incompetence to establish her standing to pursue those claims does not excuse her delay."44 Thus, standing requires more than an allegation of incapacity; standing only exists upon proof of incapacity.45
Needless to say, proof of incapacity is generally presented at, not before, trial. Thus, under Drake, a contestant should ultimately be found to lack standing only if incapacity is not proven at trial, i.e., when the contest is defeated on the merits.46 Hence, a Drake contestant should have the right both to plead and to attempt to prove incapacity, and the issue of standing should become more or less a technical requirement with little practical impact.
2. Can Pre-Death Contests Be Based on Grounds other than Incapacity?
Incapacity is not the only basis on which to set aside a trust instrument. Others include fraud, mistake, or undue influence. Can a pre-death challenge be asserted on grounds other than lack of capacity?
The answer depends on the context of the claim. The Drake court, in holding that the defense of laches barred all of Gina’s claims, relied on the fact that, under Probate Code section 15800, the rights owed to the settlor shift to the beneficiaries upon incapacity and, thus, the beneficiaries have standing to contest a trust during an incapacitated settlor’s lifetime.47 That reasoning strongly suggests that beneficiaries do not have the right to challenge a trust during a settlor’s lifetime when capacity is not at issue. Therefore, a contest based solely on undue influence (or other non-capacity claims) could not be brought while a competent settlor is living.
However, in Drake, Gina alleged that the trust amendments were invalid not only because of Josephine’s incapacity but on other non-capacity grounds as well, including undue influence.48 The court found those claims barred by laches also.49 If a pre-death contest based on undue influence can never be brought during the settlor’s lifetime, then it would be difficult to understand how laches would apply since Gina filed suit less than five months after Josephine’s death. That reasoning supports the notion that where incapacity is alleged, other grounds for the contest may also be joined during the settlor’s lifetime. However, until an appellate court expressly so states, the present guidance for practitioners on this issue is not definitive.
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3. Can Instruments other than Trusts or Trust Amendments be Subject to Pre-Death Challenges under Drake?
Drake involved a contest of a trust amendment. This begs the question: does Drake apply to instruments other than trust instruments? The answer appears to be no.
In determining that Gina’s claims were barred by laches, the Drake court relied primarily on two points. First, Gina’s allegations of Josephine’s incapacity meant that the settlor protections in Probate Code section 15800 did not apply. Second, Janice was unduly prejudiced by Gina’s delay in bringing suit because Josephine, during her lifetime, was the best source of evidence of her mental status.50
Because there is no comparable statute to Probate Code section 15800 governing documents such as wills, transfer-on-death deeds, and beneficiary designations, it appears that capacity challenges to these documents are unaffected by Drake, and such challenges are limited to post-death only. Moreover, unlike revocable trusts, which are typically placed into effect during lifetime, wills, transfer-on-death deeds, and beneficiary designations are documents designed only to take effect at death. Thus, the differential treatment between trust instruments and other testamentary instruments is legally sound.
Nonetheless, an argument can be made that these other types of documents, although taking effect only upon death, also become irrevocable upon an individual’s incapacity. Therefore, there is no sound reason to restrict a challenge until after the individual has died, particularly since, as the Drake court noted, the individual is the best source of evidence as to the issue of capacity. However, at this point it appears, based on Drake, that trusts, and trust amendments, are the only testamentary-type documents that can be challenged during lifetime.
C. The Drake Dilemma
It is not unusual for a family member to seek legal advice when an elder, though still living, is thought to lack capacity when he or she disinherits some family members. Prior to Drake, a thoughtful attorney when so consulted would invariably explain that unless a conservatorship is established, a contest must await the irrevocability of the trust, likely upon the death of the elder. Faced with this choice, except where the elder required protection warranting a conservatorship, most family members chose to defer a contest until after the elder died.
Now, following Drake, such a potential contestant’s visit to an attorney creates what the authors refer to as the Drake Dilemma. No longer can it be assumed a contest based on incapacity may be deferred until the elder passes. Rather, after Drake, a contestant waiting until the elder passes to allege incapacity risks losing the contest based on the defense of laches.51 Therefore, the attorney advising such a client while the elder lives needs to do more than evaluate the strength of the potential contestant’s claim. The attorney must also evaluate whether the incapacity claim (1) might be lost if not asserted promptly and (2) is sufficiently strong to warrant a pre-death contest.
1. The Drake Dilemma from the Contestant’s perspective
The Drake Dilemma is particularly felt when the potential contestant is reluctant to allege the elder’s incapacity while the elder is living. Frequently, it is feared that such a claim will only push the elder further away from the potential contestant, if not directly into the arms of a person seeking to influence (unduly or otherwise) the elder.
Most potential contestants seek counsel when they suspect or know the elder has modified a trust. Because the defense of laches requires a showing that the contest should have been brought earlier, one of the attorney’s first inquiries should be to determine the potential client’s level of knowledge of the trust modification. Naturally, if the trust modification impacting the potential contestant’s expectancy was not previously known to that person, it will be difficult for the respondent to establish that the contestant sat on their rights; one cannot contest what one does not know. Hence, the attorney consulted by a potential contestant will want to evaluate whether the facts might be sufficient to raise a laches defense if the contest is deferred.
In Drake, the trust amendments in dispute were part of the court record in the prior proceeding so the contestant was unquestionably on notice of their existence. But there seems to be no policy requiring formality of notice rise to that level. Therefore, as a practical matter, counsel for a potential contestant should assume that, if the client has actual knowledge of an instrument injuring the client’s expectancy, that knowledge may be sufficient to result in laches.
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At the same time, mere suspicion of an instrument’s existence should not support laches. The more reasonable approach is to draw the line at the potential contestant actually having seen the instrument in question; arguably everything else is speculation. A thoughtful practitioner will want to explain to the potential contestant the possibility of a factual dispute as to whether the instrument in question was known to exist. A carefully drafted letter to the settlor or the settlor’s counsel requesting a copy of any trust amendment might, in that circumstance, be advisable. If a copy of the new instrument is provided, the state of the potential contestant’s knowledge and the risk of laches is clear. If the request is refused, a laches defense to a post-death contest will be difficult to establish.
The Drake Dilemma is one of timing: if the contestant does not initiate a contest promptly, while the settlor is living, a contest may later be found barred by laches. On the other hand, if the contest is brought during the settlor’s lifetime, it will be premature if incapacity is not proven. That is the essence of the dilemma.
The Drake Dilemma places the attorney representing a potential contestant in a challenging situation. It is recommended the attorney carefully prepare a letter to the client which describes the Drake rule and dilemma, explains the risks and benefits of each possible approach, and ultimately confirms the client’s decision and understanding of the risks associated with that choice.
Another possible strategy is available to a reluctant Drake contestant. Because laches under Drake is triggered by a post-death allegation of incapacity, it may be possible to defer the contest until the settlor’s death and then base the contest on other grounds only, such as undue influence, fraud, or mistake; the contest would in that event not allege incapacity. Although no court has yet to rule on the possible application of laches to such a post-death contest, it would seem immune from any such attack because, absent incapacity, the trust would not have been considered irrevocable prior to death, thereby depriving the contestant of standing to bring the contest before the death.
If a client elects to defer a contest with the intent to assert a post-death claim on grounds other than incapacity, the attorney should again send the client a confirming letter to avoid any misunderstanding as to the option(s) abandoned. After all, incapacity can, in the right case, be a powerful claim, so foregoing such an allegation is risky. Yet a post-death contest based only on undue influence should still permit discovery and introduction of evidence (including expert testimony) as to the settlor’s mental status: under California’s revised statutory definition of undue influence, the court is required to consider evidence of the alleged victim’s vulnerability, including but not limited to illness, disability, injury, and impaired cognitive function.52 Hence, abandoning incapacity as a basis for a post-death contest might avoid the bar of laches yet still allow challenge to the settlor’s mental status.
There are other practical considerations a potential Drake contestant’s counsel should consider in advising the client. First, clients need to consider the impact on the family of initiating a pre-death contest. Clients may not be amenable to bringing such a challenge during the elder’s lifetime, just as many are reluctant to initiate an involuntary conservatorship proceeding. Allegations of incapacity are rarely welcomed by an elder.
Second, in a Drake contest, there is potential difficulty in obtaining evidence. Because the elder is living, his or her privacy concerns will likely concern the court and may impede discovery. The court may in that event also express concern the elder has not injected his or her capacity as an issue, as in a personal injury case. Further, the elder may obtain trial priority, allowing insufficient time to complete discovery. The statutory exceptions to the attorney-client privilege for persons claiming through a deceased person will of course not apply because the elder is still living.53 Finally, the elder may be able to obtain their own cognitive assessment while blocking the contestant’s ability to obtain one: a contestant must thus persuade the court good cause exists for an order compelling a mental examination.54These discovery issues are discussed more thoroughly below.
2. The Drake Dilemma from the Respondent’s Perspective
The Drake Dilemma poses equally challenging issues for the settlor and his or her attorney.
A preliminary issue for the settlor’s attorney is whether the client has sufficient legal capacity to enter into a contract for representation. As discussed below, the existence of capacity is decision-specific. The client may have the capacity to execute a simple trust amendment or will (testamentary capacity), but lack contractual capacity to enter into the legal services contract with the drafting attorney.55 Before being retained, the attorney should determine that the client has capacity to contract. Even if the attorney believes the client has legal capacity to retain the attorney, there is always the potential that the contestant will claim otherwise. In close calls, the attorney should discuss with the client the possibility of obtaining a cognitive evaluation to confirm the client possesses the requisite capacity.
When representing the respondent-settlor, a primary issue is the potential psychological, mental, and physical health impact on the settlor who, oftentimes, is being forced into litigation to defend his or her wishes. A pre-death contest will likely be perceived by the elder as a restriction on their autonomy, an attack on their dignity, and the loss of their right to self-determination. Coupled with the normal stress of legal proceedings and the airing of the elder’s mental weaknesses to third party scrutiny, a proceeding can be difficult to handle. Depending upon the evidence brought before the court, the settlor may be forced to bear the shame or stigma of diminished capacity even if the suit is settled or resolved in the settlor’s favor.
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A pre-death contest may cause an elder to fear the loss of the ability to sufficiently support himself or herself. This fear is real, and the costs of litigation further diminish assets available to the elder. Further, elders fear being placed in a nursing home. In fact, these are the two major fears that most elders express.56The practitioner should consider candidly discussing the elder’s circumstances and the risks of litigation with the elder. The discussion should occur in a context that best promotes the client’s autonomy and dignity.
As noted above, the Drake Dilemma is one of timing. It is also one of knowledge; once a contestant has notice that a trust instrument has been executed by the settlor, the laches clock starts ticking on a capacity-based contest. Thus, where a contest has not yet been filed, but the settlor believes one is likely in the future, the attorney should consider how to proactively establish a potential Drake laches defense.
To trigger a potential Drake laches defense, the practitioner should consider whether to advise the client to provide the trust documents to a potential contestant. The attorney may consider advising the client to use other less direct means to put potential contestants on inquiry notice in hopes of making a laches defense available. One example is to notify the potential contestant in writing that a change in asset disposition has been made in the new instrument. This arguably provides a basis for arguing that the contestant "should have known" (inquiry notice) about the alleged claim, which becomes the start date for measuring resulting delay.57
The risk to the client is that the forgoing disclosure may invite the pre-death contest. If capacity of the client is considered easily provable, providing a copy of the trust change still may be the best option since the contest can likely be defeated. However, with a greater diminishment of capacity, there is an increased risk of inviting a contest, as well as the potential of an unsuccessful defense to the pre-death contest. At a minimum, the elderly client will be subjected to the stress of litigation and the potential loss of privacy through mental examination and discovery of his or her medical records. It is suggested that all such risks be discussed in detail with the client.
D. Strategies Maintaining or Opposing the Pre-death Contest
Although pre-death trust contests resemble post-death challenges in many respects, a pre-death contest involves unique issues not present in post-death challenges, including the issue of whether to seek a conservatorship over the settlor. Moreover, obtaining the evidence to support the pre-death challenge may be both easier in some respects (a living settlor can be subject to a capacity examination) and more difficult in others (for example, exceptions to the attorney-client privilege available in post-death challenges do not apply in pre-death contests). This section highlights several of the critical distinctions between a pre-death and post-death contest and provides strategies for maximizing success from both the contestant’s and respondent’s perspectives.
1. Identify the Instrument to be Challenged
First, the practitioner must consider the nature of the instrument to be challenged. As noted above, Probate Code section 15800, relied upon by the Drake court, applies only to trust instruments. Therefore, if the instrument is neither a trust nor trust amendment, there is no legal basis on which to mount a pre-death challenge, outside of establishing a conservatorship action and seeking relief under Probate Code section 2580. Second, the practitioner must also determine who holds the power to revoke the instrument; if the settlor is incapacitated, but the power to revoke is held by another who is not incapacitated, then the shifting of rights to beneficiaries under Probate Code section 15800 does not apply.58 Where the suspect instrument is a trust instrument and the settlor is the person holding the power to revoke, the practitioner must evaluate whether there are facts that support an allegation of the settlor’s incapacity, since only incapacity triggers the shifting of rights away from the living settlor under Probate Code section 15800. Finally, the practitioner should assess whether the trust instrument is complex or simple in nature. As discussed in detail below, a complex trust instrument is subject to a higher level of capacity than a trust instrument that resembles a simple will or codicil.59 Depending upon the level of capacity required to execute the particular instrument, the pre-death challenge may, or may not, be warranted.
2. Determine Whether a Conservatorship is Needed
The practitioner representing the potential contestant must decide whether to file a direct challenge to the questioned instrument or to first seek a conservatorship over the settlor. A conservatorship may be warranted if an elder requires protection, but it is not an ideal mechanism for challenging a trust instrument. First, in the context of a conservatorship, it is the conservator, not necessarily the contestant, who will have control. Second, when there is a conservatorship, concerns about the conservatee’s estate plan may be addressed by a petition for substituted judgment rather than a trust contest.60 There is no certainty the conservator will seek such a substituted judgment or, if sought, that the proposed action will favor the erstwhile Drake contestant. The issue in such a proceeding will be the "likelihood from all the circumstances that the conservatee as a reasonably prudent person would take the proposed action."61 From the perspective of the potential contestant, unless protection of the elder is needed, challenges to a living settlor’s trust are best addressed by either a Drake or post-death contest rather than by a conservatorship.
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Although in many circumstances a conservatorship is not preferred as the remedy, each case is unique. An analysis will need to be performed with consideration of the specific facts and circumstances presented to the practitioner. In some cases, the facts may make conservatorship preferable. Since it has not yet been clearly determined whether or not failure to pursue a claim of undue influence or fraud is subject to the laches defense, the need to initiate a conservatorship to establish a fraud or undue influence claim is another reason a conservatorship may be appropriate. The practitioner should consider that the initiation of a conservatorship proceeding will invoke the higher standard of proof of clear and convincing evidence to establish standing.62
The practitioner must also be aware that, at least for a challenge based on incapacity, the very appointment of a conservator may preclude a pre-death contest, because, unless the trust expressly reserves the right to amend the trust exclusively to the settlor, a conservator, in conjunction with the court, may hold the power to revoke.63 If someone holds the power to revoke, even if that person is not the settlor, then a beneficiary has no standing to bring a pre-death trust contest.64
Given the loss of control and the resulting uncertainties, unless needed for the protection of the settlor, a potential contestant is better off mounting a direct challenge to the questioned trust instrument rather than seeking a conservatorship first.
3. Bifurcating Other Claims
Where incapacity is alleged, a pre-death contest may also be based on grounds other than incapacity. Hence, a respondent may wish to seek bifurcation to try the capacity claim first and then, only if incapacity is found, try the other causes of action later. The purpose of such bifurcation would be to obtain clarity on whether the contestant has standing. Thus, severance or bifurcation of claims other than incapacity (e.g., undue influence, fraud, mistake) potentially makes sense because the contestant may lack standing to pursue them absent proof of incapacity. The parties will then avoid trying unnecessary claims.65
4. Capacity and Pre-Death Trust Contests
Under Drake, a pre-death trust contest requires an allegation of the settlor’s incapacity and proof of that allegation at trial. In fact, incapacity may need to be determined at two points in time: (1) at the time the instrument being contested is executed and, (2) at the time the suit is filed. Recall, the shifting of the settlor’s rights under Probate Code section 15800 occurs upon the settlor’s incapacity. Because capacity diminishes on a sliding scale, a settlor may lack present capacity (thereby triggering the shifting of the rights to beneficiaries, including the right to contest the trust) but may have had sufficient capacity at the time he or she executed the trust instrument. Thus, a contestant may be able to establish standing to contest the trust instrument only to lose the fight to invalidate the instrument. The reverse could also occur, i.e., a settlor could be incapacitated at the time a document was signed but regain capacity later, such as where a settlor signs an instrument while suffering from medically induced dementia, but subsequently recovers. Thus, the practitioner needs to be cognizant of the time frames in which capacity is an issue and build the case accordingly.
5. Incapacity and Standing
A contestant’s petition must include allegations of the settlor’s present incapacity. If the petition does not include sufficient facts to support the allegation of incapacity, the respondent (settlor) may assert, as a defense, that the contestant lacks standing to contest since the trust is revocable during the settlor’s lifetime and the settlor is not incapacitated. Thus, at the pleading stage, a respondent should consider whether, based upon the facts alleged in the petition, lack of standing is a potential pleading defect. If so, the attorney for the respondent should consider filing a demurrer.
On demurrer, the respondent’s argument might be that every action must be prosecuted in the name of the real party in interest.66 Since a beneficiary of a revocable trust does not have a current property right in, or a claim against, the trust estate, the contestant is not an interested party.67 Under Probate Code section 15800, absent incapacity or death, the beneficiary of a revocable trust does not have standing to contest the trust. If the contestant’s lack of standing to sue appears on the face of the complaint or from matters judicially noticeable (i.e., there are insufficient facts alleging the settlor’s incapacity or death) a general demurrer lies for failure to state a cause of action.68
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Capacity, moreover, is presumed to exist absent a judicial finding otherwise. The presumption of capacity is a legislative declaration. As set forth in Probate Code section 810:
(a) For purposes of this part, there shall exist a rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions.
(b) A person who has a mental or physical disorder may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.
(c) A judicial determination that a person is totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the legal capacity to perform a specific act, should be based on evidence of a deficit in one or more of the person’s mental functions rather than on a diagnosis of a person’s mental or physical disorder. 69
Probate Code sections 811 and 812 set forth the factors a contestant must prove to overcome the presumption of capacity. The respondent can argue that the contestant has not alleged sufficient ultimate facts under Probate Code sections 811 and 812 to overcome the presumption and establish lack of capacity. Arguably, a failure to allege sufficient facts of incapacity might result in a lack of standing and the demurrer being sustained.70
If a demurrer is not filed or is unsuccessful, the respondent might still defend the contest based upon lack of standing, which is not waived at any stage of the proceeding. Because elements for standing "are not mere pleading requirements but rather an indispensable part of the plaintiff’s case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation. . . ."71 These stages include pleadings, summary judgement motions, trial, and appeal.
The respondent can also attempt to persuade the court that because standing is a prerequisite to a right to relief, a trial of any other issue, other than incapacity, should be deferred until standing is established. The issue is whether a party without standing may try any issue before (or at the same time as) standing. A litigant’s standing to sue is a threshold issue to be resolved before the matter can be reached on the merits.72 In Blumhorst v. Jewish Family Services of Los Angeles, the court reasoned that "If we were to conclude that plaintiff did not have standing to maintain the action, not having been personally damaged by the defendants’ conduct, then there would be no need to address the merits of her cause. Equally wasteful of judicial resources would be a resolution on the merits without reaching the standing issue. . . ."73
Since a party who is alleged to be without legal capacity at the time the instrument was drafted is presumed to have capacity, and even if previously incapacitated can regain capacity, the test of standing is based upon the time of filing a contest, not the time of execution of the instrument. If there is an issue of regaining capacity, such as is common in the case of a stroke victim who regains capacity through rehabilitation, this issue arguably should be bifurcated from the issue of capacity at time of drafting. The reasoning is that upon regaining capacity the contestant loses standing to challenge the instrument since it is again revocable and the inheritance is a mere expectancy. If there is not an issue of regaining capacity, the same reasoning may apply to require bifurcation since the issue of capacity at time of filing is an essential element of the contestant’s claim.74
Finally, the respondent might wish to argue that, absent evidence of continuous incapacity from time of execution to time of filing, the presumption of capacity requires the contestant to prove capacity at the time of execution of the instrument and the time of filing.75 The respondent’s potential argument is a three step analysis: (1) the contestant must allege and prove incapacity at the time the instrument was executed, and (2) the contestant must allege and prove that this incapacity was continuous from time of execution until filing. Only when these two burdens are met should the burden shift to the respondent to prove a settlor regained capacity.76 Absent sufficient evidence of continued incapacity subsequent to the date of execution, the respondent need not prove a regaining of capacity.
6. Proving Incapacity in a Pre-Death Trust Contest
Proving a settlor’s incapacity in a pre-death trust contest is similar in many respects to establishing incapacity in a post-death contest.
Decisions are capacity-specific with different decisions requiring differing levels of capacity.77 Certain decisions, such as to marry or vote, require a lower level of capacity than the decision to convey property.78 Similarly, the decision to enter into a contract, or establish a complicated trust, requires a higher level of capacity than the decision to make a will.79In fact, the establishment of a conservatorship of the person and estate (a judicial determination of incapacity) while automatically terminating the conservatee’s right to enter into a contract or establish a trust, does not, without a specific court order, invalidate his or her ability to marry, vote, or execute a will.80 Thus, determining capacity, or incapacity, is not one-size-fits-all.
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Probate Code section 810 establishes a rebuttable presumption of capacity affecting the burden of proof.81 The presumption is that "all persons have the capacity to make decisions and to be responsible for their acts or decisions."82 The mere existence or diagnosis of a mental or physical disorder does not establish incapacity; a person suffering from a mental or physical disorder "may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions."83 Instead, to rebut the presumption of capacity, a litigant must establish that (1) the person suffered from a deficit in at least one of the following mental functions: alertness and attention,84 information processing,85 thought processes,86 or ability to regulate mood,87 and (2) there is a correlation between the deficit and the questioned act or decision.88 The litigant must also establish that the deficit, alone or in combination with others, "impairs the person’s ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question."89 The court is permitted to consider the frequency, severity, and duration of periods of impairment when determining whether a person is incapacitated; however, a mere diagnosis of a mental or physical disorder is insufficient to establish incapacity.90 A finding of incapacity is also appropriate if the litigant demonstrates that the person lacks the ability to communicate the decision verbally, or by other means, and to understand and appreciate: (1) the rights, duties, and responsibilities created by the decisions, (2) the probable consequences to the decision maker and, where appropriate, others affected by the decision, and (3) the significant risks, benefits, and reasonable alternatives involved in the decision.91
The capacity standards set forth in Probate Code sections 810 to 812 apply to a variety of acts, including making various kinds of decisions, transacting business, and entering into a contract.92 The capacity to execute a will, however, is governed by Probate Code section 6100.5, a lower standard than the capacity standards set forth in Probate Code sections 810 to 812. Under Probate Code section 6100.5, a person is not mentally competent to execute a will if, at the time of execution, the person (1) is unable to understand the nature of the testamentary act;93 understand and recollect the nature and situation of his or her property;94 or remember and understand the person’s relations to living descendants, spouse, parents, and those whose interests are affected by the will;95 or (2) suffers from a mental disorder with symptoms including delusions or hallucinations which cause the person to devise his or her property in a way the person otherwise would not have done.96 Thus, unless a person is suffering from delusions or hallucinations affecting her testamentary wishes, she has the capacity to make a will so long as she understands the nature and import of executing the will, knows the extent of her property, and remembers the natural objects of her bounty, notwithstanding the existence of a deficit in mental functioning.
Up until the seminal case of Andersen v. Hunt, some courts, and many practitioners, believed the capacity to establish or amend a trust ? a contractual arrangement ? was governed by the contractual capacity standards of Probate Code section 810 to 812, while the capacity to make or change a will was governed by the lower testamentary capacity standard set forth in Probate Code 6100.5. However, in Andersen v. Hunt, the Court of Appeal, Second Appellate District, rejected this bright line approach.97 Noting that capacity is not governed by a single standard ? even under Probate Code sections 810 to 812 ? but must instead be evaluated in connection with a particular act (the more complicated the decision or transaction, the greater the mental function required), the Andersen court determined that the level of capacity to execute a trust instrument was a function of the complexity of that instrument.98 If the trust instrument, in its content and complexity, closely resembles a will or codicil, then the capacity standard of Probate Code section 6100.5 applies; if, however, the trust instrument is of a more complex nature, then the general capacity standards of Probate Code sections 810 to 812 would govern.99 The Andersen court, however, did not provide any guidance as to what level of complexity must exist in a trust instrument to require the heightened capacity standards.
The contestant bears the burden of proof to overcome the presumption of capacity. The evidence standard applied by the court is the preponderance standard, "more likely than not".100
Practitioners litigating pre-death trust contests must be familiar with the capacity standards of Probate Code sections 810 to 812 and Probate Code section 6100.5, and how those standards are impacted by the decision in Andersen v. Hunt. A practitioner seeking to set aside a trust instrument due to lack of capacity may have a much more difficult task if the trust instrument was similar to a codicil and thus likely be governed by the lower testamentary standard of Probate Code section 6100.5. Similarly, the task may be easier if the trust document in question is a complicated amendment or a full restatement since, presumably, the heightened capacity standards will apply.
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Thus, one of the first tasks facing a practitioner considering a pre-death trust challenge is to evaluate the nature of the trust instrument to determine which capacity standard (contractual or testamentary) the court is likely to apply. This step can be especially challenging if the contestant-client has seen a copy of the instrument or has knowledge of it but does not have a copy in his or her possession. Because pre-death trust contests are subject to the same application of the no-contest clause that would apply to post-death contests, challenging a trust instrument without having the actual document in hand is risky. And, unlike post-death contests, the contestant is not automatically entitled to a copy of the trust instrument, as he or she would be if the settler had died.101
7. Gathering Evidence for the Pre-Death Challenge
Practitioners must be aware that there are significant differences depending upon whether the practitioner is representing an elder whose trust is being challenged or a beneficiary seeking to overturn the instrument.
Until now, this article has identified only the negative impact of Drake. However, there is a potential positive impact as well, at least from the contestant’s perspective. Previously, contestants alleging incapacity were likely required to offer expert testimony at best based on the expert’s review of the settlor’s medical records. Rarely would the now-deceased settlor have been the subject of a thorough cognitive assessment, except perhaps by a physician selected by the attorney who drafted the trust modification in question.
By contrast, under Drake, the settlor can still be living while the contest proceeds. This means the Drake contestant’s main goal should be obtaining a proper cognitive assessment of the elder. Ideally, the contestant should seek a court order setting a full battery of cognitive testing to be performed by a qualified neuropsychologist.102 The mental health professional who will be testifying for the contestant’s side also needs to understand the import of Anderson v. Hunt.103, Many attorneys seek to have the expert opine not only about the elder’s capacity but also about the elder’s ability to comprehend the specific instrument being contested.
Thus, although one might consider Drake to have established a new field of play with several negative consequences, it also can be seen as having created a scenario where a cognitive assessment might be obtained during the elder’s lifetime. If the settlor lacks capacity, it is much easier to prove when the expert is able to rely upon a thorough cognitive assessment.
To obtain a mental examination of the settlor, a court order is required.104 A court is authorized to order a mental examination of a party when (1) the mental condition of that party is in controversy and (2) the moving party shows "good cause" for the examination.105 In assessing whether the mental condition of a party is in controversy and good cause has been shown, the discovery rules are to be liberally construed in favor of disclosure.106 Generally, the concept of good cause calls for a factual exposition of a reasonable ground for the order sought.107 The moving party must demonstrate that the discovery sought will aid his case.108
A showing of good cause for a mental examination requires that the moving party produce specific facts justifying discovery and the inquiry be relevant to the subject matter of the action or reasonably calculated to lead to the discovery of admissible evidence.109 The constitutional right to privacy is not absolute.110 The court must balance the right of privacy against the need for the discovery.111
Although these rules would seem to allow for a proper cognitive assessment in virtually any Drake contest, it is the experience of the authors that courts are generally extremely protective of elders in such matters and that meaningful evidence suggesting incapacity will sometimes be required to give the court sufficient comfort to order the requested examination. This may create something of a Catch-22 where a Drake contestant is forced to present evidence of incapacity to obtain the cognitive assessment required to prove incapacity.
If the court is reluctant to order an examination of the elder by a party’s expert, the practitioner may want to move for an examination under Evidence Code section 730. Under Evidence Code section 730, the court may appoint an expert to investigate, to render a report to the court, and to testify at trial. Because the expert appointed on an Evidence Code section 730 motion renders his or her report to the court, the expert is not affiliated with either party. The neutrality of the Evidence Code 730 expert may alleviate the court’s concerns regarding the elder’s privacy rights.
A practitioner representing a respondent-settlor should evaluate asserting as a defense the settlor’s right to privacy and the fact that the settlor has not placed his or her mental status in controversy. In addition, the practitioner should consider obtaining a cognitive assessment of settlor. If the settlor presents without any significant deficits in cognitive function, a thorough cognitive evaluation of the settlor by a qualified neuropsychologist can be used to combat allegations of incapacity. The capacity assessment closest in time to the date the challenged document was executed is usually more persuasive than an assessment obtained at a more remote time.
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Practitioners should be aware that the argument that no cognitive examination should be permitted because the settlor did not place his mental status in controversy is not available if the settlor is also asserting that he has regained capacity, such as following a stroke or other medical event. A regained-capacity defense will inevitably put the issue of capacity in controversy. The contestant must first establish that capacity is an issue in controversy. If regaining capacity has not been asserted by the respondent, the contestant may have more difficulty establishing the "in controversy" requirement to obtain an examination. Claiming the client regained capacity leaves no doubt that capacity is an issue in controversy and will result in opening the door to the other side obtaining an examination and medical records.
The cognitive assessment of the living settlor may be the most important piece of evidence in a pre-death trust contest, depending upon how recently the trust instrument was executed. The more time that has elapsed between execution of the instrument and the time the assessment is conducted, the less evidentiary weight the court may give to the assessment. Thus, in addition to the cognitive assessment, the evidence normally sought in post-death contests will be equally relevant to a Drake contest, including medical records and observations of friends and witnesses, etc. What substantially distinguishes a Drake contest from a post-death contest is the ability in a Drake proceeding to depose the settlor and the potential of obtaining a thorough cognitive assessment.
The practitioner must also be aware of a significant limitation in pre-death challenges not present with a post-death contest: the loss of the Evidence Code exceptions to the attorney-client privilege. If the trust instrument in question was prepared by an attorney, the best source of evidence as to the settlor’s reasons in executing that instrument may be the drafting attorney. In a post-death challenge, obtaining the attorney’s file and/or deposing the attorney is not difficult as the attorney-client privilege does not apply as to communications "relevant to an issue between parties all of whom claim through a deceased client, regardless of whether the claims are by testate or intestate succession, nonprobate transfer, or inter vivos transfer."112 Moreover, the attorney-client privilege does not apply to communications "relevant to an issue concerning the intention of a client, now deceased, with respect to a deed of conveyance, will, or other writing, executed by the client, purporting to affect an interest in property"113 nor does it apply "as to a communication relevant to an issue concerning the validity of a deed of conveyance, will, or other writing, executed by a client, now deceased, purporting to affect an interest in property."114 These Evidence Code exceptions to the attorney-client privilege are powerful tools but none of them can be invoked in a pre-death contest as all expressly refer to a decedent. The lack of exception to the attorney-client privilege prevents the deposition of the estate planning attorney unless the elder waives the privilege.
8. Settlement Issues
As with any trust contest, there is a good possibility that the matter will settle short of trial. However, there are unique considerations with settling a pre-death trust contest. First, unless the settlor is under conservatorship, it may be questionable as to whether he or she has the capacity to sign the settlement agreement, leaving the door open for a possible later invalidation of the settlement. The practitioner should consider requesting the court appoint a guardian ad litem to sign the settlement agreement on the settlor’s behalf to ensure that it cannot be later set aside on the grounds of the settlor’s incapacity. A practical alternative may be to have the settlement approved by the court.
Second, it may be difficult to prevent the elder from undermining the settlement agreement once it is signed. For example, if the settlement agreement calls for the suspect trust document to be modified to distribute in a certain manner after the settlor’s death, provisions must be included to prevent the settlor from then executing a subsequent trust agreement or other document that then changes the agreed upon plan. This can be avoided by drafting the agreement to prevent the settlor from revoking the modified trust, but care must be taken to avoid inadvertently establishing an irrevocable trust with attendant tax implications. For example, the settlement agreement could call for the appointment of a trust protector and provide that any amendment must be made jointly by the settlor and the trust protector.
Even if the settlement agreement precludes the settlor from the ability to amend or revoke the trust as modified by the settlement agreement, the settlor may still be able to circumvent its provisions by transferring assets during his or her lifetime. This is of particular concern where the settlor executed the suspect trust instrument because of undue influence; if the undue influencer still plays a role in the settlor’s life, the settlor could be coerced into giving gifts of property to the influencer post-settlement in order to circumvent the settlement terms. To avoid this, the practitioner may want to include terms in the settlement transferring control of the assets to a different trustee, perhaps a private fiduciary. This can be a tricky situation, especially where the settlor lacks insight into his or her mental deficits and views the trust contest as an unwarranted attack. The loss of further control, such as the ability to control one’s own finances, can cause the settlor to resist turning over control of his or her assets to a third party, which may impede settlement.
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The practitioner will also want to consider, and make provision in the settlement agreement for, the possibility of the challenger predeceasing the elder. Most often, settlements of pre-death contests do not involve an immediate payout to the challenger but a change in the post-death distribution plan contained in the suspect document. Because there is no guarantee that the challenger will survive the settlor, the settlement agreement needs to direct what will happen to the challenger’s share of the trust in the event the challenger predeceases the settlor.
IV. CONCLUSION
The Drake case has turned the conventional wisdom regarding trust contests on its head. Instead of a bright-line test permitting trust contests only after a settlor’s death, practitioners now inhabit a world in which a trust contest may, under certain circumstances, be brought during the settlor’s lifetime and which may be barred if not so brought. To navigate this new world, practitioners’ best strategy is to familiarize themselves with the perils and pitfalls of pre-death trust contests and to learn the strategies needed to successfully traverse this new landscape.
* Kibre & Horwitz LLP, Beverly Hills, California
** Knitter & Knitter, LLP, Vacaville, California
*** Weintraub Tobin Chediak Coleman Grodin Law Corporation, Sacramento, California
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Notes:
1. Drake v. Pinkham (2013) 217 Cal.App.4th 400.
2. Prob. Code, section 15800, subd. (a).
3. Prob. Code, section 15800, subd. (b).
4. Prob. Code, section 16069, subd. (a).
5. Prob. Code, section 16061.7, subd. (a)(1), emphasis added.
6. Estate of Giraldin (2012) 55 Cal.4th 1058, 1065-1066.
7. Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1319.
8. Johnson v. Kotyck (1999) 76 Cal.App.4th 83, 87-88.
9. Id. at p. 88.
10. Prob. Code, section 15800.
11. Estate of Giraldin, supra, 55 Cal.4th at p. 1067, quoting California Law Revision Commission report Recommendation Proposing the Trust Law (Dec. 1985) 18 Cal. Law Revision Com. Rep. (1986) pp. 584-585, emphasis added.
12. Note, though, that the trust instrument in the Giraldin case expressly reserved to the settlor the right to amend or revoke the trust. (Estate of Giraldin, supra, 55 Cal.4th at p. 1063.) The absence of such provision might dictate a different result. In Johnson v. Kotyck, the settlor of a revocable trust had become incapacitated and had been placed under conservatorship. (Johnson v. Kotyck, supra, 75 Cal. App.4th at pp. 85-86.) A beneficiary of the trust petitioned for an accounting of the trust on the basis that, pursuant to Probate Code section 15800, the settlor’s incapacity had triggered the shifting of rights from the incapacitated settlor to the beneficiary. (Id. at pp. 87-88.) The court denied the request, noting that, under Probate Code section 15800, the person holding the power to revoke holds the rights afforded beneficiaries so long as the trust is revocable and "the person holding the power to revoke the trust is competent." (Ibid.) The court reasoned that, because the trust instrument in question did not reserve the right to revoke solely to the settlor, the conservator could seek to revoke the trust by petitioning the court under Probate Code section 2580. (Ibid.) Therefore, the conservator (in conjunction with the court), and not the settlor, was the person holding the power to revoke ? and since the person holding the power to revoke was competent, no rights had shifted to the beneficiary. (Ibid.) This case illustrates the need for practitioners to carefully evaluate who holds the power to revoke in the event of an incapacitated settlor, and the limitations on the powers of revocation in a given trust instrument, before assuming that rights have shifted to their clients under Probate Code section 15800.
13. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 403.
14. Ibid.
15. Ibid.
16. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 403.
17. Id. at pp. 403-404.
18. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 404.
19. Ibid.
20. Ibid.
21. Ibid.
22. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 404.
23. Ibid.
24. Id. at pp. 404-405.
25. Id. at p. 405.
26. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 405.
27. Ibid, emphasis added.
28. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 406-407.
29. Id. at p. 407.
30. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 407-408.
31. Id. at p. 408.
32. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 407-408.
33. Id. at p. 407.
34. Id. at p. 408, emphasis in original.
35. Ibid., emphasis in original.
36. Id. at pp. 408-409.
37. Ibid. The appellate court further noted that the language in section 15800 concerning the incompetence of the settlor would be "wholly superfluous" if the beneficiary could not challenge competency until the death of the settlor.
38. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 408-409.
39. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 408-409. Laches requires "unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay." (Id. at p. 406.) Delay is measured from the time the plaintiff knew, or should have known, of the alleged claim. (Ibid.) For a defense of laches to apply, the defendant must affirmatively demonstrate that the delay resulted in prejudice to him or her. (Ibid.)
40. Id. at p. 407.
41. Id. at p. 409.
42. Black’s Law Dict. (10th ed. 2014) p. 1625, col. 1.
43. Drake v. Pinkham, supra, 217 Cal.App.4th 400.
44. Id at p. 409.
45. Ibid.
46. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 409.
47. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 408-409.
48. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 404-405.
49. Id. at p. 409.
50. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 407, 409.
51. Drake v. Pinkham, supra, 217 Cal.App.4th at pp. 407, 409.
52. Prob. Code, section 86; Welf. & Inst. Code, section 15610.70, subd. (a)(1).
53. Evid. Code, sections 957, 960, 961.
54. Code Civ. Proc., section 2032.310.
55. Prob. Code, sections 810-812; Prob. Code 6100.5; Andersen v. Hunt (2011) 196 Cal.App.4th 722.
56. http://www.canhr.org/factsheets/abuse_fs/html/abuse_FinanceSchemes.htm [as of July 31, 2017].
57. Drake v. Pinkham, supra, 217 Cal.App.4th at p. 406.
58. Johnson v. Kotcyk, supra, 76 Cal.App.4th at p. 88.
59. Anderson v. Hunt, supra, 196 Cal.App.4th 722.
60. Prob. Code, section 2580 et seq.
61. Prob. Code, section 2583(k).
62. Prob. Code, section 1801, subd. (e).
63. Johnson v. Kotcyk, supra, 76 Cal.App.4th at p. 88.
64. Prob. Code, section 15800, subd. (a).
65. Although, under Drake, incapacity must be alleged for a pre-death trust contest, that does not prevent a contestant challenging a trust instrument solely on other grounds ? so long as they proceed by first establishing a conservatorship over the settlor. A conservator of the estate may be appointed for a person who is substantially unable to manage his or her own financial resources or resist fraud or undue influence. (Prob. Code, Section 1801, subd. (b).) It should be noted that the standard of proof for appointment of a conservator is clear and convincing evidence. (Prob. Code, section 1801, subd. (e).) Once a conservatorship was established, the conservator would have standing, under Probate Code section 2580, to petition to invalidate the questionable trust instrument. Arguably, the failure of the contestant to seek conservatorship and initiate a Probate Code section 2580 petition could subject him or her to the defense of laches. Thus, from the respondent’s perspective, the fundamental policy of laches arguably requires an attempt by the contestant to petition to establish a conservatorship to obtain standing to pursue a contest due to fraud or undue influence or that claim is barred. The fact that standing in the form of a establishing a conservatorship of the estate needs to be pursued should not prevent the application of laches and is consistent with the Drake holding. The Drake court stated in this regard "Gina therefore had "the usual rights of trust beneficiaries" if, as she alleges, Josephine was incompetent. (Drake v. Pinkham, supra, 217 Cal.App.4th at p. 409.) Thus, nothing in sections 17200 or 15800 precluded Gina from bringing the underlying action prior to Josephine’s death. That she would have had the burden of proving Josephine’s incompetence to establish her standing to pursue those claims does not excuse her delay. (Ibid.) Laches therefore can be argued by the respondent to bar claims not only based upon lack of capacity, but fraud and undue influence, when such claims are brought post-death.
66. Code Civ. Proc., section 367.
67. Prob. Code, sections 48; Prob. Code, section 15800; In re Estate of Giraldin (2012) 55 Cal.4th 1058, 1068.
68. Code Civ. Proc., section 430.10; County of Fresno v. Shelton (1998) 66 Cal.App.4th 996,1009.
69. Prob. Code, section 810.
70. The respondent may also consider arguing that, based upon public policy analogous to fraud claims, specific facts of incapacity must be pled rather than mere general allegations. Fraud must be plead with specificity and with more detail than other causes of action. (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App. 4th 226, 240.) This heightened pleading requirement for fraud allegations "serves not only to give notice to defendants of the specific fraudulent conduct against which they must defend, but also ‘to deter the filing of complaints as a pretext for the discovery of unknown wrongs, to protect [defendants] from the harm that comes from being subject to fraud charges, and to prohibit plaintiffs from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis." (State ex rel. McConn v. Bank of America, N.A. (2011) 191 Cal. App.4th 897, 909.) The respondent could argue that the stigma of a claim of incapacity and the use of such a claim as a pretext for discovery of facts to increase a party’s inheritance are similar to the concerns addressed by the requirement of pleading fraud allegations with specific facts. The respondent might also argue that the public policy of specific fraud pleading to weed out meritless claims (West v. JP Morgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793) should also be applicable in the pre-death capacity context. To withstand a demurrer, the contestant arguably should be required to state with specificity the facts supporting a conclusion that the standard of incapacity, under Probate Code sections 811 and 812, has been satisfied. Failure to do so might subject the claim to demurrer and possible dismissal. While there is no established legal precedent for this argument in the pre-death trust contest arena at this time, given the ongoing evolution of the law in this area and the public policy arguments in favor of protecting living elders from oppressive, onerous, and intrusive litigation over their estate plan, it is an argument that may find traction with a court under the right circumstances.
71. Lujan v. Defenders of Wildlife (1992) 504 U.S. 555, 561.
72. Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal. App.4th 993, 1000.
73. Ibid.
74. Lujan v. Defenders of Wildlife, supra, 504 U.S. at p. 561.
75. See Estate of Warner (1959) 166 Cal.App.2nd 677, 684. Although Warner involves a will, not a pre-death trust contest, and thus may likely be distinguishable for that and other reasons, it is helpful for the proposition that capacity must be assessed at the time of the questioned incident and cannot be assumed simply because the individual was incapacitated before and/or after that date.
76. Estate of Fosselman (1957) 48 Cal.2d 179, 186.
77. See Prob. Code, sections 810-812 (capacity to make decisions); Prob. Code, section 813 (capacity to give informed consent to proposed medical treatment); Prob. Code, section 6100.5 (capacity to make a will).
78. A person placed under conservatorship retains the right to marry and to vote, unless such rights are abrogated by specific court order. (Prob. Code, sections 1900-1901, 1910.) The conservatee, however, does not retain the legal capacity to enter into any transaction that binds the conservatorship estate. (Prob. Code, section 1872.)
79. Prob. Code, section 810-812; see also Andersen v. Hunt , supra, 196 Cal.App.4th at p. 742 (holding that the capacity to make a complex trust document requires a higher level of capacity than to make a will or trust amendment analogous to a will).
80. Prob. Code, section 1872 (conservatee lacks legal capacity to bind conservatorship estate). Prob. Code, section 1900 (conservatee retains capacity to marry); section 1901 (court may determine by order whether a conservatee has capacity to enter into a valid marriage. See also Prob. Code, section 1871 (conservatee retains the right to make a will); Prob. Code, section 1910 (absent specific court order, conservatee retains the right to vote).
81. Prob. Code, section 810, subd. (a).
82. Prob. Code, section 810, subd. (a).
83. Prob. Code, section 810, subd. (b).
84. Prob. Code, section 811, subd. (a)(1). Mental functions relating to alertness and attention include, but are not limited to, the person’s level of arousal or consciousness; their orientation to time, place, person, and situation, and their ability to attend and concentrate.
85. Prob. Code, section 811, subd. (a)(2). Mental functions relating to information processing include, but are not limited to, short- and long-term memory, including immediate recall; the ability to understand or communicate with others, either verbally or otherwise; recognition of familiar objects and familiar persons; the ability to understand and appreciate quantities; the ability to reason using abstract concepts; the ability to plan, organize, and carry out actions in one’s own rational self-interest; and the ability to reason logically.
86. Prob. Code, section 811, subd. (a)(3). Deficits in mental functions relating to thought processes include, but are not limited to, severely disorganized thinking; hallucinations; delusions, and uncontrollable, repetitive, or intrusive thoughts.
87. Prob. Code, section 811, subd. (a)(4). Deficits in mental functions relating to the ability to modulate mood and effect "may be demonstrated by the presence of a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference, that is inappropriate in degree to the individual’s circumstances.
88. Prob. Code, section 811, subd. (a).
89. Prob. Code, section 811, subd. (b).
90. Prob. Code, section 811, subds.(c)-(d).
91. Prob. Code, section 812.
92. Andersen v. Hunt, supra, 196 Cal.App.4th at p. 728.
93. Prob. Code, section 6100.5, subd. (a)(1).
94. Prob. Code, section 6100.5, subd. (a)(1).
95. Prob. Code, section 6100.5, subd. (a)(1).
96. Prob. Code, section 6100.5, subd. (a)(2).
97. Andersen v. Hunt, supra, 196 Cal.App.4th 722.
98. Id. at pp. 730-731.
99. Ibid.
100. Estate of Fritschi (1963) 60 Cal.2d 367, 372; American Trust Co. V. Dixon (1938) 26 Cal.App.2nd 426,431. Although the current common law is to the contrary, the respondent might argue that the higher clear and convincing standard should apply in trust contests. The policy reasons that may apply include the fact that to deprive the right of a person to make donative transfers in a limited conservatorship proceeding, the presumption may be overcome only by clear and convincing evidence. (Prob. Code, section 1801, subd. (e).) The argument is that the same evidentiary standard should apply in proceedings affecting the same right of a person similarly situated to create, amend, or revoke the terms of the trust.
101. Under Probate Code section 16061.7, a beneficiary or heir is entitled to a copy of the trust terms upon the death of the settlor.
102. Code Civ. Proc., section 2032.310.
103. Andersen v. Hunt, supra, 196 Cal.App.4th 722.
104. Code Civ. Proc., section 2032.310.
105. Code Civ. Proc., section 2032.310.
106. Harabedian v. Superior Court (Seyfert) (1961) 195 Cal.App.2d 26, 31.
107. Goodman v. Citizens Life & Cas. Ins. Co. (1967) 253 Cal.App.2d 807, 819.
108. Associated Brewers Distr. Co. v. Superior Court (Jos. Schiltz Brewing Co.) (1967) 65 Cal.2d 583, 587.
109. Vinson v. Superior Court (Peralta Community College) (1987) 43 Cal.3d 833, 840.
110. John B. v. Superior Court (Bridget B.) (2006) 38 Cal.4th 1177, 1198-1199.
111. Board of Trustees v. Superior Court (Dong) (1981) 119 Cal.App.3d 516, 525.
112. Evid. Code, section 957.
113. Evid. Code, section 960.
114. Evid. Code, section 961.