Trusts and Estates

Ca. Trs. & Estates Quarterly 2014, Volume 20, Issue 4

LITIGATION ALERT

By Mary Gillick, Esq.*

I. CURRENT LAW APPLIED TO NO CONTEST CLAUSE CONTAINED IN A TRUST THAT BECAME IRREVOCABLE PRIOR TO AMENDMENT OF THE NO CONTEST LAW; BENEFICIARIES’ CLAIMS DID NOT CONSTITUTE A CONTEST UNDER THE NEW LAW

In Donkin v. Donkin (2013) 58 Cal.4th 412, the California Supreme Court held that the current no contest law applied to a safe harbor petition filed before the law was changed on January 1, 2010, and the beneficiaries’ claims did not constitute a contest under the new law.

Two trustors executed a revocable trust that distributed their assets to their children following their deaths. The trust contained a no contest clause that disinherited any beneficiary who contested the trust. The trustors died in 2002 and 2005. Two of the beneficiaries filed an application under the safe harbor provisions then in effect under Probate Code, section 21320, to determine if their petition concerning the interpretation of the trust and claims for breach of fiduciary duties by the trustees, violated the no contest clause. The petition concerned an amendment made by the surviving trustor that was unclear regarding its applicability to trusts that became irrevocable when the first trustor died. On January 1, 2010, while the safe harbor application was pending, the Probate Code was amended to remove the safe harbor provisions, and changed the requirements for the enforceability of no contest clauses. The trial court held that the beneficiaries’ challenge would not constitute a contest that violated the no contest clause. The trial court did not make a specific finding of whether the former or the current no contest law applied. The trustees appealed.

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