Trusts and Estates

Key v. Tyler

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Cite as B322246
Filed May 28, 2024
Second District, Div. Two

By Erika J. Gasaway
Hopkins & Carley
www.hopkinscarley.com/

Headnote:  Trusts – Enforcement of No Contest Clauses

Summary:  A direct contest of an original trust instrument resulted in forfeiture under an amendment that did not contain a no contest clause because the assets the challenger sought to inherit pursuant to the amendment were given under the original trust instrument.

Settlors executed a trust in 1999 (the “Original Trust”) that called for creation of a typical Survivor’s Trust, Marital Trust, and Exemption Trust upon the death of the first spouse.  It also created a Residual Trust to receive the assets of those three subtrusts upon the death of the surviving spouse.  Settlors executed an amendment in 2003 (the “2003 Amendment”) that called for the Residual Trust to be distributed equally among their three daughters.  The surviving spouse purportedly executed an amendment in 2007 (the “2007 Amendment”) that changed how the Survivor’s Trust assets would flow to the Residual Trust and reduced Key’s gift.  Key successfully invalidated the 2007 Amendment on grounds that Tyler unduly influenced their mother.  (Key v. Tyler (June 27, 2016, B258055, mod. June 29, 2016) [nonpub. opn.].)  Tyler’s defense of the 2007 Amendment constituted a “direct contest” of the Original Trust.  (Key v. Tyler (2019) 34 Cal.App.5th 505.)  Tyler argued that, notwithstanding that ruling, she was entitled to inherit one-third of the Residual Trust as set forth in the 2003 Amendment because the 2003 Amendment was a separate, unprotected instrument that did not contain a “no contest” clause.  The Probate Court agreed with Tyler, and Key appealed.

The appellate court reversed.  Tyler’s direct contest of the Original Trust was sufficient to support a forfeiture even if the 2003 Amendment was a separate, unprotected instrument.  The assets in the Residual Trust that Tyler sought to inherit were “given under” the Original Trust.  The no contest clause required the challenger to forfeit all interests under “this Trust” and “any other trust,” including the Residual Trust.  Therefore, the absence of an express reference to amendments in the no contest clause did not limit the forfeiture and the absence of a no contest clause in the 2003 Amendment was not controlling.  The case was remanded to determine whether Tyler had probable cause for her direct contest.

https://www.courts.ca.gov/opinions/documents/B322246.PDF


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