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Last week the California Supreme Court issued a unanimous opinion in Barefoot v. Jennings (2020) 8 Cal.5th 822, ruling that a trust beneficiary disinherited in an amendment may contest the amendment’s validity in the probate department of the Superior Court under California Probate Code section 17200.

The Court of Appeal had narrowly construed section 17200 to limit contests in the probate department to current trustees and beneficiaries. 

How did this dispute reach the Supreme Court?

Joan Mauri Barefoot was a beneficiary and successor trustee in her mother’s revocable trust until its 16th amendment.  Her mother then executed eight amendments before passing away, disinheriting Joan under all of them.

A trial judge in Tuolumne County ruled that Joan could not contest the eight amendments under mental incapacity, undue influence and fraud theories because she was no longer a beneficiary.  The Court of Appeal agreed, issuing a published opinion that upended conventional wisdom as to standing to contest trust amendments.  As attorney Howard Kipnis observed in California Trusts and Estates Quarterly, the Barefoot holding “sent shockwaves throughout the probate and trust bar.”

In response to the outcry, the Supreme Court granted review in December 2018.

What happened in the Supreme Court?

The Executive Committee of the Trust & Estates Section of the newly-created California Lawyers Association (TEXCOM) submitted an amicus curiae brief, seeking a reversal of the appellate court ruling.  This was CLA’s first case in an amicus role.

At oral argument in Sacramento on November 6, 2019, the justices of the Supreme Court showed great interest in the breadth of a probate court’s authority to hear trust-related disputes.  Attorney Herb Stroh presented argument on behalf of CLA.  A video of oral argument can be accessed here.

In the opinion issued on January 23, 2020, the Supreme Court framed the question as follows: “If amendments to a revocable trust made shortly before the settlor dies disinherit a beneficiary, does that individual, as one who is not named in the trust’s final iteration, have standing to challenge the validity of the disinheriting amendments in probate court on grounds such as incompetence, undue influence, or fraud?”

The court answered this question affirmatively, relying in part on the definition of “beneficiary” in Probate Code section 24.  The court explained: “Reading the Probate Code section [17200] consistent with the statutory scheme as a whole, and examining the statutory language to give it commonsense meaning, we conclude that claims that trust provisions or amendments are the product of incompetence, undue influence, or fraud, as is alleged here, should be decided by the probate court, if the invalidity of those provisions or amendments would render the challenger a beneficiary of the trust.”

From a procedural perspective, the Supreme Court confirmed that when a contestant’s standing is challenged in a demurrer, the court “may not simply assume the allegations supporting standing lack merit and dismiss the complaint.  Instead, the court must first determine standing by treating the properly pled allegations as true.”  Thus, if a petition alleges facts to support a contest, and the contestant shows that he or she will take under the trust if successful, the court likely will decide the standing issue as part of a trial on the merits rather than dismissing the petition at an early stage.  (In its amicus brief, TEXCOM had urged the Supreme Court to require an evidentiary hearing as to whether contestant Barefoot had standing to pursue her claim, but the Supreme Court did not mandate such a hearing.)

There are observations in the opinion regarding a court’s supervisory authority over trusts that may be referenced in trust litigation contexts other than the narrow standing issue raised in the case.  For example, the Supreme Court acknowledged “the public interest in preventing the administration of trust property that is procured through fraud or undue influence.”

In footnote 2, the court left for another day the question of “whether an heir who was never a trust beneficiary has standing under the Probate Code to challenge that trust.”