California trust disputes often involve the interests of parents and their minor children. Sometimes those interests conflict. When disputes are settled, who looks out for the interests of children under 18 years of age? Who checks that no child is left behind?
Probate judges, as explained in a prior post, may appoint a guardian ad litem to advocate for the interests of a minor. A recent decision from the California Court of Appeal, in Chui v. Chui (2022) 75 Cal.App.5th 873, sheds light on how the beneficial interests of children may be compromised under court supervision even when the parent objects.
Chui Family Members Litigate Over Trust Assets
King Chui and May Chui, a married couple, accumulated wealth in residential apartment complexes and other assets. They had three children: Robert, Margaret and Esther.
King and May created a revocable trust to hold their assets. May died in 2004 and her portion of the assets was allocated to irrevocable subtrusts. King’s share of the assets was allocated to a revocable subtrust, which he amended several times to favor Robert and his wife Christine.
King’s cognitive abilities declined and in 2011 he resigned as trustee. Robert and Margaret became successor co-trustees.
Litigation over the trust erupted in 2012 when Esther filed a petition in Los Angeles County Superior Court alleging that Robert and Margaret improperly delegated their co-trustee duties to Christine Chui, Robert’s wife.
Esther requested the appointment of guardian ad litem (“GAL”) for Christine’s minor children: Jacqueline (age 10) and Michael (age 8). The court, over Christine’s objection, appointed lawyer Jackson Chen to serve as GAL.
Robert (a physician) died in 2013, followed by King (at age 91) in 2014. Litigation amongst the Chui family members raged on for years. Esther, for example, alleged that King had suffered from dementia since 2004 and claimed that Christine and Robert improperly had taken trust assets worth $10 million.
In 2018, as trial was set to begin, the parties informed the court of a settlement agreement. Christine’s counsel recited the settlement terms on the record.
Within two months, however, Christine sought to set aside the settlement, claiming that “she was under the influence of codeine, as well as ill and sleep-deprived.” She contended that the agreement was “unconscionable.” The judge enforced the agreement against Christine.
While GAL Chen did not join in the initial settlement agreement, he eventually consented to adjusted terms that the judge approved.
Court of Appeal Confirms Validity of Agreements
The appellate opinion spans 74 pages, but the court deemed only a few parts worthy of publication and thus precedential value.
Most significantly, the Court of Appeal addressed the role of the probate judge versus that of a guardian ad litem in reviewing settlement agreements.
Jacqueline claimed that GAL Chen could not enter into a settlement agreement on Jacqueline’s behalf because Chen’s appointment as GAL occurred in only one of the several pending cases related to the Trust.
The appellate court rejected that argument. The appointment of a GAL under Probate Code section 1003 is discretionary. When a GAL is not appointed, the probate judge serves as the “guardian of the minor.” Hence the judge had a duty to consider and protect the rights of Christine’s children and could do so without naming any GAL. Jacqueline was not left without representation given the judge’s oversight role.
Christine asserted that she could repudiate the agreement that the GAL entered into on behalf of her children given her roles in the various cases, including her appointment as guardian of her children’s estates. The probate judge found that Christine’s objection was inconsistent with the interests of her children and the appellate court agreed.
The Court of Appeal assumed that Christine’s objection on behalf of her children was entitled to some deference, but Chen’s support warranted greater deference given the more pertinent scope of his appointment. Moreover, Christine had a conflict of interest in purporting to advocate for her children because repudiation of the agreements would favor her over her children as to trust assets. Ultimately, the probate judge could reject the Christine’s position if adverse to the best interests of the children.
The children also contended they could disaffirm the agreements based on Family Code section 6710, which provides that a “contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards.”
In rejecting this argument, the appellate court relied in part on Code of Civil Procedure section 372, which allows a guardian ad litem in civil cases to compromise a dispute with a judge’s approval. The court’s reliance on section 372 raises an eyebrow because Probate Code section 1003 governs the appointment of GALs in probate proceedings. In any event, the appellate court observed that, in the context at hand, the policy favoring settlement of litigation overrides the policy of discouraging adults from taking economic advantage of minors.
Lastly, the Court of Appeal addressed the scope of Probate Code section 259, which Christine attempted to rely upon in seeking to undo the agreements.
Section 259(a) provides that, under certain circumstances, a person who is liable for financial abuse of a decedent, will be deemed to have predeceased the decedent “to the extent provided in subdivision (c).” Subdivision (c) in turn states that a person who is liable under subdivision (a) shall not “receive any property, damages, or costs that are awarded to the decedent’s estate in an action described in subdivision (a).”
Hence, section 259 does not necessarily eliminate an abuser’s entitlement to a share of an estate. Instead, it restricts the value of the estate to which the abuser’s percentage share is applied and thus prevents that person from benefiting from his or her own wrongful conduct.
The Chui case confirms that a California probate judge may, but need not, appoint a guardian ad litem to consider whether a settlement agreement is appropriate as to minor children.
At the same time, given the press of business in the probate courts, judges generally are inclined to appoint a guardian ad litem who can take the time necessary to review whether a settlement agreement in a complex dispute adequately serves the economic interests of affected children.