Stranger in a Strange Land: Entering Trust and Estate Litigation

May 12, 2010

San Francisco and Los Angeles Daily Journals

A client you defended a few years ago in a construction defect action comes to you with a new matter. He’s the successor trustee of Aunt Tillie’s trust and needs your help.

Tillie, who lived in Eureka and died without children last month, left half of her trust estate to the client and the other half to her favorite charity. This client is concerned because his brother is already complaining about not being a beneficiary. Also, a neighbor has demanded the valuable painting in Tillie’s living room, explaining that she loaned it to Tillie 20 years ago.

You have not previously handled such a situation, but you’d like to work with this client again and the issues seem easy enough. The trust instrument allows the client to retain counsel and pursue litigation, and the oracle (your civil litigation practice guide) explains that a trust is not a legal entity, but a trustee has standing to sue.

So you bang out a complaint for declaratory relief against the brother and neighbor to resolve their claims. Your client lives in Sacramento, but you plan to file in Humboldt County because the neighbor lives there. Humboldt is only a CourtCall away, and it is distant from your client’s brother, who lives in Bakersfield.

Stop, look, listen! Before you go forward, realize that trust and estate disputes are governed by a unique set of substantive and procedural rules. Civil litigators unfamiliar with this terrain may go astray before realizing they are lost.

Trust and estate disputes are typically resolved in the probate department of the Superior Court and attorneys who frequent that department have a leg up. The quirks of trust and estate litigation often come as a surprise to newcomers.

When court action is needed, which is not always the case in the trust context, the proponent typically files a verified petition (not a complaint) for relief. Litigators who ordinarily file unverified complaints often overlook the verification requirement.

Counsel must determine who is entitled to notice of the petition, which is not always as obvious as in a civil case, and what form of service (personal or mail) is required.

Unlike civil complaints, which are filed long before any trial date is set, probate petitions are noticed at the outset for hearing on a particular date, usually at least 30 days after service of the petition. Typically, the clerk assigns a hearing date when a petition is filed and given a case number, and the petition can then be served on the interested parties with a notice of hearing, using Judicial Council Form DE-120.

The large majority of probate petitions are uncontested. If prepared and presented properly, as first determined by a court staff attorney who acts as a probate examiner, petitions are approved at the initial hearing date. Most courts issue probate notes, available online, which allow the court staff to flag any deficiencies before the hearing date. Counsel may be able to “clear” the probate notes, and avoid a continuance, by promptly filing documents to correct the specified deficiency. The local rules and court’s Web site generally explain the probate notes procedure.

Probate courts also may issue tentative rulings and the procedure for such rulings should be checked and calendared in advance of the hearing date.

In ordinary civil litigation, complaints must be answered in writing long before the court adjudicates them, and ordinary motions must be opposed nine court days before the hearing.

The probate process, on the other hand, gives flexibility to the responding party. Under Probate Code Sections 1043 and 1046, the party may either file written objections in advance or simply show up on the day of the hearing and make a written or oral objection. Some local court rules specify that the objection should be filed a certain number of days in advance if it is to be considered at the hearing. Later written objections must be considered, but may result in a continuance.

Objections, if written, must be verified. They are not as formal and formulaic as answers to verified complaints in civil cases. Rather than responding with admissions and denials, the objecting party can weave together factual information with legal argument.

Civil litigators often mistakenly assume that petitions will be decided on the noticed date. In reality, at least in busier courts, dozens of probate matters may be set on the same calendar. If there is a substantive objection to the petition, the hearing essentially becomes a case management conference. The judge will size up the case, may schedule a further status conference, or may set a trial date.

The uninformed lawyer who shows up at the initial hearing with the client and witnesses in tow, and an elaborate argument, almost always will be disappointed.

Probate petitions are like civil complaints in that the parties have a right to an evidentiary hearing on disputed matters. Thus, since there is no right to a jury, either side can request a bench trial. Some lawyers are surprised to learn, for example, that a judge resolves will and trust contests.

Judges assigned to probate departments often have few days available for trial, so long cause matters may be sent out to general trial departments with judges who have little or no trust and estate experience.

When matters are contested, discovery may proceed as in ordinary civil cases. Some estate planning attorneys, who also handle routine estate administration, will pick up the red phone and call litigation counsel at the first sight of a deposition notice. The Probate Code sometimes allows forms of discovery that are unavailable in other civil cases, but interrogatories and requests for production of documents are the norm.

As with civil litigation, most trust and estate matters are resolved by compromise, though the intra-family dynamic may raise obstacles and mediator selection should be considered carefully. Some courts set mandatory settlement conferences, as in civil cases. The Sacramento County Superior Court recently adopted a local probate rule that requires parties to participate in alternative dispute resolution before requesting a trial date.

Settlement evaluation and negotiation may involve accounting and tax issues, as well as the drafting of new trust declarations or other instruments. Hence, litigators who are not estate planners should consider consulting with a planner before finalizing a deal. Often, one side or the other will want the court to approve the settlement before it takes effect so as to prevent later objections by non-signatories. If proper notice is given, courts are usually happy to oblige.

So, do you have a sound opening strategy to resolve Tillie’s trust? No! First you will need to send a notice to Tillie’s named beneficiaries and heirs at law, as prescribed by Probate Code Section 16061.7, informing them (among other things) of her death, of the date of execution of the trust instrument, and that they have a short period of time in which to initiate a contest. If the client’s brother does not file a contest within the specified period, he will lose the chance to do so – hence, no reason to initiate any litigation with him.

As to the neighbor who craves Tillie’s painting, Probate Code Section 850 creates a process to resolve disputes in the probate department regarding property ownership. If nothing can be worked out with the neighbor, you might file such a petition to resolve who owns the painting.

The client should be informed that he will be pursuing any litigation in his capacity as a fiduciary, such that the charity that stands to receive half of the trust estate may object to legal expenses. Trustees have to live with the possibility that, once they have accounted to beneficiaries for expenditures of legal fees, the beneficiaries may object to the expenses, and trustees who have not acted prudently may be surcharged.

Experienced civil litigators have many skills that will serve them well in trust and estate litigation, but the peculiar features of this practice area may leave the newbie feeling like a stranger in a strange land. To be effective, litigators should carefully research the substantive and procedural issues unique to the trust and estate realm, and if possible collaborate with attorneys who often practice in the field.

Jeffrey Galvin is a partner with Downey Brand in Sacramento. He represents clients in civil litigation, with an emphasis on trust and estate disputes. He can be reached at [email protected]

Reprinted and/or posted with the permission of Daily Journal Corp. (2010).