August 11, 2005

Devries Column

Debt collectors may not harass consumers

This week’s question:
I am one of the beneficiaries of my parents’ living trust. I have read this document several times and I am not happy with it. Is there any way that I can contest this document without violating the no-contest clause? It goes on and on for several paragraphs and I am concerned that if the no-contest clause controls, I may end up with only $1.

Matt M.
Almaden Valley

Dear Matt:
It sounds like your parents’ no-contest clause is like the ones we include in our living trusts. They do in fact go on and on. And you are wise to think this over before you file any papers in court. You may end up with $1.

The short answer to your question is that it depends on the circumstances. It may be possible for you to find out if a particular challenge is a “contest.” (This would be after your parents’ passing, of course, since during their lifetimes I would presume that the trust is revocable or changeable.)

This is an area where you especially need to see your own attorney, it seems to me. There is a way in some situations where you may be able to file a “declaratory relief” action with the probate court to see if a particular provision would constitute a “contest”.

For example, in a relatively recent case arising out of Los Angeles dated March 28, 2005, the Court of Appeal for the Second District in California held that a widow could proceed with her “safe harbor” challenge as to whether her husband fulfilled the survivorship requirement as the beneficiary of a trust, but that any other challenges would constitute contest to the will in violation of the trust’s no-contest clause.

The case is Estate of Davies, 05 C.D.O.S. 2668. In this particular case, Edwin died at age 90, evidently leaving an estate of around $3.7 million. Part of his living trust included a rather routine “survivorship” clause of 120 days.

This clause essentially meant that if the beneficiary of a gift did not survive Edwin more than 120 days, the gift would lapse.

As it so happened in this case, part of the trust was designated for Douglas Davies. But wouldn’t you know it, Douglas only outlived Edwin 119 days, although it was possible Edwin may have died five or 10 minutes earlier, thus making his death 120 days earlier.

According to the death certificate, Edwin died at 12:05 a.m. on July 23, 2002. Douglas died 119 calendar days later, on November 19, 2002. Had Edwin died six minutes earlier, or had Douglas (who was then in a hospice and knew he was dying) lived one more day, Douglas would have survived Edwin by 120 days and satisfied the survivorship requirement of 120 days. (This is the kind of situation our law school professors dreamed up!)

Since a substantial sum of money was involved, the attorney for Patricia, the surviving spouse of Douglas, filed proceedings under California Probate Code Section 21320. This is often called a “safe harbor” application to the court to determine if a ruling would constitute a violation of the no-contest clause of the instrument. In that way, one can tell ahead of time if a possible legal action will violate the no-contest clause.

The court held that no-contest clauses are valid in California, and they are favored by the public policies of discouraging litigation and giving effect to the purposes expressed by the testator (will maker). The court also held that whether there has been a “contest” within the meaning of a particular no-contest clause depends upon the circumstances of the particular case and the language used.

The court went on to say that as a general rule, the decision about whether the beneficiary’s proposed action would be a will contest may not involve a determination of the merits of the action itself. This is a rule that “makes sense” because the summary safe harbor procedure could otherwise be used to allow the very form of challenge and protracted litigation the testator (will maker) sought to prevent.

You can read this opinion for yourself by logging onto: http://caselaw.lp.findlaw.com/data2/californiastatecases/bl73522.pdf.

It is especially necessary in this area to have your own attorney help you understand this case and how it may apply to your particular situation. This area of the law is quite tricky.

Good luck, Matt. I hope your problem turns out well.

Donald J. DeVries
Almaden Valley

Donald J. DeVries is an attorney practicing law in Almaden Valley. If you would like him to answer your question in his next Almaden Times column, you can reach him by e-mail at don@almadenvalleylawyers.com, fax at (408) 268-6502, telephone at (408) 268-9500, or mail at, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. To view Almaden Times columns since 1986 visit www.almadenvalleylawyers.com. DeVries writes this column to provide you with general information about important legal matters affecting California residents—not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.