I occasionally discuss with my clients the issue of someone “fighting” their trust. This usually is where there is an estranged child or other family member, and the clients are concerned about cost and delay of litigation after their death. The clients will ask about “giving that person one dollar or something” which is a common comment based on what clients have seen on television shows and in movies. I explain that the practice of giving a person only a dollar in a document is so that person is a beneficiary and subject to the no-contest clause. My discussion with my client then surrounds whether that person would have “standing” to contest and whether one dollar is a true incentive to not contest the trust.
Now that discussion has more clarity based on the finding in Hamlin v. Jendayi (2024) 105 Cal.App.5th 1064. Hamlin broadened the class of parties who can bring a trust contest.
An initial issue when discussing a trust contest is whether someone has “standing” to bring the contest which is a requirement to file a petition with the court. The theory of requiring standing is to limit claims by people who truly have no interest in the trust. While the Probate Code can limit the persons who are entitled to bring a claim, case law can broaden or limit the list of individuals (or entities). This can be seen in the Hamlin court’s definition of standing which differs from the parties named in Probate Code Section 17200 who can bring a petition under that section. That Probate Code Section is a common one used to bring trust contests, and it states that only “a trustee or beneficiary of a trust may petition the court.” However, Hamlin defines standing as a party who has a beneficial interest in the conflict and has a concrete, actual right, or interest that can be affected by the action (105 Cal.App.5th at p. 1074). The key difference now is that any interested person can bring a trust contest. The Probate Code defines “interested person” in Section 48 and that definition is similar to the definition in Hamlin.
The Hamlin case involves a decedent who executed a trust close to her death that named a non-relative as the trustee and sole beneficiary. The decedent’s sisters, her only family members, were not named at all in the trust and they contested it. The non-relative, who was the trustee and sole beneficiary, claimed that the sisters did not have standing to contest because they were not a trustee or beneficiary as stated in Probate Code Section 17200. The court, using the definitions discussed above regarding interested persons, found that the sisters in their capacity as heirs – the closest blood relatives to the decedent – did have standing to contest the trust. The reasoning discussed that elsewhere in the Probate Code, heirs have rights such as under Probate Code Section 16061.7 where an heir is entitled to receive a trustee’s notice when a trust becomes irrevocable even when they are not a beneficiary.
In situations where there has been actual undue influence by a party to be named as a beneficiary of a trust, it does make sense to allow those who would have been entitled to a distribution to bring a trust contest. But this holding could open the door for more litigation by heirs that a decedent truly does not want to receive a distribution. Based on this holding, if I have a client who strongly believes that an heir will contest the trust upon my client’s death, I may suggest that they give something to that heir as an incentive to not bring a contest. This will force that beneficiary to consider the risk of bringing a contest and not receiving that gift. I can guarantee you that the amount I suggest my client to give to that person will be more than a dollar!