California Trusts and Estates Quarterly Rumors of Their Death Are Greatly Exaggerated: the Pre-death Will Contest and Other Strategies in Conservatorship Litigation

• Publication year: 2006
• Author: By Adam F. Streisand

CALIFORNIA TRUSTS AND ESTATES QUARTERLY RUMORS OF THEIR DEATH ARE GREATLY EXAGGERATED: THE PRE-DEATH WILL CONTEST AND OTHER STRATEGIES IN CONSERVATORSHIP LITIGATION

By Adam F. Streisand^*

It is an ever increasing phenomenon. Advances in medicine and generally more healthy lifestyles are contributing to the aging of our population. And increasingly, our bodies outpace our minds. More often we confront the Ronald Reagan syndrome: physically able but mentally departed. The phenomenon will no doubt continue exponentially. After all, the baby boomers are turning a young 60. California is already home to the greatest number of elderly in the country. Predictions are that the number of Californians over the age of 65 will double by 2020. Add to this mix that we divorce more, that we may have multiple marriages and children from more than one relationship, as well as a general, societal attitude that makes us more willing to air our grievances publicly in the courtroom. We are more litigious. It is a combustible combination.

So it is that we see in our courts on an ever increasing basis litigation on a new battle front. While I do not mean to suggest that we are wanting for cases over decedents' estates or their trusts, probate litigators find themselves increasingly in court in conservatorship matters. This article discusses various strategies for litigating disputes in conservatorship proceedings, including pre-death will and trust contests, civil actions for fraud and undue influence, proceedings to recover misappropriated assets, enhanced remedies for elder abuse, and litigation over marital property and the rights of non-marital partners in the conservatee's assets.

There is a noble cause in conservatorship litigation. The elderly are among our most vulnerable citizens and conservatorships are often the best means for protecting them. It is equally true that the conservatee's beneficiaries may be innocent victims of avaricious elder abusers. To redress these wrongs is to protect the conservatee and the integrity of her true intentions. Unfortunately, conservatorship law is in its infancy relative to the need for procedural and substantive means to litigate these cases. This article discusses strategies that are at the cutting edge of conservatorship law.

I. PRE-DEATH WILL CONTESTS

Generally, a will may not be contested until the testator's death. A will is not operative until death. The will cannot be offered for probate and no probate of the estate is possible while the testator remains alive. But to invoke again the circumstances of our 40th President, the testator may live many years after she loses mental capacity. While we wait for the testator to pass away, we may lose critical evidence. Witnesses may die or become unavailable (the California courts have no power to subpoena a witness outside of California to appear for trial). Witnesses' memories may fade over time. Documents or other tangible evidence may be lost or destroyed. Meanwhile, the elderly and infirm are vulnerable to abuse. The legislature articulated its concern for these vulnerable members of our society in enacting the Elder Abuse and Dependent Adult Civil Protection Act and making available enhanced remedies to those who successfully pursue such abuses.¹ In the same vein, the interests of justice militate heavily in favor of a pre-death contest to a will procured by undue influence or based on lack of capacity.

Neither the legislature nor the courts have clearly articulated whether a contest of a will is possible in a conservatorship proceeding. In this author's view, it is not only possible but entirely appropriate. If a conservatorship is established, an interested person may bring a petition for substituted judgment under Probate Code § 2580(b)(13) seeking an order requiring the conservator to make a new will for the conservatee.² Section 2580 provides in pertinent part as follows:

(a)The conservator or other interested person may file a petition under this article for an order of the court authorizing or requiring the conservator to take a proposed action for any one or more of the following purposes: ...
(b)The action proposed in the petition may include, but is not limited to, the following: ...
(13)Making a will.

It is not entirely clear that the substituted judgment provisions authorize an interested person to file a petition for an order allowing the conservator to make a new will as a means of contesting an existing will. There is one case that seems to suggest that it may be an appropriate vehicle for such purposes.³ In Conservatorship of McDowell, the court appointed as conservator the public guardian of Santa Clara County. The conservator subsequently filed a substituted judgment petition seeking permission to execute a new will and trust, alleging that the existing will was invalid because the conservatee lacked testamentary capacity at the time she executed it, and that the will was the product of undue influence.⁴ After trial, the court sustained the objection of the accused beneficiary concluding that the conservatee was competent to make a will, but overruled the beneficiary's objection as to undue influence.⁵ The court granted the petition, reasoning that the beneficiary was a "care custodian" under Probate Code § 21350 and failed to rebut the presumption of undue influence.⁶ On appeal, the beneficiary argued that the court erred in finding that she was a care custodian.⁷ The Court of Appeal reversed on the grounds that the objector was not, in fact,

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a care custodian, and remanded for the trial court to reconsider the petition for substituted judgment while placing the burden of proof of undue influence on the petitioner.⁸

Admittedly, the appeal was limited to the issue of the burden of proof based on whether or not the objector was a care custodian for purposes of Probate Code §§ 21350 and 21351. However, the Court of Appeal appears to have adopted the procedural mechanism of a substituted judgment petition as a pre-death will contest. In considering the issues raised in the petition, the Court of Appeal did not question the fundamental right of the conservator to use that process for purposes of a pre-death will contest. Instead, the court explained the standards for substituting its judgment for that of the conservatee and authorizing the conservator to make a new will:

Under sections 2580 through 2586, a superior court may, upon the petition of any interested person and after consideration of all relevant circumstances, exercise its discretion to authorize or require a conservator to take a variety of different actions affecting the conservatee's estate. "In essence the statute permits the court to substitute its judgment for that of a conservatee." (Conservatorship of Hart (1991) 228 Cal.App.3d 1244, 1250, 279 Cal.Rptr. 249 (Hart); see Estate of Christiansen (1967) 248 Cal.App.2d 398, 56 Cal.Rptr. 505 [discussing the common law doctrine of substituted judgment, later codified in § 2580 et seq.].) "[T]he question in substituted-judgment proceedings is not what the conservatee would do but rather what a reasonably prudent person in the conservatee's position would do." (Hart, supra, 228 Cal.App.3d at p. 1270, 279 Cal.Rptr. 249.) We review the trial court's order granting substituted judgment for abuse of discretion. (Id. at pp. 1253-1254, 279 Cal.Rptr. 249.)⁹

Notably, the Court of Appeal remanded to the trial court for reconsideration of the petition for substituted judgment.¹⁰ Thus, while reversing on the issue of the burden of proof on undue influence, the appellate court considered it appropriate for the challenge to the will on the grounds of undue influence to proceed in the context of a substituted judgment petition. However, it is important to point out that conclusions or articulations of the law that are not necessary to the decision reached (or not squarely addressed) are dicta and have no precedential value. Conservatorship of McDowell would suggest that the courts might agree ultimately with the position advanced in this article, but until the question is put squarely to the Court of Appeal, and decided, it is uncertain.

II. PRE-DEATH TRUST CONTESTS AND ALTERNATIVE STRATEGIES

A. The Problem Of Standing

With respect to revocable trusts, beneficiaries have no rights while the person holding the power to revoke is competent (unless the trust provides otherwise).¹¹ Thus, beneficiaries have no standing to contest a trust so long as the holder of the power to revoke is competent. If the settlor becomes incompetent, the beneficiaries may remain powerless notwithstanding. Even if the settlor lacks capacity, there may be another who holds the power of revocation. The settlor may vest her attorney in fact with the power of revocation.¹² However, the settlor must expressly state in her power of attorney that she imbues her attorney in fact with the power of revocation; it cannot be construed from broad language or evidence of intent.¹³ If a conservator of the estate is appointed for the settlor, the conservator, with the assistance of the superior court, holds the power of revocation (unless the trust provides otherwise).¹⁴

In Johnson v. Kotyck, a beneficiary of an inter vivos trust of a settlor under conservatorship filed a petition under Probate Code § 17200 seeking to compel an accounting.¹⁵ The trial court sustained the trustee's demurrer without leave to amend and the Court of Appeal affirmed, holding that the beneficiary lacked standing.¹⁶The Court of Appeal held that Probate Code § 15800 postponed the beneficiary's rights while the holder of the power to revoke was competent.¹⁷ Even though the settlor was incapacitated, the court held that the conservator held the power of revocation.¹⁸ The court rejected the beneficiary's argument that Probate Code § 15800 postponed Johnson's rights only so long as the settlor was competent, and that the conservator did not hold the power to revoke.¹⁹ The court's analysis is...