Ensuring Another Bite at the Apple

This post is NOT about Steve Jobs.

Instead, it is about the court's propensity to allow parties to fix problems with their pleadings, rather than using their powers to dismiss an action for good.

Frank Dito was 94 when he married 28-year-old Elenice, who was from Brazil.  Elenice worked as a housekeeper for Frank and his then wife Roseana.  Frank and Elenice married two years after Roseana died.  The two signed a prenuptial agreement.  Frank and his former wife Roseana had an estate plan that Frank never updated after Roseana died.  When Frank died in 2007 (when he was over 100 years old), Frank and Roseana's daughter filed a petition for probate of Frank's pourover will, which identified Roseana as his wife.  Elenice filed petitions to set aside the prenuptial agreement as unenforceable, and to take a share of her husband Frank's estate as an omitted spouse.  The court ruled that Elenice was the surviving spouse of Frank, that she was entitled to a share of his estate as an omitted spouse, and that the prenuptial agreement was unenforceable.

After the court's ruling, Frank's daughter filed a petition alleging that Elenice committed financial elder abuse against Frank, and that under the Probate Code, she should be deemed to have predeceased Frank, taking nothing under his estate.  Elenice demurred on the grounds that Frank's daughter's petition was barred by the doctrine of Res Judicata because the court had already concluded that Elenice was an omitted spouse and was entitled to a share of Frank's estate.  The trial court agreed, and sustained the demurrer without leave to amend.  Frank's daughter appealed.

The appellate court reversed the lower court's ruling.  Res Judicata only works where the same "primary right" is at stake.  Here, the appellate court found that the primary right in the first action was whether Elenice was entitled to a share of her husband Frank's estate as an omitted spouse.  The primary right in the second petition was that of Frank not to be abused or defrauded.  Since the two actions arose from different primary rights, the doctrine of Res Judicata did not apply.

The appellate court did find other reasons for the trial court to sustain Elenice's demurrer, but those reasons could be cured by amendment to the petition, and so the appellate court held that the demurrer should be sustained with leave to amend.

In my 10-plus years as a litigator, I cannot remember a single instance of a court sustaining a demurrer without leave to amend. Not that it hasn't happened to me.  I just can't think of any right now, which suggests to me how rare it is.  Courts are very averse to taking away someone's day in court, and will usually only throw something out entirely in extreme situations, such as where a statute of limitations has expired.  Courts are much more willing to pull the trigger once a case has been argued on its merits.

Estate of Dito, 2011 Cal.App. LEXIS 1104.

Reminder: Trusts 101 Seminar September 19

On Mondy, September 19, 2011 I will be speaking on drafting revocable trusts and ethical issues for estate planning attorneys at the Oakland Marriot. In addition, Veronica Cerruti will be giving an overview of trusts, and will talk about irrevocable life insurance trusts. Daniel Newbold will speak on using trusts for tax reduction, and grantor trusts. Wrapping it all up, Christing Beraldo will speak on trusts for the disabled. It is part of the all-day seminar "Trusts 101" put on by National Business Institute. For more information, click here.


Hope to see you there!

ABA Journal Blawg 100 Nominations

The ABA Journal is putting together its Blawg 100 list of the best legal blogs.  As you know, I've worked tirelessly to promote the proper use of the California Probate Code through this blog.  Don't be shy, go the site and submit a "friend of the blog" brief for California Trust & Estate Lawyer!

More Speaking Engagements in October

On Friday, October 28, 2011 I will be moderating Trusts 101, an all day panel discussion put on by Continuing Education of the Bar. It will be held at the Bar Association of San Francisco, 301 Battery Street. Topics will include:

• The basic elements of a revocable living trust
• Tailoring the trust to your client’s needs
• Trustee selection and duties
• The correlation of will and trust
• Trust accounting and taxes

For more information, go to CEB CLE Programs.

Mental Capacity and Trusts

Trusts are essentially contracts. The creator of the trust contracts with the trustee to hold certain property for someone's benefit. In California, revocable trusts have almost completely replaced wills as the method to dispose of a person's property when they die. The problem is, the mental capacity necessary to execute a will is different than the mental capacity necessary to execute a contract. Testamentary capacity to make a will is quite low. To execute a will, you basically have to know: (1) what your property is, (2) who the people you are giving your property to are, and what you are giving them, and (3) that you are making a will and what that means. Capacity to enter into a contract is higher. When someone is alleged to lack the capacity to execute a trust, which is essentially a will substitute, which standard do you use?

The answer, of course, is it depends. Mom and Dad executed a trust in 1992. Mom died in 1993. Dad, who had started a relationship with Girlfriend while Mom was still living, amended the trust to make substantial gifts to Girlfriend. Not surprisingly, when Dad died, Children petitioned to have the amendments set aside on the grounds that Dad lacked capacity, and was unduly influenced by Girlfriend to make the gifts to her. Girlfriend claimed the lower will capacity was all that was needed, whereas the Children alleged the higher contract standard applied.

The California Court of Appeals for the Second District (Los Angeles) held that, where a trust or trust amendment closely resembles a will in content and complexity, the lower testamentary capacity for wills is proper. In other words, if the trust is a will substitute, the level of capacity needed to execute it should be no higher than that necessary to execute a will.

Although trusts have been used as will substitutes in California for over 20 years now, the law is still catching up in the reconciliation between the law of wills and the law of contracts.

Andersen v. Hunt, Case No. B22107

Upcoming Speaking Dates

It's embarassing that I haven't posted since March, but my day job just keeps getting in the way.

Anyway, Mark your calendars for September 19, 2011. I will be presenting for the National Business Institute on revocable living trusts and ethical considerations for estate planners. Here are the particulars:

September 19, 2011
Marriot City Center
1001 Broadway, Oakland, CA 94607
8:30 a.m. to 4:40 p.m.

The seminar is entitled "Trusts 101" and is directed toward estate planning attorneys, financial planners, accountants and trust officers.

For more information, visit .

How much is enough? The Clear and Convincing Evidence Standard

How much proof do you need to meet the "clear and convincing" evidence standard to show a person intended a writing to be their will? In Estate of Stoker, the court of appeals for the Second Appellate District shows us in, shall we say, colorful detail.

The fact start out ordinary enough. Steven Stoker signed a will and trust in 1997. He died in February, 2008. His will nominated Destiny Gularte as the executor of his will. She petitioned the court for probate in March 2008, and sent a notice to the beneficiaries of the trust per Probate Code section 16061.7 and 16061.8, notifying them that they had 120 days to contest the trust.

In April 2008, Steven's daughter Denine petitioned the court to probate a later, handwritten will, signed in August 28, 2005. That will revoked the 1997 trust and gave his estate to his two children equally. There were no witness signatures to this will, but there were two witnesses to Steven's signing of the will. One witness testified at trial that Steven told her to get pen and paper. He then dictated the 2005 will to her, he then signed it and told her this was his last will and testament. Another witness saw Steven sign the will.

This was not all, though. Perhaps feeling the need to drive home the point unequivocally that he intented to revoke the 1997 will, he then, in front of the witnesses, proceeded to urinate on the original of the 1997 will, and then burn it.

The court first held that the petition to probate the 2005 will was sufficient to constitute a contest of the 1997 trust, since the will states specifically that it revokes the trust.

The court then got to the fun part. The Probate Code in California was amended in 2009 to allow wills that do not necessarily follow the formalities required for a valid will if it can be shown by clear and convincing evidence that the testator intended the will to be his or her last will when they signed it. (Prob. Code section 6110 (c)(2).) The court of appeal upheld the trial court's ruling that the clear and convincing evidence standard was met, that Steven Stoker intended to revoke the 1997 will, and that he also intended the 2005 will to be his last will.

Now you know what it takes to meet the clear and convincing evidence standard to show that an otherwise defective will (no witness signatures) was intended to be the testator's will. I will not, however, go so far as to counsel my clients to urinate on and then burn the wills they intend to revoke. If they want to do that it is up to them. I will say, though, that if they do decide to take that extra step, the Court of Appeals for the Second District will conclude that it meets the clear and convincing evidence standard.