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David C. Nelson, co-chair of the firm’s Trust & Estate Litigation practice, discusses intricate family law issues that can surface in trust and estate litigation. David highlights the range of issues within probate court litigation regarding trusts and decedents’ estates as well as the circumstances under which related family law issues can arise and strategies to reduce litigation in these types of trust and estate matters. This Q&A is in continuation of our series on trust and estate litigation.
Tell us a little about your practice and the types of matters you typically handle.
I was honored to join Loeb & Loeb in 1988 and have had the privilege of practicing here ever since. Over the past 35-plus years, my practice has focused almost exclusively on handling all types of litigation in probate court as well as appeals arising out of probate court litigations.
When one thinks of litigation in probate court, what typically comes to mind are cases involving trusts or estates of decedents, and those certainly are the most common types of probate court litigations. However, probate court also is the venue for a variety of other types of litigation, including such diverse subjects as conservatorships, guardianships, financial powers of attorney, powers of attorney for health care and accounts under the California Uniform Transfers to Minors Act. Loeb’s Trust & Estate Litigation practice has experience handling litigations in all these different areas.
In litigation involving trusts and decedents’ estates, what types of issues do you often encounter?
In general terms, probate court litigation regarding trusts and decedents’ estates commonly involves one or more types of core issues, each of which in turn can involve a broad variety of more specific sub-issues, including (1) contests or challenges to the validity of testamentary instruments, (2) questions regarding the interpretation of such instruments, (3) disputes about the ownership of real or personal property by the subject trust or decedent’s estate, and (4) issues relating to the propriety or prudence of actions taken (or sometimes not taken) by the fiduciary (i.e., the trustee of the trust or the personal representative of the decedent’s estate) in administering the trust or decedent’s estate.
In addition to these core issues, when someone dies, their trustee or personal representative often steps in to the decedent’s shoes with respect to whatever may have been happening in their life. To name just a few examples, this can include a range of things, such as transactions relating to real property owned by the decedent or their trust, the operation of a business owned or controlled by the decedent or their trust, and the management of intellectual property rights or interests owned by the decedent or their trust. Probate court litigation sometimes can arise relating to these diverse types of circumstances as well.
Finally, while one might not intuitively think of this, probate court litigation also can involve a variety of family law issues.
Tell us about some of the types of family law issues that may arise in trust and decedent’s estate cases.
Litigation relating to trusts and decedents’ estates can involve a number of different kinds of family law issues. Below are a few scenarios in which they commonly arise.
Perhaps the most common type of family law issue that can arise in trust and decedent’s estate litigation concerns the characterization of property. Such cases typically involve disputes as to whether or to what extent particular property is community property of the decedent and their surviving spouse or instead is the separate property of one of the spouses. Besides implicating complex legal questions, these issues can involve complicated problems of tracing that often require assistance from accountants and other experts. I have successfully handled a number of cases involving such community property/separate property issues.
A more esoteric family law issue can arise when spouses are in the process of dissolving their marriage when one of them dies. While dissolution proceedings are pending, the spouses are subject to what are referred to as automatic temporary restraining orders, or ATROs. Among other things, these ATROs prohibit a spouse from making certain changes to their estate plan without obtaining the consent of or giving notice to the other spouse; though, while some changes require consent, others only require notice. In a recent case, I was successful in defending a husband’s restatement of his separate property trust, executed while dissolution proceedings were pending and ATROs were in effect, that revoked a substantial gift to his wife, but then the husband died without having obtained consent from or giving notice of this change to the wife.
Lastly, when spouses who are dissolving their marriage have a joint trust, issues can arise—and sometimes need to be resolved by probate court litigation—regarding either the termination or future administration of that joint trust. I recently was involved in a case where our client and her husband dissolved their marriage but kept intact after the dissolution a joint trust created during the marriage that held the controlling interest in a business. Perhaps not surprisingly, disputes arose between the former spouses concerning the operation and management of the business and devolved into litigation filed by the husband in probate court concerning the trust. We were able to resolve that litigation and the underlying disputes through a settlement that was very beneficial to our client.
Can anything be done to avoid or minimize the types of trust and decedent’s estate litigation you have described?
The short answer to this question fortunately is yes! While no sure-fire litigation avoidance solution exists, my years of experience practicing in this field have taught me various strategies that can be effective either to avoid many of these types of litigations altogether or, at a minimum, to anticipate them, minimize the risk of their materializing and/or limit their impact if they do occur.
Armed with this experience, an important aspect of my practice is advising estate planning and fiduciary clients who anticipate or are concerned about possible future litigation regarding litigation avoidance strategies applicable to their circumstances.
How is Loeb a leader in the space?
The Trust & Estate Litigation practice at Loeb is particularly unique in that while we work with our broader Trusts & Estates department to deliver timely solutions to various aspects of a client’s trust and estate matters, we have a deep understanding of the intricacies of trust and estate litigation and probate court. This sets us apart in the space as a niche practice dedicated to various aspects of trust and estate litigation, including certain related family law issues, as I’ve discussed. Each member of our practice strengthens the comprehensive guidance we provide to our clients.
