Be Careful When Revising a Trust

Margaret Chappell created a trust in 2010 and amended it three times before succumbing to cancer in 2016. In the original trust she left everything to her boyfriend, Jose Aviles, on her death. The subsequent amendments changed the distribution provisions with the third amendment naming Tracy Swearingen the sole remainder beneficiary and successor trustee. The third amendment also incorporated by reference the unchanged provisions of the second amendment, including a no contest clause. After Chappell died, Aviles filed a petition to invalidate the third amendment on the grounds that it was the product of undue influence and financial abuse.

Swearingen opposed the petition and filed her own petition to disinherit Aviles based on his violation of the no contest provision. She argued the no contest provision in the second amendment was incorporated by reference into the third amendment. The trial court denied the petition to disinherit Aviles, ruling that the third amendment was not a “protected instrument” under the applicable statutes because it did not contain a no contest clause or expressly reference the no contest clause in the second amendment.

The appellate court affirmed. Under California law, a no contest clause and its application to future trust amendments is strictly construed. The applicable statutes require that a “protected instrument” either contain the no contest clause or that the instrument be in existence on the date that the instrument containing the no contest is executed and is expressly identified in the no contest clause. The appellate court also rejected Swearingen’s argument that the applicable statutes did not apply because there was a contrary provision in the trust. Lastly, the court could not find that Chappell unequivocally intended the no contest provision to apply to trust amendments that are the product of fraud or undue influence.

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