Legal Updates

​In some circumstances, challenging the terms of a trust may be the right thing to do. Trust contests, however, are not resolved in a day. These contests are legal actions akin to a civil lawsuit and can take years to reach final resolution. What happens to the Trust's assets in the meantime and are there any tools to ensure that the trust assets are preserved pending the outcome?​

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Yes. There are several tools available and one -- called a lis pendens -- was highlighted in a recent case: Newell v. Superior Court. In that case, Newell, the daughter of the decedent, challenged a trust amendment that disinherited her and named her father’s caregiver, Rollins, as the sole beneficiary and trustee of the family trust. Newell alleged that Rollins exerted undue influence over her elderly father and committed financial elder abuse. When she discovered that Rollins used trust assets to purchase real property, Newell recorded a lis pendens against the property. A lis pendens acts as a notice to the public that a legal dispute exists that affects title to the property. 

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Rollins moved to expunge the lis pendens, arguing that Newell’s claims did not involve a “real property claim.” The probate court granted the motion. 

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The California Court of Appeal reversed, holding that Newell’s trust contest petition did state a real property claim because the petition, if successful, would result in a different trustee overseeing the trust assets. The court reasoned that because changing the trustee directly impacts title to trust-held assets, the trust contest petition stated a "real property claim."

 

A lis pendens makes it difficult, if not impossible, to obtain a loan or convey title to real property until the lis pendens is resolved. The Newell decision confirms that a lis pendens remains a valuable tool that, in appropriate situations, can serve to protect trust assets. You can read the court's full opinion in Newell here.