California Court Discusses Rights of Future Beneficiaries With Regard to Trusts

Trusts are useful tools that help people protect their wealth and assets for future generations. In some instances, beneficiaries or other parties may be able to modify a trust. If they do, however, they must ensure that they provide notice to anyone who has an interest in the trust; otherwise, the modification may be void. This was demonstrated in a recent California opinion in which the court determined that an alteration to a trust that was made without notice to future beneficiaries was not binding. If you need assistance creating a trust or determining your options in relation to a trust, it is advisable to meet with a seasoned California probate and trust lawyer as soon as possible.

History of the Trust

It is reported that the trustor created a trust for the benefit of his wife during her lifetime. She was granted testamentary power of appointment over the remainder. If she did not exercise her appointment power, the grandfather’s three children and the wife’s child would each receive an equal share. When the trustor died, his children pursued claims against the estate. The wife and the children ultimately entered into an agreement in which the trustor’s children disclaimed any interest in the trust left for the wife.

Allegedly, in 1991 a court issued a decree based on the terms of the agreement that changed the default distribution upon the wife’s death that would allow the entire trust to go to her child. None of the trustor’s grandchildren were involved in the hearings pertaining to the modification. When the wife died, the trustor’s grandson filed a proceeding arguing he was a beneficiary of the trust, as he was not notified of the 1991 proceeding, and no one had the power to bind him. The trial court ruled in favor of the wife’s son, and the grandson appealed.

Rights of Future Beneficiaries

On appeal, the court reversed the trial court ruling. The court explained that due process requires that any party whose interests or property rights may be adversely impacted by a proceeding must be provided notice of that proceeding. Here, the grandson had a future interest in the trust as a contingent remainder beneficiary, which meant that he would take a share of the remainder if certain conditions occurred.  The court elaborated that while his interest was contingent, it was nonetheless a valid interest. Thus, as the grandson’s address and identity were known at the time the agreement was entered into and the 1991 modification was made, and therefore, he should have been provided with formal notice of the proceedings and a chance to be heard. Accordingly, the court ruled that the 1991 decree was void.

Meet with an Experienced Probate and Trust Attorney in California

Many people prudently choose to protect their assets via trusts, but it is critical for both trustees and beneficiaries to understand how future modifications may impact their rights. If you are a beneficiary of a trust and need assistance determining or protecting your rights, it is smart to speak to an attorney experienced in handling matters involving estates. Ethan M. Weisinger is an experienced probate and trust litigation lawyer, and if you hire him, he will advocate tirelessly on your behalf. You can reach Mr. Weisinger at 925-258-2020 or through the form online to set up a conference.

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