Safe Harbor Application to Challenge a Trust Amendment
In Estate of Rossi (2006) 138 Cal.App.4th 1325, the beneficiary of a trust filed a safe harbor application seeking to challenge a trust amendment on the ground of undue influence. (Rossi, supra, 138 Cal.App.4th at p. 1328.)
Both the trust instrument and the amendment in question were executed after 2001. (Id. at p. 1335.)
The trust contained a no contest clause that applied by its terms to any action that sought to "'void, nullify or set aside this trust or any of its provisions . ...'" (Id. at p. 1329.)
However, the no contest clause in the trust did not specifically refer to amendments to the trust, and the trust amendment did not contain a no contest clause. (138 Cal.App.4th at p. 1329.)
The no contest clause in the trust in Rossi provided in full: "'In the event any beneficiary under this trust shall, singly or in conjunction with any other person or persons, contest in any Court the validity of this trust or of the Settlor's last Will or shall seek to obtain an adjudication in any proceeding in any Court that this trust or any of its provisions or that such Will or any of its provisions is void, or seek otherwise to void, nullify or set aside this trust or any of its provisions, then the right of that person to take any interest given to him or her by this trust shall be determined as it would have been determined had the person predeceased the execution of this Declaration of Trust.'" (Rossi, supra, 138 Cal.App.4th at p. 1329.)
The successor trustee (Toinette) claimed that because the trust amendment in question did not add or amend a no contest clause, section 21305, subdivision (c) rendered section 21305, subdivision (a) inapplicable. the Rossi court rejected this interpretation of section 21305, subdivision (c):
"We reject Toinette's reading of subdivision (c). Toinette's interpretation suggests subdivision (a) is inapplicable so long as an amendment makes no change in the no contest clause of the original trust instrument or declaration, regardless of whether the decedent executed the original instrument before or after January 1, 2001, the effective date of section 21305. Such an interpretation renders superfluous the last phrase of subdivision (c), 'contained in an instrument executed before January 1, 2001.'
"Moreover, the plain language of the first clause of subdivision (c) provides that subdivision (a) does not apply to a codicil or amendment to an instrument executed on or after January 1, 2001.
This is so because the instrument itself, executed on or after that date is already subject to subdivision (a). Subdivision (c) merely clarifies that a testator or settlor with a post-2001 will or trust that already contains a no contest clause that meets subdivision (a)'s specificity requirements need not repeat the no contest clause in a codicil or amendment in order to have the no contest clause apply to the will or trust.
"This interpretation harmonizes subdivision (c) with subdivision (a)(3)." (Rossi, supra, 138 Cal.App.4th at pp. 1337-1338.)
Toinette also claimed that section 21305, subdivision (a)(3) applied only to nontestamentary instruments. the Rossi court rejected this argument as well. (Rossi, supra, 138 Cal.App.4th at p. 1339 stating "there is nothing in the language of subdivision (a)(3) that suggests the Legislature intended to restrict the application of subdivision (a) in such a ... manner".)
The Rossi court applied section 21305, subdivision (a)(3), and rejected Toinette's argument that the amendment to the trust was subject to the trust's no contest clause:
"The language in subdivision (a)(3) clearly recognizes instruments or other documents separate from the instrument containing the no contest clause, and that those separate instruments or documents may be the subject of a safe harbor challenge. Here, the second amendment is such a document. It is separate from the instrument containing the no contest clause since it does not contain a no contest clause. and it is subject to challenge without violating the no contest clause of the instrument, because the instrument's no contest clause language failed to expressly identify the action as a violation." (Rossi, supra, 138 Cal.App.4th at p. 1338.)