The Court of Appeal of the State of California holds that a lawsuit with the practical effect of challenging a trust cannot proceed. The trustee’s notice to the would-be challengers triggered a statute of limitations, which bars the lawsuit. In Hamilton v. Green (Cal. Ct. App. B323621, December 28, 2023).
Lena Hamilton had two children, LaDonna Green and Eric Hamilton. Her testamentary trust listed her children as beneficiaries and stated their shares would go to their descendants if they died. Her son, Eric Hamilton, passed away before her. He left behind two sons: Dominic Hamilton and Eric Hamilton Jr.
A trust amendment effectively removed her grandsons from the trust. The amendment provided that if one of her children predeceased her, everything would go to the surviving adult child.
After Ms. Hamilton died, her daughter, serving as trustee, informed Dominic Hamilton and Eric Hamilton Jr. that they inherited nothing. Although they requested to see the full trust document, she only set them portions. Because she refused to show them the full document, they initiated a legal proceeding seeking her removal as trustee on January 13, 2020.
On April 17, 2020, Ms. Green served a “notification by trustee” to Dominic Hamilton and Eric Hamilton Jr., pursuant to the probate code. The notice explained that they could not bring an action to contest the trust after 120 days of its receipt.
Claiming that the trust amendment was a forgery, the grandsons amended their petition to challenge its validity on March 10, 2021. The court denied their motion.
More than a year after the notice, on July 29, 2021, the grandsons brought a civil complaint against Ms. Green, alleging via seven causes of action that the preamendment trust terms entitled them to benefit from the trust.
Ms. Green filed a demurrer, asserting that the complaint was time-barred.
Finding that the 120-day limitations period precluded the action as a matter of law, the court sustained the demurrer without leave to amend. The grandsons appealed.
On review, the appellate court considers whether the complaint states facts to constitute a cause of action and, if not, whether an amendment would cure it. To answer these questions, the reviewing court addresses whether the statute of limitations bars the lawsuit.
Dominic Hamilton and Eric Hamilton Jr. claimed that the statute of limitations did not apply to their lawsuit because it did not contest the trust. Unpersuaded, the appellate court finds that the statute of limitations bars the claim because its practical effect is to challenge the trust.
Even though the lawsuit is not labeled as a trust contest, courts may look beyond the label of a suit to examine its effect. Since the action challenged the validity of the trust by advancing the theory that the amendment was fake, it is a trust contest. To evaluate the causes of action in the complaint, the court would have to determine whether the trust amendment resulted from a forgery.
The complaint is time-barred because the grandsons filed the lawsuit after the statute of limitations in the “notification by the trustee” lapsed. The trial court correctly sustained the demurrer without leave to amend.