The law generally precludes prosecuting a will contest until after the testator's death because, until then, a will contest is not ripe. But does the law ever preclude a will contest after a testator dies?
According to a California appellate court, the answer is “Yes.” And its decision could have serious ramifications for practitioners and beneficiaries across the country.
In Murphy v. Murphy1 — a case of first impression — California's First Appellate District found that a substituted judgment order approving a conservatee's estate plan collaterally estops any post-death challenge to that estate plan so long as the contestant had notice and opportunity to be heard in the prior, substituted judgment proceeding.2
This decision could impact will contests nationwide, because it is based on California's substituted judgment law, which is similar to that found in the Uniform Probate Code (UPC). UPC Section 5-411 permits a conservator to create a revocable or irrevocable trust, amend a revocable trust and make, amend or revoke a conservatee's will, with the court's authorization following a petition and notice to interested persons. Sixteen states have adopted the UPC, including variations of this provision.3 In at least two others states, Massachusetts as well as California, there are similar substituted judgment laws.4
Until recently, the only case addressing the final and binding effect of an order authorizing an estate plan issued in a substituted judgment proceeding was In re Boston Regional Medical Center, Inc. (BRMC).5 But in BRMC, after the settlor's death a charitable beneficiary in essence sought to reform a provision in a substituted judgment trust to conform the trust to the settlor's intent as reflected by her prior trust. In contrast, the plaintiff in Murphy, the decedent's son, sought to invalidate his father's trust and pour-over will on the grounds that his sister had procured them by fraud and undue influence, and that the trust and will violated a “testamentary agreement” between his parents that the survivor would leave the remaining estate in equal shares to their two children. After a two-month bench trial in which the plaintiff prevailed on all of those claims, the appellate court ruled that none of them should have ever been considered. The opinion in Murphy held that the substituted judgment order directing the conservator to execute the revocable trust and will, creating an estate plan disinheriting the conservatee's son, had final and binding collateral estoppel effect,6 barring the son's post-death challenge to those instruments.
In Murphy, an attorney in his 70s who was still operating his solo law practice had a stroke. At the time, the attorney had a holographic will in place favoring his daughter by leaving her more than two-thirds of his estate. After his father returned home from the hospital following the stroke, the son, also an attorney, initiated proceedings to have his father conserved. However well-intentioned the son might have been in conserving his father, this act greatly upset the father, who executed a holographic will leaving his daughter the entire estate, except for $1 to the son. A temporary conservator was appointed at the son's request. Then, with the help of his estate-planning attorney, the father confirmed his disinheritance of the son by signing a trust with the same dispository provisions as the prior holographic will and appointing his daughter as trustee. But because the father already had been conserved, his trust was never funded.
Once the conservator closed out the father's law practice, which was in substantial disarray, the father wanted to terminate the conservatorship by having his assets transferred to a trust under court supervision. In California, this is a relatively common means of reducing the significant expenses of a conservatorship when the close court scrutiny associated with a conservatorship is no longer necessary. The father's attorney therefore filed a substituted judgment petition for approval of a trust and pour-over will identical in every respect to those that the father had signed at the outset of the conservatorship, except that the conservator was to sign the substituted judgment instruments if authorized or directed to do so. An equally important motivation underlying the substituted judgment petition was to obtain court approval of the trust's dispository provisions. The son had notice of the proceeding and appeared, but ultimately did not object to the court's authorization of the instruments. The court ordered the conservator to execute the trust and will; he did so, and then he transferred the conservatorship estate to the daughter, as trustee.
Shortly after the father died, the son filed his trust contest, which the daughter opposed on the grounds that all of the contest's claims went to the validity of the court-approved trust instrument and should have been raised in the substituted judgment proceeding when the probate court was deciding whether to order the trust's creation in the first place. The law and motion judge and the trial judge both ruled against the daughter on her collateral estoppel defense. A lengthy trial ensued — leading to a judgment for the son for half of his father's estate; invalidating the substituted judgment trust and will and all of the father's prior estate-planning instruments; and enforcing the “testamentary agreement.” The daughter appealed, and the Court of Appeals overturned the trial court's ruling, finding that no trial ever should have taken place. The son's only opportunity to challenge the trust, including its dispository provisions, was to oppose its creation in the substituted judgment proceeding.
In reaching this holding, the Murphy court explained: “We conclude that the integrity of the judicial system would be served, judicial economy promoted and vexatious litigation avoided by giving collateral estoppel effect to the substituted judgment order. Application of collateral estoppel in this case would give credit to the implied findings made by the probate court, acting within the scope of its jurisdiction, and in a forum where the parties were afforded a fair and full opportunity to present their evidence and arguments, and appellate review of adverse rulings was available.”7
Lessons for Us All
One important lesson from Murphy is that a conservatee's estate plan can be protected from post-death challenge by initiating a substituted judgment proceeding to have the court approve it. This procedure can surmount the inevitable questions regarding a person's capacity once he's conserved.8 While some consider it an abuse of the substituted judgment procedure to try to “bulletproof” an estate plan, the procedure makes it possible to address the cloud of incapacity that the conservatorship places over the conservatee's head while he's still alive. Most significantly, this permits an adjudication of the estate plan's propriety to take place near the time of its creation when what is likely to be the best evidence of incapacity, undue influence and fraud is still available — testimony from the testator himself. Thus, a substituted judgment hearing offers a major advantage over posthumous will contests in which, unfortunately, the person who would be the most important witness is never available to testify.
On the other hand, when, as in the Murphy case, the proposed estate plan is highly controversial, filing a substituted judgment petition likely will subject the conservatee to participating in and observing a trial almost identical to a contest (strictly speaking, the issue is whether the court should approve the plan, not whether it is valid). Most parents detest the idea of having their children fight over their estate even after they're gone. Actually watching them fight could be particularly unappealing.
The Murphy opinion is also a wake-up call to beneficiaries whose gifts will be lost or reduced by an estate plan proposed by a substituted judgment petition. While the natural inclination might previously have been not to engage in litigation opposing the plan's approval — after all, the plan still might be modified (the very reason contests are generally posthumous) — Murphy forces such a beneficiary to speak now or forever hold his peace.
- Murphy v. Murphy, 164 Cal. App.4th 376 (2008).
- The authors represented the defendant in Murphy.
- The 16 states that have adopted the Uniform Probate Code (UPC) in its entirety, including the substituted judgment provision (Article V, Title 72, Part 4, Section 5-411) or variations of it, are: Alaska, Ariz., Colo., Fla., Hawaii, Idaho, Maine, Mich., Minn., Mont., Neb., N.M., N.D., S.C., S.D. and Utah. (See Cornell University Law School, Uniform Probate Code Locator, www.law.cornell.edu/uniform/probate.html.) Several of these states allow for creation of a trust, but expressly prohibit the making of a will.
- In fact, the UPC modeled its provision regarding the conservator's right to make, amend or revoke a person's will on California Probate Code Sections 2580, 6100.5(c), and 6110(c). (Comment, UPC Section 5-411.)
- In re Boston Regional Medical Center, Inc., 298 B.R. 1 (2003).
- Collateral estoppel is the legal doctrine by which issues that were or could have been previously litigated are barred from re-litigation in a subsequent proceeding. It is distinct from but related to the doctrine of res judicata which bars re-litigation of the same claims.
- Murphy, supra note 1 at p. 407.
- Notably, under California law, the fact that a person has been placed under a conservatorship does not in itself establish testamentary incapacity. (See Estate of Mann, 184 Cal.App.3d 593, 604 (1986).
David W. Baer chairs the trust and estate litigation group at San Francisco's Hanson Bridgett. S. Anne Johnson is a senior counsel in that firm. Both attorneys served as defense counsel in the case that is the subject of this article
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