Before the appellate court's decision in Barefoot v. Jennings (2018) 27 Cal. App. 5th 1, trust litigators assumed that former trust beneficiaries, i.e., beneficiaries disinherited by a subsequent trust amendment, had standing under Probate Code section 17200 to challenge the validity of that trust amendment in probate court. Barefoot upended this assumption, holding that section 17200 is only available to current trust beneficiaries and that former beneficiaries, like the petitioner in Barefoot, must initiate a separate civil action to seek relief.

Barefoot caused consternation among trust litigators because it, theoretically, shifted an entire category of cases from probate court to the civil department and created a strange anomaly in California's trust law. Under Barefoot, a trust beneficiary left with one dollar can petition the probate court for relief using section 17200, but a beneficiary who is totally disinherited must file a separate civil action to obtain the same relief.

The California Supreme Court, in an opinion issued Jan. 23, 2020, reversed the court's ruling in Barefoot, holding that section 17200 is open to anybody alleging they are a beneficiary of a trust or any prior version of that trust. The court's decision confirms that Probate Code section 17000, et seq., of which section 17200 is part, makes the probate court the "center of the universe" for trust related disputes.

Probate Code 17200 Overview

The Legislature enacted a major overhaul of California's trust law in 1986, replacing what was a patchwork of trust related provisions spread between the Probate Code, the Civil Code, and the Code of Civil Procedure with a comprehensive statutory scheme. As part of that overhaul, the Legislature adopted Probate Code sections 17000, et seq., which govern judicial proceedings regarding trusts, to accomplish two primary goals: (1) to designate the probate court as the exclusive forum for proceedings regarding the "internal affairs" of the trust, and (2) to empower the probate court to resolve all disputes brought before it, including disputes external to trust administration such as actions to determine the existence of trusts and actions involving trustees and third persons. Probate Code section 17200 provides the procedural vehicle for trustees and beneficiaries to raise trust issues with the probate court.

The Barefoot Decision

The issue addressed in Barefoot is narrow. Does a former beneficiary of a trust have standing under section 17200 to petition the probate court for an order invalidating the current version of a trust? The fact pattern in Barefoot is not unusual. A parent set up a living trust and named her children as beneficiaries. The parent made amendments to her trust that favored some of her children over others and, ultimately, disinherited one of her children entirely. After the parent died, the disinherited child challenged the validity of the offending trust amendments based on incompetence, undue influence, and fraud.

In Barefoot, the probate court dismissed the petition for lack of standing, and the appellate court affirmed. In reaching this decision, the appellate court concluded that petitioner, as a former beneficiary, was a trust outsider seeking to "contest[] the internal affairs" of the current trust instrument. Because proceedings under section 17200 are reserved for the trust's "trustee or beneficiaries," the court reasoned, a person not named as a trustee or beneficiary in the current trust instrument, like the petitioner, lacks standing. It would be "imprudent," the court reasoned, "to open challenges to the internal workings of the current trust to those no longer included in the most current version of the trust when such individuals have alternative methods of seeking relief should they allege foul play."

The Supreme Court's  Decision

The court reversed, finding that the Barefoot petitioner's challenge to the trust amendments is exactly the type of dispute section 17200 authorizes the probate court to resolve, and that petitioner's allegation that she is the "rightful beneficiary" of the trust is sufficient to establish standing.

The court noted that "when a demurrer or pretrial motion to dismiss challenges a complaint on standing grounds, the court may not simply assume the allegations supporting standing lack merit and dismiss the complaint." The probate court, just like any court, must "first determine standing by treating the properly pled allegations as true."

Section 17200, the court reasoned, expressly supports the petitioner's standing. Section 17200(a) authorizes a beneficiary to petition the court concerning the trust's affairs "or to determine [its] existence." Section 17200(b)(3) contemplates disputes among beneficiaries over "the validity of a trust provision." Probate Code section 24(c) defines "beneficiary" as "a person who has any present or future interest [in a trust]." The Barefoot petitioner, thus, established standing by alleging that she has a present interest in the trust because the trust provisions that purportedly disinherited her are invalid.

The court found the lower court's concerns over third parties "meddling" in trust affairs to be overstated. Individuals still must allege a present interest in a trust to establish standing. Also, the probate court has the power and discretion to "preserve trust assets and the rights of all purported beneficiaries while it adjudicates the standing issue."

The court noted that the Barefoot decision's narrow application of section 17200 "runs counter to both the Probate Code and the cases interpreting it." The Probate Code "was intended to broaden the jurisdiction of the probate court so as to give that court jurisdiction over practically all controversies which might arise between the trustee and those claiming to be beneficiaries under the trust." The court also noted that the Barefoot decision's limitation on standing would "insulate those persons who improperly manipulate a trust settlor to benefit themselves against a probate petition," which runs contrary to public interest.

To the relief of many trusts and estates practitioners, the court's decision brings an end to the short-lived Barefoot era in trusts and estates litigation, confirms that the probate court is the proper forum for all trust related disputes, and recognizes that the probate court is empowered to dispose of all matters before it.

Kevin P. O'Brien is a senior associate on Hartog, Baer & Hand's litigation team in Orinda, California. He can be reached at [email protected].