The California Supreme Court issued its long-anticipated decision in Estate of Duke July 27, 2015, changing the way in which all state courts evaluate wills prospectively.  At issue was a rule established by the Supreme Court in 1965 that prohibited courts from considering evidence outside the four corners of a written will in order to correct a mistake within that will. (Estate of Barnes (1965) 63 Cal.2d 580 (Barnes).)  This meant that for the last 50 years unless the will instrument itself was deemed “ambiguous,” trial courts would refuse to “reform” the will to fix mistakes. 

Changing 50 Years of Precedent:

In a 35-page, meticulously crafted opinion, the High Court’s Chief Justice carefully explained how and why a unanimous Court was reversing course from its prior precedent in Barnes.  Reaching all the way back to the 1870s to analyze the root of its decision in Barnes, the Supreme Court noted that over time judicial sentiment on evaluating extrinsic evidence has shifted.  In rejecting an argument that permitting reformation of unambiguous wills would cause too much uncertainty in estate planning, the Supreme Court confronted the reality that some courts were already “essentially reform[ing] wills” under the guise of construing an ambiguity. (Opn., p. 20).  After evaluating the efforts of the Legislature in the probate arena and concluding that legislation did not expressly preclude the Supreme Court from changing the law, the Duke Court concluded that in order to serve the paramount purpose of probate – to interpret and give effect to a person’s testamentary wishes – courts should be permitted to “reform” wills to correct mistakes. In doing so, the High Court noted that its new rule meant wills would be treated no differently from other written documents when it comes to mistakes found in those documents. (Opn., p. 25).

The Court’s ruling also eliminates an inconsistency that may have had disparate socioeconomic impact.  Chief Justice Cantil-Sakauye noted that the current regime of allowing reformation for trusts, but not wills, “appears to favor those with the means to establish estate plans that avoid probate proceedings, and to deny a remedy with respect to the estates of individuals who effect their plans through traditional testamentary documents.” (Opn., p. 30.) The Chief Justice’s observation reflects a common-sense understanding of the categories of documents trial courts are confronted with, and the types of litigants associated with each.  Put simply, those with smaller estates are more likely to have unsophisticated wills, while those with more assets are more likely to invest in more sophisticated trusts.  The former scenario is precisely what appeared to be the case in Duke.  As the Chief Justice observed, the Duke decision creates a greater parity by allowing the reformation remedy for the pauper’s mistaken will document as well as the prince’s trust document. 

A High, Specific Bar:

The Duke decision does not make reformation of an unambiguous will easy.  After all, in a will dispute, the testator is deceased and the possibility of fraud by unscrupulous heirs cannot be ignored.  Giving a nod to the evidentiary concerns underpinning the statute of frauds and the statute of wills, the High Court imposed a “clear and convincing” standard for the reformation of wills.  That standard, higher than the normal “preponderance of the evidence” standard used in most civil disputes, but lower than the “beyond a reasonable doubt” standard employed in criminal cases, is an effort by the Court to exclude cases where either the mistake or the true intent are difficult to ascertain.  Specifically, the litigant hoping to reform a will must now show clearly and convincingly: (i) that there is a drafting mistake and (ii) what the testator’s actual, specific intent for the property was at the time the testator executed the will.  In the opinion and in oral argument, the Court acknowledged that, even with the heightened evidentiary standard, trial courts will sometimes reach the wrong result.  But the Duke Court appears to be saying that the threat of admitting evidence which might occasionally lead to a wrong outcome at the trial court level is preferable to excluding all evidence, which certainly would result in a wrong outcome in some cases.

No Fear of the Floodgates:

The Duke Court took head on the argument, often raised as a reason to deny a new remedy, that “allowing reformation will result in a significant increase in probate litigation and expenses.” (Opn. p. 26).  The Court noted that because of the rule allowing extrinsic evidence to find an ambiguity and resolve it, any additional amount of litigation is likely limited.  The High Court seems to take the position that estates will only be litigated if there is enough money at stake, the benefits of consistency outweigh the risk of increased litigation and, as to those cases that support a reformation claim but not an ambiguity claim, the clear and convincing evidentiary standard will “help the probate court to filter out weak claims.” (Opn. p. 27).  In other words, while the justices seem to tacitly acknowledge increased litigation, they conclude that there is a sufficient need for the new remedy and that they have installed sufficient safeguards to ameliorate abuse.

Takeaways:

The unanimous High Court decision overruling prior precedent creates a wholly new remedy for heirs of a will: Courts may now “reform” wills to correct errors. In order to do so, a trial court must hear “clear and convincing” evidence of the both the mistake and the true intent of the decedent.  The ruling almost certainly will create more litigation, but as the High Court notes, that additional litigation seems warranted where there is a mistake in a will.  Individuals who use wills to leave property to others will likely need to take even greater care to document their wishes to try to avoid any unjustified claims of “mistake” after death.  At the same time intended heirs who, through mistake, are erroneously excluded from a will now have an avenue to seek redress, which likely will lessen the number of cases where a will exists but property is granted through intestacy rather than through that will. 

Practitioner Quotes:

“Estate planning attorneys must now ensure that their files adequately reflect a testator’s testamentary wishes to avoid a reformation claim based on mistake, not just ambiguity,” said Steve Braccini, a shareholder in the Hopkins & Carley’s Trust & Estates Litigation Group.

“While all Supreme Court decisions set precedent for the state, Estate of Duke really changes the legal landscape in a fundamental way,” said Allonn Levy, a shareholder who heads Hopkins & Carley’s Appellate Practice Group.  “The Supreme Court is the only court with the power to change precedent that it has set – this ruling did that by re-analyzing 50 years of established precedent and acknowledging that the approach to extrinsic evidence has changed during that time-frame.” 

Available for Comment:

Allonn Levy – 408-286-9800 – alevy@hopkinscarley.com

Shareholder, H&C Appellate Practice Group Leader.  Allonn has been handling appeals for almost 20 years, he has been involved in numerous cases considered by the California and U.S. Supreme Courts and is certified by the State Bar of California as an Appellate Specialist. 

Ryan Cunningham – 408-286-9800 – rcunningham@hopksincarley.com

Associate, H&C Trusts & Estates Litigation Group and Appellate Practice Group.  Ryan works on both Trust & Estate litigation matters and appeals.

About H&C’s Groups:

Trusts & Estates Litigation Group:   Hopkins & Carley boasts one of the largest Trusts & Estates groups in California.  Based in two Silicon Valley Offices, the group routinely handles some of the largest and most complex trusts & estates litigation matters in California.

Appellate Practice Group:   Hopkins & Carley’s experienced appellate group has multiple members admitted to practice before the United States Supreme Court.  The group has been responsible for numerous decisions at all levels of the appellate system including a number of precedent-setting decisions that have shaped the law in California and beyond.