Dad creates a trust in 2010 that splits his estate equally between his two sons. Dad amends the trust in 2012 to say that when he dies, one son, Greg, gets Dad's house, and Scott (the other son) gets money equal to the appraised value of the house.
In short, in both versions of the trust, the estate is split equally between the two sons. Which is what one typically expects.
But, in 2014, Dad appears to have handwritten "half" onto the latest version of the trust. That way it reads that Greg gets the house, but Scott only gets half the value of that house.
When Dad dies in 2020, the two sons fight over the trust. Scott says that Dad was just confused; that he was old, and thought that putting in "half" meant that the kids would split the estate equally, whereas Greg contends that, no, Dad knew what he was doing, and only wanted to give Scott half of the house (but with everything else split equally).
So in 2022, Scott sues, claiming that he should have gotten the full value of the house, not just half.
The trial court thinks that this is a contest to the trust, and since contests have to be filed within 120 days, dismisses the petition as time-barred. The Court of Appeal reverses. It's not a contest. It's an attempt to reform the trust to comport with Dad's actual intent.
What I liked most about Justice Buchanan's opinion in this regard is its penultimate footnote, which I thought was super persuasive. I don't know if Justice Buchanan thought up the hypothetical himself, if it came out of one of the briefs, or if it came from one of the other justices, but I found it very insightful and informative. The trial court thought that Scott's petition was a "contest" on the theory that his claim was inconsistent with the text of the trust itself, whereas the Court of Appeal thought that reformation to comply with the testator's intent was a different animal. The relevant paragraph and footnote read:
"Greg’s argument to the contrary conflates the merits of Scott’s claim with the nature of Scott’s claim. As Scott points out, a meritless reformation petition is still a reformation petition. It cannot be the case that the answer to whether a petition is deemed a contest to the trust or a request to reform the trust depends on how persuasive the extrinsic evidence is of the trustor’s intent—that goes to the merits of the petition. To conclude otherwise would contradict the Supreme Court’s holding that extrinsic evidence is admissible to determine the trustor’s intent even where the donative document is unambiguous, and it would also undermine the purpose of reformation.
[Footnote]: A more obvious example better illustrates the point: if Scott had a video that showed Newton writing the word “one-half” into the first amendment to the trust in 2014 while stating that his intent in so doing was to ensure his assets were divided equally between his sons, such evidence would clearly reflect that Newton’s true intent was as is now asserted by Scott. We assume in that scenario Greg would not dispute that Newton’s true intent would be effectuated by reforming the petition, despite the trust’s facially unambiguous use of “one-half.” The fact that Scott may not have such clear evidence does not transform his petition to reform into a trust contest."
That sounds spot on to me. Love the hypo. Sounds exactly right.
One final thing. On the merits, since the Court of Appeal now remands the thing back to the trial court (which previously dismissed the petition on the pleadings).
I really, really strongly recommend that the two brothers settle this thing. Quickly.
The house was only worth $970,000 or so. So the relevant fight is over around $500,000 (i.e., whether Scott should have gotten $500,000 or $1,000,000 as his "share" of the house). A half million dollars is not typically worth destroying your relationship with your brother. Especially when, as here, you're already splitting the money equally from the residue of the estate.
I got a number for both brothers:
$250,000. That should be the settlement. Today.
Scott may perhaps lose at trial. He's got to prove his father's intent by clear and convincing evidence on remand, and he may well not be able to do that. Yes, maybe his father was confused, and yes, it's likely that parents (typically) want to split estates equally between brothers, and yes, that's what the rest of the trust (i.e., the residue) reflects. But that may potentially not count as "clear and convincing" evidence, even if it counts as a preponderance of the evidence. And there might be other potential reasons why Dad might want to only give "half" the value of the house; maybe Greg improved the place with his own money, maybe Dad liked Greg a tiny bit more than Scott (or Greg or his family needed the money more), etc.
But Greg might lose at trial as well. The factfinder will likely go into a trial thinking that parents generally want to split estates evenly, and that that's fair. This is by no means a slam dunk.
So just split the baby, brothers. Don't spend more money on lawyers. Not a dime. Just resolve the case today.
Greg: Give your brother half of what he thinks he's owed. Scott's got a plausible story. Even after giving him an extra $250,000, you're still getting a quarter million dollars more than him: you'll have gotten a house worth $1 million or so, whereas he'll end up with $750,000. You're still the winner.
Scott: Don't go to trial on this. You might well lose. And maybe you're right that Dad wanted you to have the full million, but maybe he didn't. It's a totally fair compromise. And you still get lots more money than the actual text of the trust dictates.
Someone should print out a copy of this post and send it to the brothers.
It's a fair deal for both sides. (Suggested by someone with absolutely no interest in the dispute.)
Don't (further) toast a relationship with your sibling over $250,000. Strike the above compromise and move on.
