The recent appellate court decision in Breslin v. Breslin is causing an uproar for at least two reasons: (1) It authorizes probate courts to order trust disputes to mediation (as opposed to just mandatory settlement conferences); and (2) It stands for the proposition that a non-participatory beneficiary or heir may forfeit their beneficial interest for their failure to act.
Here’s what happened: The decedent named as many as 24 charities as potential beneficiaries of his trust. The trial court ordered mediation among interested parties, including intestate heirs and the 24 charities.
Only five of the 24 charities participated in the mediation, where a settlement was reached awarding specific amounts to various participating parties and excluding charities that had failed to either appear or participate. When the trustee petitioned the trial court to approve the settlement, the non-appearing, non-participatory charities objected. The trial court overruled their objections because, “they neither filed a response to [the trustee’s] petition to determine the beneficiaries nor appeared at the mediation.”
After the objecting parties appealed, the California Court of Appeal ruled that, “A party receiving notice under the circumstances here, who fails to participate in court-ordered mediation, is bound by the result.”
If the decision seems like an impulsive act by an impatient court, think again. It has long been the case that California Probate Code Section 17206 has afforded probate judges in trust proceedings broad power to issue orders in their discretion concerning trust affairs. The Breslin decision stands upon this authority.
The takeaway is that beneficiaries and heirs facing litigation are now on notice to promptly hire competent probate litigation counsel to protect their interests in that litigation, including any court-ordered settlement proceedings. Breslin speaks loudly to parties who refuse to participate only to return later to complain. Essentially, if you’re not interested enough in your beneficial interest to participate and protect that interest, the courts aren’t going to do it for you.
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