It’s not uncommon for family members who are beneficiaries of a trust to squabble about how the terms of the trust should be interpreted. But what happens when a court decides to throw out part of a trust, and then has to figure out what the trustor intended?

That was what happened in a case recently decided by the California Court of Appeal (Levin v Winston-Levin.)

Robert Levin established a revocable trust in 1986, and amended it eight times between 1993 and 2012. He died in 2015.

Elizabeth Levin, Robert’s daughter from a prior marriage, then sued his widow, Debra Winston-Levin, who had been married to Robert for 20 years.

Elizabeth demanded that certain trust property left to Debra be given to her instead. In addition, alleging Debra had exercised undue influence on Robert about the amendments and had committed financial elder abuse, she asked the court to order Debra to pay double damages.

The 2008 and two amendments had changed the terms of the trust to benefit Debra at the expense of Elizabeth.

Testimony from medical experts and Robert’s close friends indicated that his mental condition had slowly deteriorated between 2008 and 2012. Debra said that by 2012 she had to pick out his clothes, manage his medications and handle other daily tasks for him. She said his driving had become dangerous and that he had begun to make impulsive financial decisions, such as opening and closing bank accounts.

Despite this, the attorney who drafted the 2012 amendment to the trust testified that Robert seemed “as competent as any client that I have ever talked to.” He said Robert made the change because “Mr. Levin was very concerned about Debra being, basically, harassed and dragged into court by his daughter, Elizabeth, after Robert had passed away.”

Robert moved into an assisted living facility in June of 2013, and died two years later.

The court rejected Elizabeth’s claim that Debra had exercised undue influence on her husband in 2008, but it found a presumption of undue influence by her as to the 2012 amendment. Debra did not rebut that finding.

As a result, the Orange County Superior Court voided the entire 2012 amendment and ordered Debra to return property she had obtained pursuant to the amendment.

Debra did not appeal the court’s ruling, but Elizabeth did.

She argued that the court’s finding of undue influence compelled it to find that Debra was also liable for financial abuse of an elder. Under California’s Probate Code, that would have entitled Elizabeth to an award of double damages, or $4 million.

She also argued that the lower court should not have voided the entire 2012 amendment, and instead should have carved out only those portions that benefited Debra.

The appellate court noted that the Probate Code provides for an award of double damages if a court finds that an elderly person has been abused “by the use of undue influence in bad faith.” While Debra may have exercised undue influence on Robert, there was no finding that she had done so in bad faith.

“Not all instances of undue influence entail bad faith,” the appellate justices noted. “A loved one’s slow, inexorable mental decline toward incompetency has no obvious signpost to delineate the exact point where negotiations about the disposition of assets become overbearing,” they wrote.

“Courts often make determinations of undue influence with the benefit of hindsight and expert testimony. But as the tragedy of a loved one’s deterioration is unfolding, it may not be clear.”

The appellate justices rejected Elizabeth’s argument that the trial court should have voided only the provisions of the 2012 amendment that benefitted Debra, leaving the rest in place.

“The history of Robert’s estate planning reveals a calculated attempt to balance the disposition of his assets between his wife and his daughter,” they noted. If the court had in effect disinherited Debra, “the balance that Robert always carefully struck would be upended.”

The trial court was correct when it looked back at that history and “drew a reasonable inference” about his intentions, the appellate court ruled. It affirmed the lower court’s decision, and awarded costs to Debra.

By Susan Sabry