Colvis v. Binswanger: Who Has Standing to Object in a California Trust Proceeding? – California Legal Guide | CPT Law

California Legal Implications: Standing to Object in Trust Litigation

A recent decision by the California Court of Appeal has clarified an essential procedural question in estate litigation: who is allowed to participate in court proceedings concerning a trust? While many assume that trust disputes are strictly between family members and trustees, the ruling in *Colvis v. Binswanger* expands the scope of who may voice objections.

According to the summary from Sheppard Mullin, the court determined that an “interested person”—such as a business entity held by a trust—has standing to object to petitions that affect its property rights, even if that entity is not a named beneficiary or trustee. For California families and business owners, this highlights the complex intersection between estate planning and corporate governance. and corporate governance.

Who is an “Interested Person” Under California Law?

In the context of probate and trust administration, standing refers to the legal right to initiate a lawsuit or participate in court proceedings. California law typically restricts the ability to *file* a petition for court instructions to the trustee or a beneficiary. However, responding to a petition is a different matter.. However, responding to a petition is a different matter.

Under California Probate Code section 48, the definition of an interested person is broad. It can include:
– An heir, devisee, child, or spouse
– A creditor
– A beneficiary
– Any other person having a property right in or claim against a trust estate is broad. It can include:
– An heir, devisee, child, or spouse
– A creditor
– A beneficiary
– Any other person having a property right in or claim against a trust estate

In the *Colvis* case, the court ruled that a company partially owned by the trust had the right to object when beneficiaries tried to force the company to borrow money to pay estate taxes. This establishes that if a trust proceeding threatens the financial health or assets of a third party (like a family business), that party may have the legal right to intervene.

The Difference Between Petitioning and Objecting

For those navigating trust administration, it is vital to understand the procedural difference highlighted by this case:, it is vital to understand the procedural difference highlighted by this case:

1. Petitioning the Court: Generally, only those directly named in the trust (the trustee and beneficiaries) can ask the court for instructions regarding the internal affairs of the trust.
2. Objecting or Responding: The class of people who can *defend* their interests is much larger. If a beneficiary asks the court to take an action that would harm a business or a creditor, that “interested person” has standing to appear in court and object. to appear in court and object.

Planning for Business Assets in Trusts

This legal development is particularly relevant for Californians who hold business interests within their Revocable Living Trust. When a trust owns a significant portion of a company, the line between fiduciary duties and corporate governance can blur. and corporate governance can blur.

To avoid costly litigation similar to *Colvis v. Binswanger*, estate plans should clearly define:
– The trustee’s authority regarding business assets.
– How estate taxes should be apportioned without jeopardizing the viability of family businesses.
– Whether the trust grants specific powers to the trustee to intervene in corporate management. to intervene in corporate management.

About This Case

Source: Colvis v. Binswanger: Who Has Standing to Object in a California Trust Proceeding?

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Legal Disclaimer

This article is for informational purposes only. Consult with a qualified California estate planning attorney for advice specific to your situation.

About the Author: Dustin MacFarlane, Esq.

California Licensed Attorney | Estate Planning Specialist

Dustin MacFarlane is the founder of California Probate and Trust, PC, with over 15 years of experience in estate planning, probate administration, and trust law. Licensed by the California State Bar, Dustin has helped thousands of California families protect their assets and plan for the future.

CA Bar License: Active | Practice Areas: Estate Planning, Probate, Trust Administration | Location: Granite Bay, CA

Why Estate Planning Matters in California

California has unique estate planning laws that differ significantly from other states. Without proper planning, your assets may not pass according to your wishes, and your family could face unnecessary probate court proceedings.

A comprehensive California estate plan typically includes:

• A revocable living trust to avoid probate
• Pour-over will as a safety net
• Advance health care directive
• Durable power of attorney for finances
• Beneficiary designations on retirement accounts and life insurance

How Trusts Work in California

California’s trust law (Probate Code Division 9) governs how trusts are created, administered, and terminated. Understanding these rules is essential for effective estate planning.

Key benefits of California trusts:

• Avoid probate: Assets in a properly funded trust bypass California’s lengthy probate process
• Privacy: Unlike wills (which become public in probate), trusts remain private
• Control: You maintain control during your lifetime and direct distribution after death
• Incapacity planning: Your successor trustee manages assets if you become incapacitated
• Tax planning: Trusts can help minimize estate and income taxes