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Journal of Gift Planning 19

In Re Helen’s Trust:A tale of how charities should and

should not respond to litigationReynolds T. Cafferata

Syllabus for Gift Planners Code: 4.02

Abstract: Circumstances beyond a charity’s control may require the charity to participate in litigation to protect a gift.The author uses the case of Helen’s Trust to provide practical advice to charities and their counsel for anticipating andresponding to litigation.

he author has represented a number of charitable organizations and other fiduciaries inlitigation involving charitable bequests and charitable trusts. From those experiences, hedeveloped a presentation for charitable organizations and practitioners on how to avoidlitigation and how to respond to it when it occurs.1 In 2003, the author represented twocharities in a single case that illustrated most of the issues and concerns that the authoraddressed in his presentations. This article is the story of that case and the lessons that it holds.The case was settled through mediation, and there are no reported decisions. Some of thecharitable organizations that did not respond effectively in this particular case are well knownnational organizations. So that the focus of the article will be on the lessons and not the parties,the parties are not identified. The case is referred to as In re Helen’s Trust.

Helen came to Los Angeles in the 1930s hoping to be a movie star. Her movie career neverreally took off, but she managed to purchase a few small houses on a cul-de-sac in Beverly Hills.Helen had a difficult personality, and her dementia and pain from arthritis made her even moredifficult in her last years of life. Helen’s closest relative was a niece, but the two did not appear tohave a warm relationship.

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20 Journal of Gift Planning

Helen had an attorney-drawnwill and living trust that left herestate primarily to six charitableorganizations with a few specificbequests to individuals anddistant relatives. There were twointeresting aspects to thebequests to the individuals. First,the bequests were included in herwill, not her living trust. Thiswas problematic because, unlikemany other individuals, Helenmanaged to transfer all of herassets to the living trust so there were no assets in herprobate estate to pay these individual bequests.Furthermore, there were no provisions in the living trustdirecting the trustee to pay the bequests listed under thewill. The second interesting aspect was the bequest toHelen’s full-time caregiver. This bequest contained theintriguing proviso that if Helen died within 10 years ofcreating the will, an autopsy was to be performed to see ifthe caregiver had poisoned her. If the caregiver hadpoisoned Helen, the gift was forfeited.

Helen suffered from debilitating arthritis which requiredthat she take powerful pain medication. In addition, towardthe end of her life, she also suffered from Alzheimer’s anddementia. A few years before her death, a proceeding toestablish a conservatorship for Helen had been initiated.Helen retained counsel to fight the imposition of the con-servatorship, and the matter was settled when Helen agreedto have her accountant and her caregiver named as co-trustees of her trust to manage her financial affairs. Themedical reports in that proceeding, however, reflected thatshe had diminished capacity.

In the last months of Helen’s life, her dementia and needfor pain medication worsened. During this period of time,the caregiver made repeated attempts to change Helen’sestate plan. These attempts included the completion of afill-in-the-blank trust kit in which Helen signed a trust for a

single person, a trust for a married person and a revocationof a trust. In all cases, blanks for beneficiaries were filled inwith the names of the caregiver and the caregiver’s family.

In May of 2002, Helen signed a document titled“Temporary Living Trust.” According to the declaration ofthe husband of the caregiver, one morning, Helen told himthat she wanted to change her estate plan. The declarationwent on to say that Helen requested that she not be givenpain medication and then dictated to the caregiver’shusband a new estate plan that gave most of the estate tothe caregiver and the caregiver’s family. The caregiver’shusband typed the dictated text on a computer and printedout the document. He then read it to Helen and had hersign it. The Temporary Living Trust included a few otherindividual bequests and a small gift to a charitable organiza-tion that had never been included in Helen’s previous estateplans. Helen died the next day.

During the period of time that all of these estate plans werebeing created, Helen’s accountant and co-trustee of her trustmade repeated attempts to contact her. He was alwaysturned away by the caregiver, who told him Helen was notstrong enough to meet with him. He had even called on theday that the Temporary Living Trust was signed, but nomention of it was made to him.

Shortly after Helen’s death, the caregiver faxed a copy of theTemporary Living Trust to Helen’s attorney and her

[We contacted Helen’s attorney and the

accountant. They provided us with copies of

the various other attempted estate plans, as

well as significant other background information

including filings from the conservatorship

proceeding. The material convinced us that the

Temporary Living Trust was the product of

undue influence, and was signed at a time

when Helen lacked the capacity to execute

such a document.

42176_Journal-June05 7/14/05 8:47 AM 0


accountant who was the co-trustee of thetrust. The accountant questioned the validityof the Temporary Living Trust, and thecaregiver retained counsel to defend thedocument.

Under California law, the trustee of a livingtrust is required to send out a notice to thetrustor’s heirs at law and the beneficiaries ofthe trust when trustor dies.2 The notice mustbe sent within 60 days of the trustor’s death.The notice must advise the heirs and trustbeneficiaries that the trust has becomeirrevocable and that they have 120 days torequest a copy of the trust. The statuteimposes a statute of limitation to contest thetrust of the later of 120 days from the time aperson is sent the notice or 60 days fromwhen the person is sent a copy of the trust.3

With the 120 day period to request a copy ofthe trust and the 60 day period after the copy of the trust issent out, up to 180 days is allowed to contest the trust. Ifthe trustee sends a copy of the trust with the notice,however, the statute runs in 120 days.

The accountant prepared a notice to the heirs and trustbeneficiaries, to which he attached a copy of the trustincluding all of the amendments to the trust except theTemporary Living Trust. The caregiver also prepared herown notice, to which she attached all of the amendmentsto the trust including the Temporary Living Trust. Theheirs and beneficiaries received both versions of the noticeswithin two days of each other.

In order to send out the trustee’s notices, both trusteessearched the California Secretary of State’s web site andfound addresses for many of the organizations named asbeneficiaries of the trust. If they were not able to find theorganizations there, other Internet searches provided thenames. Some attorneys are sloppy about giving notice tocharities. Most charities are incorporated. The proper way to

serve a corporation is to serve the agent for service ofprocess registered with the secretary of state of the statewhere the corporation is organized or of the state in whichthe charity has qualified to do business. This information isa public record and available on most secretary of states’ websites. Calling the charity and asking where to send papers isan unreliable method of getting this information, as the stafflikely will not be aware of the registered agent. Failure toserve the charity properly may give it defenses to statutes oflimitation or to any order in the proceeding. Becausecharities can have similar or identical names, it is prudent tosearch the name on the Internet to see whether more thanone charity might be referenced in a document. We wouldlater learn that the trustees probably should have used morediligence in searching out the beneficiaries of the trust.

As noted above, each of the charitable beneficiaries, as wellas the other beneficiaries of the trust and heirs, receivedtwo trustee’s notices: one containing a version of the trustthat did not include the Temporary Living Trust and oneversion with the Temporary Living Trust that resulted in a

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radically different distribution of the trustassets. One of the charities that the authorrepresents regularly has a paralegal on staffwho reviews all of the probates and trustnotices sent to the organization. She isable to distinguish routine notices that anorganization receives in an ordinary estateproceeding that do not require theattention of an attorney from notices orfilings that suggest that there may be aproblem requiring legal action.

The conflicting versions of the trust in thenotices were a clear indication that therewas a dispute regarding the terms of thistrust, and that one version of the trustwould exclude the charitable organizationfrom receiving any share of the estate. Onits face, the Temporary Living Trust was adubious looking document at best. It wasa jumble of incomplete sentences, and thesignature clearly was made by a personwho could barely hold the pen to thepaper. The paralegal for the charitycontacted our offices immediately andforwarded the conflicting notices to us.Shortly thereafter, we were contacted byanother organization that has similarprocedures for reviewing trust and estatefilings.

We contacted Helen’s attorney and theaccountant. They provided us with copiesof the various other attempted estateplans, as well as significant otherbackground information including filingsfrom the conservatorship proceeding. Thematerial convinced us that the TemporaryLiving Trust was the product of undue

influence, and was signed at a time whenHelen lacked the capacity to execute sucha document.

The end of the 120 day statute oflimitations to contest the trust was a fewweeks away, and on behalf of the twocharitable organizations that werepresented, we filed a contest to thevalidity of the Temporary Living Trust.This contest was served on all of the ben-eficiaries listed in both of the versions ofthe trust and on Helen’s heirs using theservice lists on the trustees’ notices.Shortly after filing the contest, counsel fora third charity contacted us and then filedon behalf of that charity a joinder to thecontest that we had filed.

On the day that the 120 day statute oflimitations ran, three of the charitablebeneficiaries had not filed any documentsin the case. As the hearing date on thecontest approached, the remaining threecharities had not filed any documents. Anattorney in the author’s office attemptedto contact the other three organizations tosee if they planned to make anappearance. The attorney was havingdifficulty contacting an organization inSacramento, California, called WorldPeace,4 and she searched the Internet tosee if World Peace was a local chapter ofan organization with a national office thatshould be contacted. The attorney founda website for World Peace based in theNew York, which she called. The WorldPeace New York was not aware of anychapters in California and had not

[A mediation is simply a discussion of money. Helen’s Trust had

about $2.3 million of real estate and cash. Mediation usually does

not produce what the parties would consider to be a just or fair

result, only a result that is tolerable to all of them.5



received any of the documents in the case. As a courtesyto World Peace New York, our office advised them of thehearing date and sent them by Federal Express a completeset of the pleadings and documents in the case, now astack of paper that was a couple of inches thick. ThisFederal Express was sent to the General Counsel of WorldPeace New York.

At the hearing, only the two organizations represented bythe author and the other charity that had joined thecontest appeared. In addition, the caregiver wasrepresented, as well as the charitable organization that wasnamed in the Temporary Living Trust. As is routine forthese matters, the judge continued the matter to give theparties time to try to resolve the case through mediation.Our experience has been that over 90 percent of thesecases can be settled with the assistance of a mediator. Thegeneral counsel for World Peace New York made one ortwo calls to our office leaving voicemails before Californiabusiness hours, asking that we provide them withinformation regarding the case. Those calls were returnedduring normal New York business hours, leaving themessage that our firm did not and could not representWorld Peace, and that World Peace should contact thetrustee of the trust if it wanted additional information.Each message provided the contact information for thetrustee (which also appeared on several of the pleadingsthat World Peace New York had).

Two months after the hearing, the two charitiesrepresented by the author and the third charity that hadjoined the contest of the trust conducted a mediationwith the caregiver and some of the other beneficiaries thatreceived gifts under the Temporary Living Trust,including the charity that was named in that document.The mediator was a respected retired probate judge.

A mediation is simply a discussion of money. Helen’sTrust had about $2.3 million of real estate and cash.Mediation usually does not produce what the partieswould consider to be a just or fair result, only a result that

is tolerable to all of them.5 When planning for amediation, a party needs to determine the amount thatthe party would likely obtain at trial, and then deductanticipated attorneys’ fees. That amount is the party’s bestcase scenario: it is the most that the party can obtain fromthe case. In rare circumstances, a court will award aprevailing party attorneys’ fees. This is unusual and notnormal in the American system of justice. Recently, inanother estate in which the author represented a charity,the other party’s conduct was so egregious that the courtdid award the author’s client attorneys’ fees. The otherparty, however, has no assets and was judgment proof.The situation simply reinforces the reason whysettlements should be evaluated assuming that parties willbear their own attorneys’ fees.

After determining what the party could get from afavorable ruling at trial, the party must then factor in thelikelihood of prevailing at trial. The caregiver had aterrible case. The declaration signed by the husband ofthe caregiver describing the creation and signing of theTemporary Living Trust made out the elements requiredto create a presumption of undue influence as if thedrafter of the declaration had been carefully following thecases to be sure every one of the elements was satisfied.6



One might be tempted to, at that point, give thecaregiver no chance of winning, but litigation is riskyand unpredictable. It is not a bad idea to give even theweakest opponent a 10 percent chance of winning toaccount for potential surprises.

Two cases in which the author was involved illustrate therisks of litigation. One case dealt with a charitable organ-ization that believed it was the beneficiary of a $1.3million estate under a holographic will. Initially, thedaughter of the decedent challenged the holographicwill, arguing that a prior typewritten will should govern.A few months into the case, however, the daughterdiscovered a typewritten will that had a later date thanthe holographic will that benefited the charity. The latertypewritten will left the estate to the daughter. Thecharity spent a considerable amount of legal fees andexpert witness fees to challenge the later typewritten will.In the process of that battle, another holographic willthat was later than the original holographic will butearlier than the typewritten will was discovered. The laterholographic will left the estate to a charity represented bythe author, not the charity named in the firstholographic will. The later holographic will meant thatthe charity that had been fighting the case all along nolonger had any standing to pursue the case.7

Another matter involved a trustee who was defendingagainst claims by beneficiaries who were complainingabout aspects of the administration of the trust. Thebeneficiaries prolonged the case and avoided mediation.The beneficiaries also antagonized the sibling of thedecedent who had created the trust. The decedent’ssibling then revealed to the trustee that the decedent hadan additional child. The child was a potential beneficiaryof the trust and would reduce the shares of the otherbeneficiaries by 20 percent. Under the circumstances,had the beneficiaries embraced mediation early on in theprocess, the case may well have been resolved withoutthe trustee knowing about the other child. Had thathappened, it is unlikely the child ever would haveappeared to make a claim.

Another risk of litigation is that judges don’t always lookfavorably on a charitable organization that, in the judge’sperception, is aggressive in litigation. Some judges aresympathetic toward disinherited heirs and view thebequest as “found money” for the charitable organization.

The risk analysis did not give the complete answer in themediation of Helen’s Trust. Helen’s trust presented theodd situation where both sides could easily obtain abetter result from the mediation than either could obtainby going to trial. If the charities won at trial, each wouldget one-sixth (1/6) of the estate less attorney’s fees. Thethree charities present at the mediation, however, werecollectively only entitled to half of the estate. They alsoarguably were damaged by their legal fees to date sincethe caregiver’s case was so weak. The charities told thecaregiver that they would settle the case if the charitieseach received their share of the estate plus an amount tocover their attorneys’ fees to date. This still left over one-third of the estate available for the caregiver—far morethan the caregiver would get at trial. Since the charitieswere getting their share of the estate and their attorney’sfees, they too were getting more than they would receiveat trial. Going to trial would result in more attorney’sfees which the charities would not recover.

The attorneys for the charities were not obligated toconsider the interest of the charitable organizations thatdid not bother to participate in the case. It is inconsis-tent with the rules of professional conduct for anattorney to represent interests adverse to the attorney’sclient’s interests in a case.8 The author has settled anumber of cases in which either charitable or non-charitable beneficiaries chose not to participate in themediation. In each case, the parties who did notparticipate were left out of the settlement. There were anumber of non-charitable beneficiaries who also did notparticipate in this mediation and were left out of thesettlement. All of those beneficiaries had smaller intereststhan the charitable organizations that did not participatein the case.



At the conclusion of themediation, each charity wasreceiving $375,000. The balanceof the estate was going to thebeneficiaries of the TemporaryLiving Trust. Although it couldbe handled in various ways,typically a settlement is presentedto the court for approval.Accordingly, a petition was filedwith the court to approve thesettlement that the parties hadreached, and notice of thatpetition was sent to all of thepotential beneficiaries of thedifferent versions of the trust.The week of the hearing hadarrived and, as expected, none ofthe other beneficiaries of thetrust had filed any documents.Two days before the hearing,however, World PeaceSacramento objected to thesettlement. World PeaceSacramento argued that thesettlement should be set aside because World Peace didnot know that if it did not participate in the proceeding,then it would be excluded from settlement. This is not ameritorious basis for setting aside settlement. Furtherdelays, however, would prove costly, and charities thathad settled the case and the caregiver were willing tomake a quick settlement with World Peace Sacramentoto keep the overall settlement on track. The representa-tive of World Peace Sacramento was not particularlysophisticated, and insisted on nothing less than her dayin court and justice for the estate of Helen. World PeaceSacramento refused to consider any kind of settlement.

The hearing on the settlement would be made moreinteresting by the appearance of World Peace

Sacramento, but the parties to the settlement stillanticipated that they might salvage the settlement. Theopportunity for salvaging it quickly disappeared,however, when the attorneys stated their appearances atthe hearing. All of the attorneys who attended themediation stated their appearances. As expected, therewas an attorney representing World Peace Sacramento.In addition, however, there was an attorney for WorldPeace New York. An attorney for one of the relativeswith a $50,000 specific bequest also appeared at thehearing to object to the settlement. The entire gaggle ofattorneys stepped outside the courtroom to discuss thecase, but the two World Peace organizations were notwilling to reach any settlement. The attorney for therelative wanted to cut a deal, but the charities refused

continued on page 50



because it was likely that attorney would not stay in forwhat was going to be the long haul of the case.

The attorneys returned to the courtroom to continue thehearing. The attorney for World Peace New Yorkcomplained bitterly about how the charities had just sentthe charity a huge stack of papers months ago. Theauthor acknowledges finding World Peace New York’sattacks on his client and the attorney who sent thedocuments to World Peace highly obnoxious. This maycolor the discussion of World Peace New York in thisarticle. World Peace Sacramento said it was unjust thatthe caregiver was getting anything. The original charitiesand the caregiver argued that both World Peaces weretoo late in appearing in the case. The regular judge wason vacation on the date of the hearing, and a SuperiorCourt staff attorney was acting as a judge pro tem. Thejudge pro tem was not inclined to make any rulings inwhat had become a messy matter and simply continuedthe hearing for 45 days.

By the end of the hearing, the case had become procedu-rally complicated. There were two different World Peacesclaiming to be one of the charities entitled to distribu-tion of Helen’s trust. Both World Peaces were in theunenviable position of having to prove which one wasthe beneficiary of the trust. Once the correct WorldPeace was identified, that organization would have toshow why it was not precluded from participating in thecase because it had not timely joined in the action andwas barred by the 120 day statute of limitation from thenotices by the trustee.9

World Peace New York argued that the original charitieshad tricked World Peace New York into not respondingwithin the statute of limitations by having buried theProbate Code Section 16061.8 notice in several inches ofpleadings that were sent to them. The notices were majorexhibits to the contest of the terms of the TemporaryLiving Trust. It is hard to understand why the generalcounsel of a major charity did not immediately hirecounsel after receiving a call regarding litigation and

receiving by Federal Express a stack of a couple of inchesof pleadings. The pleadings clearly showed that othermajor charities were involved in this litigation, in whichWorld Peace New York could lose a six-figure gift. Moreimportantly, the pleadings told World Peace New Yorkthat it had not initially received pleadings in the casebecause there was an organization operating inSacramento incorporated under World Peace New York’sname. With that information, the general counsel forWorld Peace New York decided to do nothing and notto hire any counsel in California until months later—one day before the hearing on the petition to approvethe settlement of the case.

The dispute between the two World Peaces points outone of the major sources of litigation with regard tocharitable organizations: confusion over names. An Ohiocase shows how a charity can lose a substantial part of agift because of name confusion. In the case, a decedenthad drafted a gift to an organization whose name wassimilar to three different organizations but not exactlythe name of any of those three organizations, or anyactual organization. In a resolution that would meet withthe approval of Solomon, the court simply divided thegift between those three organizations.10 While this wasa practical resolution of the case, it meant that oneorganization lost two-thirds of its gift and two organiza-tions received a windfall. Charitable organizations shouldbe diligent about making sure that it is easy for donorsand their counsel to find the proper legal name for theorganization.

Organizations that operate under a different name thantheir legal name should make sure that they have made

Cafferata, continued from page 25

[42176_Journal-June05 7/14/05 8:47 AM Page 50


the proper registrations to link bothnames together and protect the use ofboth names. In general, it is a betterpractice for an organization to operateunder and be known as its legal namerather than have two different namesand risk confusion. In the case ofWorld Peace New York, its name was afictitious name for Peace Foundation,the actual legal name of the organiza-tion. This difference between thecommon name and the legal name ofWorld Peace New York contributed tothe confusion in the case andcompromised World Peace New York’sclaim to the trust.

A charity should regularly verify thatno other organization is using its name.This is where World Peace New Yorkfell down. For-profit organizationsregularly do searches to protect theirnames and trademarks. Charitableorganizations also need to protect the value of theirnames. World Peace Sacramento had been operatingunder that name for several years without the knowledgeof World Peace New York. A simple Internet search wouldhave warned World Peace New York of the existence ofthe organization in Sacramento.

To clear up the mess of the World Peaces, the originalthree charities filed papers with the court indicating thatthe two World Peaces needed to resolve which of themwas the real World Peace, and then the court coulddetermine whether or not that World Peace had the rightto participate in the case. The author’s office was investi-gating World Peace Sacramento and made an interestingdiscovery. World Peace Sacramento had originally incor-porated under the name “Bread Basket.” Bread Baskethad changed its name to World Peace two years afterHelen had signed the trust leaving the gift to World

Peace. Accordingly, it was not possible that World PeaceSacramento was the beneficiary of the trust because itdidn’t have that name when Helen signed the trust. WorldPeace New York likely was the intended beneficiary ofHelen’s trust.

The attorneys for World Peace New York had beennegotiating with World Peace Sacramento, but had notcome to any resolution of the matter. The original threecharities had filed documents with the court calling intoquestion which World Peace was the correct World Peace.The three charities had a duty of candor to the court tofile a copy of the certificate evidencing the name changeof Save the World Sacramento from Bread Basket, and toask the court to take judicial notice of the name changeand the date that it took place. In short, the original threecharities won the argument for World Peace New York inits dispute with World Peace Sacramento. The authorfound World Peace New York’s lack of gratitude for this



assistance obnoxious, and, again, this may color this article.

The general counsel of World Peace New York was in anawkward position. As noted above, he had received all ofthe pleadings in the case and notification that an organiza-tion in Sacramento was operating under World Peace NewYork’s name. The general counsel did nothing until hereceived the notice of proposed settlement showing thatthe charitable organizations that had timely participated inthe case were each receiving $375,000. The general counselhad improperly handled the matter, and World Peace NewYork was about to lose a lot of money.

Because of the difficult position of the general counsel ofWorld Peace New York, reaching agreement with WorldPeace New York to settle the case was extremely difficult.On the eve of the next hearing, World Peace New Yorkfinally reached an agreement with the other parties. Bythen, however, one of the other charities that had not par-ticipated in the case filed papers indicating that it toowanted a share of the trust.

At that hearing, the judge pro tem was again on the benchand was again unwilling to make any rulings or decisions.Once again he continued the matter for 45 days. Duringthis second continuance of the hearing to approve thesettlement, the sixth and final charity finally appeared andindicated that it wanted some of the money as well.

The original parties to the settlement filed various briefs asto why the late parties should be excluded from the case.The original three charities that had contested the trustand the caregiver and other beneficiaries of the TemporaryLiving Trust now became allies against the late charities.The parties to the settlement argued that the latecharities should not be able to intervene in the casebecause their challenge to the trust was barred by thestatute of limitations. The original charities and the ben-eficiaries under the Temporary Living Trust wanted tosave the settlement because, as noted above, both groupswere in better positions than either would be if the casewent to trial.

Since the trust notice statute that imposed the statute oflimitation on the late charities was only a few years old,there were no cases interpreting its provisions. The long-standing California will contest statute, however, imposes astatute of limitation similar to the trust notice statute. Thewill contest statute provides a short period of time after awill has been admitted to probate for a contest to the will.11

In a case interpreting the will contest statute, one party hadcontested the will and then reached a settlement.12 A partywho had not contested the will within the statute oflimitations or participated in the settling party’s contestthen tried to set aside the settlement. The court upheld thesettlement and did not allow the late party to enter thecase. Obviously the other side made different arguments,

[It may be necessary to ask the judge for a ruling in advance of

mediation regarding parties that do not participate, or to seek to

settle the case in a way that does not require a petition to approve

the settlement that can be attacked.



but looking at the case now not as theadvocate, but in this review, the precedentfrom the will contest likely should havecontrolled the participation of the latecharities.

One area of doubt, however, was the situationof World Peace New York. By the time WorldPeace New York appeared in the case, 120 dayshad run since it had received the initial stackof pleadings including the trust notices andthe copies of the two versions of the trust.Courts, however, construe notice requirementsnarrowly and technically. The notices had beenmailed to World Peace by a party and as partof a pleading. The notice statute requires thenotice to be sent by the Trustee and does notsanction including the notice with otherdocuments. There was a strong possibility thatthe court would not apply the statute oflimitations to World Peace New York for thesereasons. If World Peace New York could jointhe case, the court might allow the other late charities tojoin the case, even if those charities otherwise would bebarred, since the case would be proceeding with WorldPeace New York in any event.

By filing papers that it is permissible for a charity to contesta trust after the statute of limitations has run, the latecharities may have been taking a position that, whilehelpful to them in the current case, could prove detrimentalin future cases. These were national charities that inordinary circumstances would be expected to be timely intheir filings. More often than not, these charities would bein the position of making an advantageous settlement thatexcludes less well organized beneficiaries that did not timelyparticipate in the litigation.

The possibility of late charities had been discussed with themediator, who was a well regarded former probate judge asnoted above. His conclusion, and the experience to date ofthe other attorneys in the case, was that the late charitieswould be barred from joining the case. When the parties

finally had a hearing before the sitting probate judge,however, he was no more interested in making anydecisions than the judge pro tem. Before any of the counselcould make any arguments at the hearing, the judgeordered all of the parties before the court to return tomediation.

The downtown Los Angeles Court has a crowded docket,and the judges take every opportunity to get cases resolvedin mediation. While this directive was expedient in thecurrent case, it potentially created problems for parties infuture cases. The judge’s ruling created the possibility that aparty might skip a mediation and then object to thepetition for approval of settlement after the other partieshave bargained down their positions. Parties may bereluctant to make their last best offer in a mediation if theyare concerned that there will be second round of negotia-tions, and cases may not settle if the parties are trying toleave more room for an additional round of negotiations.With respect to Helen’s Trust, the judge indicated that



although he was ordering a mediation that included thelate charities, the parties should not read the ruling as anindication that he would rule in their favor of allowingthe late charities into the case if he actually was forced todecide on whether they were barred by the statute oflimitations. So being late would be a risky strategy never-theless, and perhaps the judge figured that was sufficientto discourage parties from attempting to game amediation process in the future. In this case, the charitieswere late due to lack of diligence, not as an attempt togame the mediation process.

The ruling does, however, leave charities in the difficultposition of participating in litigation when some of thepotential beneficiaries of the trust or estate have refused toparticipate or appear in the litigation. It may be necessaryto ask the judge for a ruling in advance of mediationregarding parties that do not participate, or to seek tosettle the case in a way that does not require a petition toapprove the settlement that can be attacked.

It was nearly three months out before a date could befound that all of the parties and their attorneys could gettogether to conduct the second mediation. On the eve ofthe second mediation, we learned that the mediator had adeath in his family. It looked like the case would bedelayed for several more months. In an amazing act ofservice, however, recognizing the challenge the parties hadfaced in setting the second mediation, the judge told theparties that he would conduct the mediation as planned.

At the start of the mediation, the trustees advised all theparties that the trust had about $2 million in it, not $2.3million as originally estimated at the first mediation. Thevalue had decreased because the real estate in the trust hadnot sold for as much as expected because of its poorcondition. This meant that there were more partiesdividing up a smaller pot. From the outset, there was a lotof anger among the parties. The original three charitieswere upset that they had done all of the work in the caseand had gone through a mediation, only to have the latecharities trying to join the case once it had become a sure

thing that there would be some money. The late charitieswere angry with the original three charities for giving theirmoney to the caregiver. World Peace New York, inparticular, was bitter about the process. In addition, thegeneral counsel of World Peace New York was not lookingat the case objectively, but was there to remedy his ownmishandling of the case. In the earlier agreement reachedwith World Peace New York, it had agreed to accept$225,000, an amount that mostly came from thecaregiver. Notwithstanding that more parties weredividing up a smaller pot, World Peace New York said ithoped to get more money from the mediation.

In the earlier deal with World Peace New York, theoriginal three charities had each reduced their share by$10,000 to $365,000. At the mediation, each of theoriginal three settling charities fairly quickly offered toreduce the amount that each would take from thesettlement from $365,000 to $340,000. The originalcharities still would receive more than they could obtainby trying the case. In this case that amount would be one-sixth of $2 million. That $2 million, however, would bereduced by attorneys’ fees as well as the cost of administer-ing the estate. Accordingly, the amount to be dividedwould probably be, at most, $1.8 million or $300,000 percharity. Accordingly, the $340,000 was still a greatsettlement for the original three charities. The caregiverand the other beneficiaries of the Temporary Living Trustconceded significant additional sums, since the likelyoutcome at trial for the beneficiaries of the TemporaryLiving Trust was that they would receive nothing. Thediscussions continued throughout the day with the gapbetween the parties shrinking.

By mid-afternoon, the parties were approximately$30,000 apart. At this point, the retired judge who wasacting as mediator indicated that he was needed at home.He asked the parties to finish up the mediation on theirown. It seemed like a relatively easy task to finish themediation given the modest amount remaining betweenthe various sides. It took nearly five hours to find the$30,000.



The difficulty in finishing the mediationwas caused by two factors. First, beforeleaving, the judge had talked to each of theparties and explained that he was runningout of time. He asked each party for abottom line number. Most of the parties,out of respect for the commitment thejudge had made in participating in themediation, honored his request and gavehim their real bottom line rather thanholding back for further negotiations. Theoriginal three charities, for example,reduced their amounts by $25,000 from$340,000 to $315,000. Second, WorldPeace New York continued to maintain itscompletely unreasonable expectation that itshould receive more money from themediation than it had earlier agreed toaccept. The retired judge would have beenmore effective than the other parties inpersuading World Peace New York to berealistic.

The next several hours were spent dragging more moneyfrom the beneficiaries of the Temporary Living Trust, whostill had the most to gain from the settlement and pressingWorld Peace New York to make a contribution to thesettlement. By approximately 6:00 in the evening, theparties were $10,000 apart. The author suggested toWorld Peace New York that if it put in $5,000, the authorcould get the last $5,000 from the other side. World PeaceNew York’s response was to ask the other side to committhe $5,000 first. The author agreed to get the $5,000 withthe stated expectation that World Peace New York wouldprovide the other $5,000. Ironically, the beneficiaries ofthe Temporary Living Trust had come up with $8,000.

Frustrated with World Peace New York’s negotiationtactics, the author told the caregiver’s attorney that only$5,000 was needed. When presented with the $5,000from the beneficiaries of the Temporary Living Trust,

World Peace New York’s attorney then tried to game thesituation and suggested that the other charities each put insome of the $5,000. The general counsel for World PeaceNew York objected to the tactic, but was concerned thathe was being advised by his attorney to take thatapproach. The representative of one of the other charities,however, assured him that he was the client and coulddirect his attorney to accept the settlement. The generalcounsel promptly did so, and the case was finally resolved.

At this stage, the parties had a yellow pad of paper withlots of different numbers scratched out on it. A settlementshould be completely memorialized in writing before theparties leave the mediation. It is easy for a settlement todrag on or unravel if the parties come to a basicagreement, but do not memorialize it at the mediation.Either because of genuine misunderstandings that didn’tget clarified or because a party is trying to take advantageof the opportunity, negotiations after the agreement has



been reached can become protracted and can result in thesettlement falling apart.

In most instances, it is possible to anticipate 90 percent ormore of the terms that will be in the settlementagreement. In this case, the only unknown was really thepercentages or amounts that the parties would receive. Theauthor brought to the mediation a laptop computer anddisk with a shell of a settlement agreement. The documenthad the names of all of the parties in it, blanks forpercentages or amounts for dividing up the assets of thetrust, and standard provisions for a settlement agreementsuch as mutual releases and provisions allowing themediator to resolve disputes about the settlement if anyarose. Once the blanks for the amounts for each partywere filled in, there were virtually no changes to any otherprovisions of the agreement. By having the agreement inadvance, it allowed the parties to document the settlementin full in a short amount of time and avoid any risk of thesettlement unraveling at a future date.

When the dust had all settled, the final agreementprovided $315,000 to each of the three charities who hadparticipated in the litigation from the outset. World PeaceNew York received $205,000, and the other two latecharities each received $100,000. The remaining$350,000 balance of the trust went to the caregiver, thecaregiver’s family and the other beneficiaries under theTemporary Living Trust, including the charity named inthat document. The trust expenses also came out of the$350,000.

Obviously, the original charities would have been happierwith the original settlement that gave them more moneyand was reached before they had incurred additional legalfees. On the other hand, the money that they werereceiving was still the same amount or more than theywould likely receive if they had tried the case andprevailed. Accordingly, for them, it was a good settlement.The amounts accepted by the late charities alsorepresented their relative risks. World Peace New Yorkhaving the argument that it was not given proper noticehad a stronger position than the other two charities, and

therefore received a greater amount of the settlement. Atthe end of the day, the late charities were able to makerecoveries. These charities, however, received significantlyless than they would have received had they timely partici-pated in the case.

As noted at the outset, the case of Helen’s Trust has manylessons for charities regarding litigation. Those lessons areas follows:

• Gifts to charitable organizations in wills and trustshould include more identifying information thanjust the name of the organization. If the drafter ofHelen’s Trust had included an address for thecharitable organizations, the confusion of the WorldPeaces might have been avoided entirely. Care needsto be used when adding the additional identifyinginformation to be certain that it is correct for theorganization in question. If the information is added,but is incorrect, instead of resolving ambiguity, it willcreate ambiguity.

• Charities need to monitor and protect the use of theirname. Had World Peace New York been vigilantabout protecting its name, it would have received theinformation regarding the case in a timely manner.

• Parties giving notice to charitable organizations needto be especially careful of the possibility of theexistence of organizations with the same or similarnames. Even when a litigant has found an organiza-tion with the exact same name as the charity specifiedin the document, as was the case with World PeaceSacramento, it is possible that the organization is notthe organization named in the document. Additionalsearches through Internet search engines such aswww.guidestar.org, the IRS website and attorneygeneral web sites should be used to determine if morethan one organization might have a potential claim toa gift.

• A party to a case involving charities may wish tocheck the service list created by another party to



insure that proper diligence has been usedin giving notice to parties.

• Charitable organizations need a process inplace to quickly review and respond tolegal notices. In most litigation, there aretime limits by which a party must respondor participate in the litigation. A charityneeds a knowledgeable person who canreview legal notices and quickly directthem to outside counsel when necessary.The late organizations in Helen’s Trust hadnot even contacted outside counsel untilafter the time limit to contest the trust hadrun. Outside counsel did the best theycould under the circumstances for the latecharities, but their clients’ positions wouldhave been much stronger had outsidecounsel received information regarding thecase in a timely manner.

• Charities cannot rely on attorneys who do notrepresent them to protect their interest. At one pointduring the proceedings, World Peace New Yorkindicated that it had anticipated that the othercharities would look out for its interest. Thisexpectation, if genuine, was antithetical to the legalobligations of the attorneys for the other charities. Acharity that wants to have its interests in a proceedingprotected must retain its own counsel to protect thoseinterests. Furthermore, the charity must file its ownpapers to become a party to the action so that thecharity has a legal claim that only the charity can agreeto dismiss.

• These cases and settlement negotiations are only aboutmoney. The initial settlement of the case arguably wasan unjust resolution because the caregiver receivedmuch more money than she was entitled to receive orthe merits of her case would support. It was, however,

a resolution of the case acceptable to all of the partiesparticipating in the mediation. The charities whoagreed to that settlement had been made whole by thesettlement, and there was no reason for them or theirattorneys to argue for more. Even the secondsettlement likely gave the caregiver more than was just.Again, however, the mistakes of some of the othercharities had compromised their legal positions andcreated the opportunity for the caregiver to receive thegreater amount in the settlement. In most settlements,a charity will receive less than what it would receivehad there not been any litigation. The charity mustaccept the fact of the litigation and evaluate settlementin light of the litigation.

• Delaying settlement exposes a party tothe continued risk of litigation. All of the parties were surprised at one stage or another by the various developments in the litigation regarding Helen’s Trust.



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There are lots of reasons that the twoWorld Peace’s would have been reluctant to settle at the first hearing. Had the two World Peace charities reached an agreement with the other charities and the caregiver at the first hearing, however, they might have received more money from the case. At that time, the caregiver believed the trust real estate to be more valuable than it was, and there were fewer parties seeking a portion of the trust. World Peace Sacramento clearly would have been ahead since it ultimately received nothing. The lawyers representing these charities had lots of reasons for wanting to develop the facts further and perhaps better establish their claims. A party should be always mindful, however, that the passage of time can easily allow for the development of unfavorable facts as well. Legal fees continue to grow as well when a case is not settled.

Obviously charities do not wish to face litigationregarding their gifts. As illustrated in the situation ofHelen’s Trust, however, circumstances beyond thecharity’s control may require the charity to participate inlitigation to protect a gift. A natural byproduct of asuccessful bequest or planned giving program will be

disputes regarding those gifts. If charities and theircounsel are thoughtful about the litigation and rememberthe lessons of Helen’s Trust, the charities’ responses tosuch litigation will be more effective.

1 Reynolds T. Cafferata, “Avoiding And Responding To Litigation:Advice for the Charity and the Practitioner,” Proceedings of theNational Conference on Planned Giving 2004, p. 73.

2 Cal. Prob. Code § 16061.7.

3 Cal. Prob. Code § 16061.8.

4 This is not its real name, and if there is an organization actuallynamed World Peace, that organization was not a participant in thiscase.

5 Mediation is a process in which all the parties must agree to theresult. The mediator only has the power of persuasion to help theparties reach agreement. Mediation is different from arbitration inwhich the arbitrator has the power to determine the outcome for theparties.

6 See In re Graves’ Estate (1927) 202 Cal. 258, 262-63; Estate of Lind(1989) 209 Cal. App. 3d 1424, 1430; Estate of Baker (1982) 131 Cal.App. 3d 471, 483; see also Estate of Garibaldi (1961) 57 Cal. 2d 108,113.

7 The author’s client did not challenge the later typewritten willbecause there was not sufficient evidence of lack of capacity, undueinfluence or any other theory that would justify invalidating the will.

8 Cal. Rul. Prof. Cond. 3-310.

9 Cal. Prob. Code § 16061.8.

10 McDonald & Company Securities, Inc. Gradison Division v.Alzheimer’s Disease and Related Disorders Association, Inc. et al., 747N.E.2d 843 (Ohio App., 2000).

11 Cal. Prob. Code §§ 8251, 8270.

12Estate of Walters, 89 Cal. App. 2d 797 (1949).

Reynolds T. Cafferata is a partner with Rodriguez, Horii & Choi LLP of Los Angeles, CA, focusing on advising nonprofits,individuals and financial institutions regarding structure and administration of charitable gifts. He represents clients in litigationregarding gifts and operations of the organization. He is a graduate of the University of Southern California School of Law and apast board member of NCPG and 2003 chair of the National Conference on Planned Giving. He is a member of the PlannedGiving Round Table of Southern California, the Orange County Planned Giving Round Table and the Planned GivingRoundtable of Northern Nevada.


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