In 2009, the Second District Court of Appeal held that the beneficiary's petition for modification of a special needs trust provision does not violate the no contest clause of the trust, even if the beneficiary alleges the settlor made a mistake. (Balian v. Balian (2009) 179 Cal.App.4th 1505.) A special needs trust is often drafted to provide benefits, by means of a trust, to a beneficiary who would otherwise lose eligibility for public assistance (for example Social Security Income or Medicaid). The beneficiary generally qualifies for public assistance by reason of some disability that makes that person unable to hold meaningful employment and with insufficient assets to provide support.
In this case, one of the beneficiaries petitioned for modification of the trust restrictions since she was not receiving benefits based on financial hardship. The trial court and the court of appeals affirmed that a petition for modification pursued under Probate Code section 15409 does not violate the no contest clause. If you live in the California area and have questions about drafting a trust you should consult with a Los Angeles estate litigation attorney.
