5.03.2006

U.S. Supreme Court Curtails Probate Exception To Federal Jurisdiction

As reported in January 2005, the Ninth Circuit held in In re Marshall, 392 F.3d 1118 (9th Cir. Dec. 30, 2004), that the probate exception to federal jurisdiction applied in Bankruptcy Court. However, the Supreme Court has now reversed that decision as extending the probate exception too broadly.

The Ninth Circuit read the probate exception to exclude from federal jurisdiction “not only direct challenges to a will or trust, but also questions which would ordinarily be decided by a probate court in determining the validity of the decedent’s estate planning instrument.” The court also held that a State’s vesting of exclusive jurisdiction over probate matters in a special court (in this case the Texas Probate Court) strips federal courts of jurisdiction to entertain any “probate related matter,” including claims respecting “tax liability, debt, gift, [or] tort.”

However, the Supreme Court found that this broad reading lacked any basis in statute or Supreme Court precedent. Marshall v. Marshall, No. 04-1544 (U.S. May 1, 2006).

Clarifying its juris­prudence in this area, the Court said the probate exception only reserves to state probate courts the probate or annulment of a will and the administration of a decedent’s estate, and precludes federal courts from disposing of property that is in the custody of a state probate court. The probate exception does not bar federal courts from adjudicating matters outside those confines that otherwise are within federal jurisdiction.

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