February 1, 2014

When Litigating a Will or Trust Contest in California, What Evidence do I look for?

A typical case will involve a family member contacting me to complain about the dispositions in a will or trust of a deceased relative, with allegations that another family member or a caregiver "got" to the deceased relative to unduly benefit themselves at the expense of the other family members.

To properly analyze the case, I obtain copies of all prior testamentary documents (to determine if the terms are at variance with the current documents, and how great a variance there is).

I will also obtain all of the available medical records for that deceased relative, for the relevant time period. That includes hospital records, nursing records, physician records, records of mental health professionals, and any other medically related records that can provide insight as to the physical and mental state of the deceased relative at the time the will or trust was executed by them.

I don't pretend to be a medical professional. Rather, I rely on the services of a forensic psychiatrist to assist me in the analysis, and to suggest other areas of discovery that may be useful in assisting that forensic psychiatrist in reaching an opinion regarding both the susceptibility of the deceased relative to undue influence and the actual use of undue influence in procuring the contested will or trust. This is also true when the capacity of the deceased relative to engage in a testamentary act is called into question (capacity and undue influence being regular bedfellows).

To the extent necessary, I will take depositions of the family members or bad actors in question, as well as of physicians involved in the direct treatment of the deceased relative (assuming that the deceased relative was under doctor's care).

On occasion, the bad actor gives in, withdraws from consideration the trust or will in question, and the matter is settled.... on other occasions, the only resolution that can be had is by trial.

I always bear in mind that everyone influences the actions of everyone else; it is only when the influence appears to rise to the level of undue influence that I have work to do.

February 1, 2014

Undue Influence in California Will and Trust Contests

California defines undue influence in the Civil Code. Specifically, Civil Code Section 1575 states:

"Undue influence consists:

1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

2. In taking an unfair advantage of another’s weakness of mind; or,

3. In taking a grossly oppressive and unfair advantage of another’s necessities or distress. [Enacted 1872]"

Undue influence will be presumed, in California, in many cases where a family member initiates estate planning for an elderly relative; this is even more the case if the if the new plan is unfair to the elderly relative or benefits the one family member exercising undue influence to the detriment of other family members who would otherwise be expected to share in the elderly relative's estate.

Proof of undue influence is made by the introduction, at trial, of circumstantial evidence; the trier of fact must decide based on the inferences shown by the evidence. This is because it is a rare case to have direct testimony of the undue influence.

An inference of undue influence may exist if it is proven that the dispositions of the elderly relative in the will are at odds with the elderly relative's stated intentions. It can also be inferred if there is a close relationship between the bad actor and the elderly relative, and it can be shown that the bad actor took an active role in obtaining the will or trust that is being contested.

In one case the California Supreme Court decided to deny probate to a will where it was shown that the deceased elder had a weakened mental and physical state when the contested will was signed, the bad actor had opportunity and actively procured the contested will and made misrepresentations to the deceased elder concerning other relatives (the bad actor's siblings). Estate of Garibaldi (1961) 57 C2d 108

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April 26, 2013

Some Probate and Trust Litigation War Stories in California

I have represented three sisters against their brother over their mother’s will.

I’ve represented a child who was adopted and thought she had a great relationship with her presumed half-sister and then found out the sister wanted all of the deceased father’s estate. We had to find tissue and get DNA testing to resolve that matter despite all of the family photographs.

I’ve represented cousins against a decedent’s lover, who got the decedent to leave his entire multi-million dollar estate to the lover. We showed up for trial at 1PM. The judge sent us to discuss settlement … three different times I announced that I would proceed with the trial because there could be no settlement, and three different times the other side blinked. We finally settled at 7:30 PM (kudos to the judge and his staff for staying so late).

I’ve had to represent a probate estate against a former business partner to get what was due the decedent pursuant to the buy-sell agreement.

I’ve represented grandchildren against their father, who was named as trustee by the grandparents, to get him to account and give up the money, many years after it was supposed to have been distributed to the grandchildren.

And there have been so many more……

So is there a human cost to estate planning; yes there is…. It can be minimized if there is harmony in the family and the choices of individuals to serve roles (e.g. executor, trustee) are good choices. But if there is not, or there is a bad actor influencing the situation, the cost can indeed be a high one.

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April 26, 2013

Cause and Effect Resulting in California Trust Contest

Trust contests are very similar to will contests with similar allegations of incompetency and/or undue influence. The difference is that there may be only a very short time to decide if you are going to file a contest.

There is a procedure in the Probate Code (§16061.7) where the trustee gives notice to all beneficiaries that the trust has become irrevocable and a copy of the trust is provided; if that procedure is properly followed, then a contestant has only 4 months in which to bring a trust contest.

If the contestant waits too long, or there is a no contest clause, then they may be out of luck. That’s not to say that if you can prove the entire trust is invalid (and therefore the Probate Code §16061.7 notice is invalid) you can’t win; you might. It just makes a hard job harder.

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April 26, 2013

What Ifs??? Presented to the Estate Planner in California

What if, despite everyone’s good intentions, there is conflict after the death?

What if an heir or beneficiary or someone who thinks that they should have been made an heir or beneficiary complains?

What if a trustee never accounts to the beneficiaries and enriches himself at the expense of the others?

That is when we get into another part of what I do, probate and trust litigation. This is where there is a high price paid, both dollars and emotionally, for resolution of the hurt caused by the estate planning (or lack thereof).

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April 22, 2013

California Appellate Court Opinion with Sense of Humor

I was reading the State of California Court of Appeal, opinion in the Estate of Steven Wayne Stoker, Deceased (2011) out of San Luis Obispo County, a case that involved efforts by one party to invalidate a trust, while researching the issue of enforceability of the four month statute of limitations provided by California Probate Code §16061.8, when I came across this gem:

"Gretchen Landry, a friend of decedent's, testified that in 2001 decedent took his original copy of the 1997 will, urinated on it and then burned it. We hesitate to speculate how he accomplished the second act after the first. "

I had to smile .....and share.

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October 12, 2007

In California, Trust Accountings Must Disclose All Activity with Trust Assets

When the father of my beneficiary clients, as trustee of the living trust created for them by their grandparents, finally complied with the court's order to submit an accounting, it told a story of trustee misdeeds, malfeasance and breach of fiduciary duty.

In California, a trustee has various duties as set forth in California Probate Code §§16000 et seq., known as the Trust Law. Among them is the duty to put the interests of the individual beneficiaries before his own (California Probate Code §16002) In addition, a trustee has a duty to follow the instructions of the trust concerning distributions (California Probate Code §16000). In an accounting the trustee, among the other items set forth in California Probate Code §16063, is required to list, in detail, on separate schedules, the assets of the trust, the income of the trust, the gains and losses from the sale of trust assets, the expenses of the trust, distributions from the trust and property on hand as of the date of the accounting. These were the schedules that I reviewed on behalf of my clients.

While I am licensed as a CPA (Certified Public Accountant) in addition to being an attorney, I practice law. That does not, however, mean that I turn my back on my skills as a CPA. To the contrary, I find those skills very useful in most of the areas of law that I practice in, including business, probates and trusts.

What I discovered by reviewing the accounting was that the trustee, the day prior to the accounting cut-off date, had repaid approximately $20,000.00 to the trust principal, as well as several thousand dollars as interest income. This was an attempt on his part to cover-up the fact that he had used trust funds for his personal benefit. However, being the greedy person that he was, he claimed at the same time and in the same accounting expenses and trustee fees almost exactly equal to the money that he allegedly returned to the trust accounts. How curious ...

I'll describe what happened next in my next entry.

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October 8, 2007

California Law Allows Living Trust Beneficiaries to Compel Accountings and Make Trustee's Report Their Management of Trust Money

In my last post, I described the living trust situation wherein my beneficiary clients believed that their father, trustee of the living trusts established by their grandparents for their benefit, was wrongfully withholding their funds, breaching his fiduciary duty as a trustee. Here is what I did as an advocate and attorney to protect their interests.

I should point out that California Probate Code §17200(b)(7) permits a living trust beneficiary to seek a court order requiring the trustee to report and account for his activities with the trust funds. Knowing this, I wrote a demand letter to the trustee (my clients' father) informing him that I represented his children, that I had read the living trust, that the living trust required distribution to each child at age 21, and that he, as the trustee, had breached his fiduciary duty, as a trustee, to account to his children (the beneficiaries) and to distribute the funds. I further informed him that I would file a petition in the Superior Court of Los Angeles County (where the living trust was located and domiciled) to compel an accounting and distribution if my clients' demands were not met.

The trustee's initial response to my clients' demands was to delay and promise that an accounting would be forthcoming.

I will describe what happened next in my next post.

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October 6, 2007

California Living Trust Beneficiary Compels Accounting to Obtain Distribution from Trust

In my Orange County, California estate planning practice, I am constantly amazed at the greed shown by family members towards each other. Although I have been in practicing thirty years now with substantial experience in trust, probate and estate litigation, I have seen no change in the willingness of one or more family members to short-change another family member.

Not too long ago I was approached by a grandchild of deceased grandparents. This grandchild had three siblings. All of them were told that when their grandparents died, the living trust that had been established for them by the grandparents would be held by their father, as trustee, for their benefit, until each grandchild turned 21 years old. At that time, the father was to distribute that grandchild's share of the living trust.

At the time that I was retained, all of the siblings had attained age 21 with oldest being age 28. The father had never rendered an accounting (a report of the assets that he started with, the income that he received, the expenses that he incurred, and the property that was on hand) to his children to show what he had done with their trust funds. Instead, he had repeatedly made promises that an accounting would be prepared shortly or that the income and expense information was at the accountant's waiting to be assembled into an accounting. The children began to suspect that their father was withholding their money and using it for himself, which is considered, in California, a breach of fiduciary duty by the trustee. I was asked to do something about this.

What I did will be in my next entry.

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