Beware of Dormant Creditor Claims in California Probate Cases

By Jeffrey S. Galvin on Posted in Creditor Claims, Home Care Aides, Probate, San Bernardino County Superior Court

California’s probate process aims to expeditiously identify and resolve the claims of creditors against decedents.  Creditors who are unsophisticated, or who simply do not learn of the decedent’s passing, may find themselves with an uncollectable claim against an otherwise solvent estate.  You snooze, you lose.

On the other hand, once a creditor makes a claim in a California probate case, the claim can lie dormant like an oak tree in winter and later come to life to interfere with the distribution of the decedent’s assets.  That’s the lesson of Estate of Holdaway (2019) ___ Cal.App.4th ____, published by the Court of Appeal this month. Continue Reading

Elder Abuse Is Not a Trojan Horse – Bad Faith Must Be Shown for Double Damages Under Probate Code Section 859

By J. Patrick Doust on Posted in Appeal, Beneficiaries, Financial Elder Abuse, Mental Capacity, Orange County Superior Court, Undue Influence, Will/Trust Contests

Probate Code section 859, our subject in a recent post, packs a punch in California trust litigation.  It awards double damages against someone who in bad faith wrongfully takes property from an elder, in bad faith takes property through undue influence, or who takes property through the commission of financial elder abuse.

While the first two prongs of the statute contain an explicit bad faith requirement, the last one, financial elder abuse, does not.  Can double damages be awarded against someone who commits financial elder abuse, even if bad faith is not shown?  What if the elder abuse claim rests on the exertion of undue influence?

The appellate court in Levin v. Winston-Levin (2019) ____ Cal.App.4th ____, ruled that undue influence claims, even when characterized as elder abuse, require evidence of bad faith to justify double damages.  In other words, an elder abuse claim cannot be used as a Trojan horse to obtain double damages. Continue Reading

California Legislature Cracks Down on Caregivers Who Marry Dependent Adults

By Jeffrey S. Galvin on Posted in Financial Elder Abuse, Inheritance Disputes, Legislation, Mental Capacity, Undue Influence

Many California financial elder abuse cases we see involve caregivers. While the vast majority are honest, a caregiver who spends many hours alone with a vulnerable client has a unique opportunity to exploit the situation. A crafty and crooked caregiver may go so far as to marry his or her client as part of a scheme.

The California Legislature has closed loopholes in the Probate Code that allow abusive caregivers to marry their way into a dependent adult’s wealth. Assembly Bill 328, signed by Governor Newsom on June 26, 2019 and effective on January 1, 2020, creates a presumption of undue influence that applies in two scenarios. The Trusts and Estates Section of the California Lawyers Association sponsored the bill and the California Judges Association supported it.

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California Trustee Must Be Careful in Seeking Release from Beneficiary

By Jeffrey S. Galvin on Posted in Accounting, Conflict Avoidance, Trust Administration, Trustees

Can a California trustee require a beneficiary to sign a release in order to get a distribution from a trust?  A question like this appeared recently on the AVVO “Free Q&A” page and makes for a perfect blog topic.

Trustees understandably want to wrap up trust administration without having to worry about being sued by beneficiaries.  When a beneficiary appears to be litigious, the trustee may want to dangle a preliminary or final asset distribution as a carrot to get the beneficiary to sign a release.  Yet, since the trustee is a fiduciary, California law does not give a trustee unfettered discretion to insist on releases.  An effort to prevent trust litigation could end up sparking such litigation. Continue Reading

The Ninth Circuit Sounds A Wake Up Call – Federal Law Permits Class Action Claims Against Trustees

By J. Patrick Doust on Posted in Appeal, Bank Trust Departments, Beneficiaries, Trust Administration, Trustees

While institutional trustees may have once slept soundly considering themselves immune from class action lawsuits relating to the purchase or sale of securities on behalf of a trust, the Ninth Circuit’s recent ruling in Banks v. Northern Trust Corp. (9th Cir. 2019) 929 F.3d 1046, sounds a rousing wake up call for every trustee who professionally manages multiple trusts.

Federal law generally prohibits class actions relating to (1) misrepresentations of material fact in connection with the purchase or sale of a security, and (2) the alleged use of any manipulative device in connection with the purchase or sale of a security.  Thus, for the most part, cases involving these types of allegations can only be brought individually.  While institutional trustees have always had to be careful in what representations they make in the purchase or sale of securities, the potential for massive liability from class action litigation has largely been a non-issue.

However, the court in Banks v. Northern Trust Corp. clarified that this general rule does not apply to claims brought against a trustee by beneficiaries of an irrevocable trust.  Therefore, institutional trustees with a large volume of trust administration files, and especially those associated with an institution that provides investment products, should now be on high alert for the potential for class action claims to be brought against them.     Continue Reading

Could “The Farewell” Approach to Hiding a Terminal Diagnosis Occur in California?

By Jeffrey S. Galvin on Posted in Advance Health Care Directives, Mental Capacity

In “The Farewell,” now out in theaters, family members choose not to tell the matriarch (“Nai Nai”) of her terminal lung cancer diagnosis. They use the pretext of a wedding to get the family together in China so that they can spend time with Nai Nai one last time without actually saying goodbye. The well-meaning thought is that she will be happier and live longer if she thinks she’s healthy.

Written and directed by Lulu Wang, the critically-acclaimed film is promoted as being “based on an actual lie.” Wang explained a few years ago on the radio program This American Life that the story came from her own family’s experience.

In the movie version of the tale, Nai Nai’s granddaughter Billi (played by Awkwafina) who has grown up in the United States struggles with whether withholding the truth from Nai Nai is the right thing to do.

What if we import this story into the Golden State? Could Nai Nai, if a resident of California, be kept in the dark about her cancer diagnosis?  Continue Reading

How Do I Evaluate and Dispute a California Trustee’s Fee?

By Jeffrey S. Galvin on Posted in Accounting, Legal Expenses, Trust Administration, Trustee Fees, Trustees

This blog post views a trustee’s fee from the beneficiary’s perspective.  Under California law, a trustee generally can set his or her own fee and collect it without prior disclosure to the beneficiaries.  What can a beneficiary, who sees a hand reaching too greedily in the trust cookie jar, do in response?

We discussed best practices for a trustee when claiming a fee in a prior post and now consider how a beneficiary can monitor, evaluate and object to a trustee’s fee. Continue Reading

California Probate Administration Is No Time for Napping

By Christopher Miles Kolkey on Posted in Bank Trust Departments, Inheritance Disputes, Mental Capacity, Private Professional Fiduciaries, Probate, Riverside County Superior Court

In the absence of a trust that allows assets to pass without opening probate, the California probate process lasts for at least six months and can run much longer depending on the size of the estate and the nature of assets. The role of the personal representative (i.e., the “executor” if nominated in the will) is to administer the estate efficiently, resolve creditor claims, and get the assets out to the rightful beneficiaries.

By no means, of course, is the probate process supposed to drag out for two decades. That’s exactly what happened, however, in a case in Riverside County Superior Court. In Estate of Sapp (2019) 36 Cal.App.5th 86, the California Court of Appeal affirmed the probate court’s removal of the personal representative, providing guidance as to when a representative may be removed. As the opinion indicates, probate is no time for napping by the personal representative or the beneficiary: the former has a fiduciary duty to get the job done and the latter may need to poke the dozing, inept and/or corrupt representative.

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A Thin Blue Line: APS and the DA Have Few Resources to Combat Financial Elder Abuse

By Jeffrey S. Galvin on Posted in Conservatorships, Financial Elder Abuse, Sacramento County Superior Court

Seniors are vulnerable to financial elder abuse and are often victimized, but there’s a scarcity of government resources in Sacramento County and elsewhere in California to address the problem.

On May 21, 2019, the Sacramento County Bar Association’s Probate and Estate Planning Law Section presented a program entitled “Helping the Helpless: How You Can Help Adult Protective Services and District Attorney Protect Vulnerable Sacramentans.” The speakers were Debra Larson and Irene Chu, managers with Sacramento County Adult Protective Services, and Frederick Gotha, Deputy District Attorney who heads the Sacramento DA’s Elder Abuse Unit.

Their presentations indicated that our community would benefit if local authorities had greater staffing to combat the rising tide of financial elder abuse. Continue Reading

When Defending Becomes Offensive: California Court Expands No Contest Clauses to Defense of Invalid Amendment

By J. Patrick Doust on Posted in Inheritance Disputes, Los Angeles County Superior Court, Mental Capacity, No Contest Clauses, Undue Influence, Will/Trust Contests

No contest clauses are included in wills and trusts to discourage dissatisfied beneficiaries from challenging the document’s validity. Because enforcement of these clauses results in disinheritance, the California Probate Code limits their applicability. But what happens when a beneficiary defends a trust amendment that is found to be invalid? Can the defense of an invalid amendment be deemed a contest of the original trust?

The California Court of Appeal held last month in Key v. Tyler (2019) 34 Cal.App.5th 505 that a beneficiary’s defense of an invalid amendment to a trust, if made without probable cause, indeed can trigger a no contest clause and result in disinheritance. The court also confirmed that anti-SLAPP motions can be filed against petitions to enforce no contest clauses, a topic we have written on previously. Continue Reading

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