Alzheimer's Word Cloud_RevisedFor a richly-detailed profile of a woman’s experience with Alzheimer’s disease, read “Fraying at the Edges,” an article by N. R. Kleinfield that appeared on May 1, 2016 in the New York Times. The author follows Geri Taylor, who was first diagnosed with Mild Cognitive Impairment in 2012 at age 69, and introduces us to her husband and other family members, friends, and participants in support groups.

Although the article does not discuss any conflict over Ms. Taylor’s finances or estate plan, the vivid descriptions of her experience with Alzheimer’s disease illuminate the complexity of its effects on mental function. When an elder with Alzheimer’s disease makes a controversial estate planning change, the variable impact of the disease leads to challenges in assessing the elder’s mental capacity and vulnerability to undue influence, and thus substantial uncertainty in the outcome of a trust contest, will contest, financial elder abuse claim or contested conservatorship.

Financial Audit

Sometimes stepmothers are just misunderstood.

Babbitt v. Superior Court (2016) 246 Cal.App.4th 1135, recently decided by the California Court of Appeal, involves one of the fact patterns that we often see in California trust litigation: children from a decedent’s prior marriage have conflict with their biological parent’s surviving spouse. In other words, after dad passes away, stepmom and the kids do not play nicely.

Suitcase on BeachA trust is a vehicle for managing and disposing of property. Just as you don’t want to leave your suitcase on the beach when you return from vacation, you should ensure that your assets are securely loaded into the trust you have created. If you don’t, your assets may end up held in the legal equivalent of a “lost and found” with the competing claims resolved only by adjudication in a California courthouse. Disputes over property ownership are all too common in California trust litigation.

A case published last week by the California Court of Appeal illustrates this point. In Carne v. Worthington, the court considered whether Kenneth Liebler had transferred certain real estate from a trust he created in 1985 to a trust he created in 2009. Liebler stated in the 2009 trust instrument “I transfer to my Trustee the property listed in Schedule A, attached to this agreement” and listed the real estate in the attached schedule. Liebler could have avoided litigation simply by signing and recording a deed transferring the property from himself as trustee of the 1985 trust to the trustees of the newly-created 2009 trust.

IcebergSpotting undue influence is no easy task for estate planning attorneys. When Mom wants to change her trust to favor Sally over Johnny, Mom presumably is making her own choice for her own reasons. But it’s also possible that Sally, behind the scenes, is pushing Mom to make the change.

An estate planner is like a mariner viewing an iceberg. The top 10 percent of an iceberg is visible above the ocean’s surface while the bottom 90 percent is unseen and potentially hazardous. A planning attorney typically interacts with the client for a relatively brief period of time outside of the client’s home, and is unfamiliar with the events that led up to the client’s arrival. So what can the attorney do to look out for undue influence?

A Stack of PapersOnce your petition has been filed in the probate department of the Superior Court of California, and you are engaged in full-on “trust litigation,” what happens next? In most instances, it will be time to prepare for trial through a process called “discovery.” Discovery is the interval between when you file your petition and the date set for trial, when you are able to discover information that helps (or may hurt) your case.

California Probate Code section 1000 applies the Code of Civil Procedure to cases under the Probate Code, including the civil discovery tools. In general, these tools fall into four categories (1) Requests for Admissions; (2) Requests for Production of Documents; (3) Interrogatories; and (4) Depositions.

Treasure ChestA contest over the validity of a trust or a trust amendment is an expensive undertaking, typically requiring extensive discovery and a lengthy trial. Can a trustee use the trust’s assets as a war chest to fight off the contestant, even when the trustee is a beneficiary of the challenged trust document and thus has…

Double Damages_2xIn addition to bark, the Probate Code can have bite too. Some Probate Code sections have provisions that are punitive in nature and are designed to keep fiduciaries and others dealing with trust property in line. These statutes have sharp teeth.

Take, for example, California Probate Code section 859, which concerns property taken from a trust, an estate, a minor, an elder, or other vulnerable persons through the use of undue influence, in bad faith, or through the commission of financial elder abuse. This statute might be triggered if Junior tricked Mom into leaving him the $1.2 million family home in Granite Bay to the exclusion of Sister. In such an instance, section 859 permits the assessment of damages against the offending person in an amount double the value of the property that was taken, and allows for the court’s discretionary award of attorneys’ fees. This means that Sister might be able to recover $2.4 million against Junior along with the attorneys’ fees she spends pursuing him.

Opening Curtains_EditThe attorney-client privilege, a bedrock principle of our legal system, protects confidential communications between clients and their attorneys, and the lawyer’s duty to preserve client confidences generally continues after the death of the client. Under the California Business and Professions Code, lawyers must “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.”

To what extent does the attorney-client privilege apply when there is a trust contest, will contest, or a fight over the interpretation of estate planning documents? Usually, the attorney who drafted the questioned document(s) is a central witness, for example, as to mental capacity or undue influence. Estate planners are often unfamiliar with the rules that apply when their work product is subject to litigation.

Mental Health ConceptAt the start of trial recently in San Joaquin County Superior Court in Stockton, I sparred with opposing counsel over the role of the retained mental health experts with regard to testimony on undue influence. The contestant alleged that her brother unduly influenced their parents to disfavor her when they amended their trust. Sister retained a neuropsychologist to testify at trial on the subject of undue influence and Brother retained a forensic psychiatrist. Not surprisingly, the experts took divergent views on the case.

The question, which came before the judge in a motion in limine (i.e., pre-trial motion), was whether the retained experts should be allowed to testify on the ultimate issue of whether Mom and Dad were unduly influenced. Sister wanted her expert to be able to opine that her parents were victimized based on the expert’s review of the medical records and deposition transcripts. The judge agreed with Brother’s argument that, while the experts could testify on the issue of Mom and Dad’s vulnerability to undue influence, expert testimony on the issue of whether undue influence actually occurred would be excluded and that matter instead would be left for the judge to decide after hearing all the evidence.

Referree holding red cardIn California trust administrations, the trustee is in the driver’s seat. The trustee marshals the assets, deals with creditors, and (except in the case of ongoing trusts) gets them distributed out to the beneficiaries in fractional shares per the terms of the trust. But what happens when the trustee favors himself as a beneficiary, disfavors a family member he/she dislikes, or simply falls asleep at the wheel?

As illustrated by the Donald Sterling case recently discussed here, petitions to remove trustees are common in California trust litigation. Courts will suspend or remove trustees if the petitioner provides sufficient evidence that removal is necessary to protect the beneficiaries. This post will discuss trustee removal under California law from the beneficiary’s perspective. With apologies to The Sound of Music, “how do you solve a problem like trustee-a?”