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Hi, this is Stewart Albertson with Albertson & Davidson. In this video, I want to talk about how we can support the claim, and meet our burden of proof, to show that undue influence took place.

Some of the markers that we look for are the actions by the person that we believe exerted or exercised undue influence over a decedent.  We want to look at this person’s place of business in the decedent’s life when the decedent was still living.  Did this person have control over the decedent’s access to food?  Did they have control over access to medications?  Did they have control over access to going to medical appointments to see physicians?  Did they have control over the financial information of the decedent?

We see these markers and we look at this person and we say, “did they take their place within the decedent’s life, where the decedent relies on them for many things:  their medications, transportation, food?  Did they take that and did they exercise undue pressure over the decedent to get the decedent to create a trust or a will that benefits them, at the expense of other people?”

The more we see these markers, the more that we see the undue pressure, such as a wrongdoer calling up a lawyer that the decedent has never met to make an appointment to create a new trust or a new amendment or a new will or a codicil to that will, to that person driving the decedent to the lawyer, to meeting in the lawyer’s office with the lawyer and the decedent to create the trust, to have multiple emails and texts with the drafting attorney to make sure that the trust or will is drafted according to the decedent’s wishes, those are all things that we see time and time again in these undue influence cases.

One thing that really helps us, in addition to everything I’ve just pointed out is the medical records. Do the medical records show that the decedent suffered from some type of mental incapacity, such as dementia or Alzheimer’s?  It doesn’t have to be dementia or Alzheimer’s, but that’s one we commonly see.  If the decedent is suffering from any mental incapacity issues, and you have all of those other things we’ve talked about, those elements we’ve looked at, where this person is in a position of power, that generally leads us to believe that that person exercised undue influence over this individual. If they’re receiving a lion share of the estate plan, or they are receiving more than they would have, absent the undue influence.

Those are some of the things we look at to determine if we can show undue influence took place during the lifetime of decedent, often shortly before the decedent passed away.

 

THE FOLLOWING IS A TRANSCRIPT OF THIS VIDEO. FOR MORE INFORMATION, CLICK HERE

Hi, this is Keith Davidson with Albertson & Davidson. In this video, I want to talk about some of the warning signs that you should be aware of to clue you in that undue influence might be taking place with one of your parents.

As lawyers, when we get undue influence cases we typically get them after everything’s been done and we’re looking at the facts in hindsight. But, as a child, there’s times when things happen, and you might be suspicious of what’s happening, but you’re not sure if it’s something bad or not. That’s what I want to talk about. These are the warning signs that really should be on your radar and start raising red flags when you see them.

For example, let’s say you have a parent, and you can tell that they’re kind of slowing down, and you notice that somebody (like a neighbor, a caregiver, or a stranger who you don’t even know), starts spending a lot of time with that parent at their house, and then they start helping the parent write checks or go to medical appointments. That could be a real red flag of somebody who’s trying to cozy into the parent and slowly take control.

Typically, the way undue influence works is: somebody starts off by being just a friend, and then a helper, and then they start taking over everything; check-writing, finances, medications, doctor visits, even communications. That’s another warning sign.

Let’s say that you are finding it difficult to talk to your parent. You try calling them and somebody else answers the phone and won’t let you speak. Or, when you talk to your parent, there’s somebody else who’s always on the other line, listening in. That’s a huge red flag that somebody is probably trying to control the flow of information to the parent. That could be a real problem. So that’s another big warning sign.

One of the elements of undue influence is that somebody controls the necessities of life; food, medication, all those sorts of things. So if you see somebody who you aren’t that familiar with, and they’re doing all the grocery shopping for your parent they’re making meals for the parent they might be doing something that’s really nice and maybe there’s nothing wrong with that, or they might be doing something where they’re controlling the flow of food to the parent which is one way to manipulate somebody who is old and not able to resist undue influence. But, that doesn’t mean that every time you see one of these things that it’s bad, but it definitely should raise your attention and you should look into it.

So those are some of the warning signs that you should be on the lookout for in possible undue influence against one of your loved ones.

 

Here's your gift ... Now give it back!!

Can I give you a gift and then sue to get it back? That’s the scenario Chapman University (located in Orange, California) faced earlier this year when a leading philanthropist (and all-around rich guy) Mr. James Emmi pledged $12 million to Chapman University…and then changed his mind about it. Or did he? According to a report in the Orange County Register, Mr. Emmi actually never intended to make the gift in the first place. Instead, the lawsuit alleges, Chapman University President James Doti put undue pressure on Mr. Emmi to make the gift. Mr. Doti is alleged to have wined and dine the elder Mr. Emmi and pressured him to make the $12 million commitment to the University, which is alleged to be 60% of the Emmi’s total estate value.

Less than a month after its filing, the lawsuit was settled under a confidential settlement agreement that appeared to allow Chapman University to keep $3 million that was received by the University, and most likely cancelling the remaining $9 million obligation.

When the lawsuit was filed by Mr. Emmi against Chapman University, they used a cause of action well known to us: Financial Elder Abuse. Yes, the application of that statute can be far ranging. The allegations were grounded in the idea that Mr. Emmi was susceptible to inducement and confusion (i.e., undue influence) due to his advanced age. And that Mr. Doti “preyed” on Mr. Emmis weaknesses. Under the Financial Elder Abuse statute, obtaining the property of an elder by the exercise of undue influence is one of the ways in which elder abuse can be proved in court. With the right set of facts and evidence, the undue influence prong can be triggered in a wide array of circumstances, including in the context of a charitable gift.

That does not mean that everything an elder does is the product of undue influence. But it does mean that elder abuse can occur where you least expect it. Most people think of elder abuse as a scam artist stealing an elder’s life savings, but it does not need to be that extreme. Mr. Emmi’s allegations show that even those with substantial means can be the victims of an alleged elder abuse claim.

Must a Trustee Report Elder Abuse?

 

There are certain categories of people who are required by law to report any suspected elder abuse. That includes both physical elder abuse, and financial elder abuse. Under California Welfare and Institutions Code section 15630, any private or public facility that takes on the care and custody (meaning housing) of an elder (elder is defined as anyone aged 65 or older) is a “mandatory reporter”—meaning they must report any suspected physical or financial elder abuse.

Additionally, any financial institution such as a bank or credit union is a mandatory reporter for suspected financial elder abuse. While not every financial institution is good at exercising this requirement, many have become far more sophisticated in spotting and reporting suspected financial elder abuse.

Trustees of private Trusts on the other hand are not mandatory reporters. And since most Trusts created by people during life are private Trust (meaning revocable, living Trusts), most Trustee are not under a legal duty to report any type of physical or financial elder abuse.

But even if a legal duty does not attach to a Trustee, there is a strong argument that a Trustee is under a moral obligation to report elder abuse. And nearly anyone can make a complaint to the Adult Protective Services in the county where the elder is located when suspected elder abuse is present.  The Trustee also may have the right to bring a civil Financial Elder Abuse claim under the Welfare and Institutions Code, which can include a restraining order to protect the interests (and physical well-being) of the elder.

Often financial elder abuse is present when you least suspect it.  Most abusers don’t broadcast their wrongs.  Thus, any suspected elder abuse should be reported and acted upon as quickly as possible.

Our next video features Stewart R. Albertson discusses the finer points of Financial Elder Abuse in California Trust and Will litigation cases.

To our email subscribers: click on the title link to view the video on our website.

My friend and colleague, Michael Hackard, with Hackard Law in Sacramento, California, approached me the other day with an intriguing and much overlooked concept to recapture lost assets from an elder abuser: “constructive trusts.”  Our discussion lead to the following article that we co-drafted on the issue of constructive trusts. 

THE PROBLEM: FINANCIAL ABUSE OF THE ELDERLY IN NON-PROBATE TRANSFERS. Financial abuse of the elderly takes many forms and its signs are painfully common. Abusive conduct includes: taking money or property; forging signatures; using deception, coercion or undue influence to secure property or money transfers; and falsely assuring the elderly of lifetime care in exchange for money or other assets.

Abusers might include family members with a sense of entitlement or predatory individual serial abusers. Whoever the abuser is, the financial impact of the abuse is often not evident until the elderly victim’s death. 

But how do you recover assets wrongfully taken by an elder abuser?  The law doesn’t allow you to walk in and take property out of the hands of the wrongdoer, but there is a legal way in which to accomplish the same result.

SOLUTIONS: CONSTRUCTIVE TRUSTS AND LIS PENDENS. Recovering assets from an elder abuser is like closing the barn door after the horse has bolted because you have to chase down those elusive assets.  Constructive trust actions, however, can help to bring the “horse” back into the barn, or often times, more importantly, recover assets that were purchased with the elder’s stolen money or property.

Since the elder is usually deceased by the time the theft is detected, it is the elder’s heirs and/or beneficiaries who are left to bring suit as plaintiffs against the elder-abuser defendant.  A “remedy” (which is just a legal term for the relief the Court provides in a lawsuit) for the plaintiffs includes the creation of a constructive trust against real property that was wrongfully taken by the defendant. It is interesting to note that a “constructive trust” is not a Trust at all—at least not in the legal sense.  Rather it is a term used to describe the forced transfer of property from the wrongdoer (the elder abuser) to the rightful owners (the heirs and/or beneficiaries of the deceased elder).  When a Court “imposes a constructive trust” over property, really the Court is just ordering the party who has legal title to that property to transfer it to the plaintiffs.  This can be a powerful tool in recovering stolen property.

In fact, Courts have found the remedy appropriate even in those circumstances where the money obtained from the elderly victim was later used to buy new property. Not only is the wrongfully taken property subject to a constructive trust, so is any subsequent property purchased with those assets by the elder abuser.  Now that’s a horse of a different color.  But whatever the color of the horse (or cow, or chicken or whatever the wrongdoer bought), it can all be returned to the rightful owners through use of a constructive trust.

An equally powerful mechanism, however, is stopping further property transfers from occurring in the first place.  The law has a mechanism to stop the further transfer of wrongfully obtained property—referred to as a “lis pendens.”

LIS PENDENS: CRACKING THE REAL ESTATE TRANSFER. A lis pendens allows a party “to an action asserting a real property claim . . . (to) record a notice of pendency of action in which that real property claim is alleged.” (Cal. Civ. Proc. Code § 405.20).  In its simplest terms a lis pendens is a lien on the property that puts all third parties on notice that someone other than the title holder has asserted a claim against the property. The claim is based on the premise that “[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is . . . an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.” (Cal. Civ. Code § 2224).  

A lis pendens can only be filed after a legal action has begun in Court.  But once a lawsuit has been filed, a lis pendens can be recorded against the real property and then filed with the Court.  At that point, any further transfer, or attempted transfer, of the real property would be subject to the lien and could be return to the rightful owners if they are successful in their suit.

CONSTRUCTIVE TRUSTS AND LEGAL MUSCLE. Constructive trusts are becoming increasingly important given the prevalence of abusive non-probate transfers. Living trusts, joint-tenancy bank accounts, durable powers of attorney and retirement plan designations are efficient estate transfer mechanisms, but they can also be invitations for fraud and undue influence by elder abusers. While estate related litigation ranges from traditional will contests to fraud and punitive damage claims, the utilization of the constructive trust action is expanding.

Constructive trust claims can be filed in courts with probate jurisdiction or in courts of general jurisdiction having authority over civil non-probate matters. The plaintiff’s choice for judicial oversight is based upon a mix of statutory limitations, strategy, tactics, ease of discovery and estimated time to trial. 

Estate and trust litigation attorneys often share their clients’ frustration over the difficulties in remedying the financial abuse of the elderly. Remedies such as constructive trusts can go a long and creative way in preventing obvious and unfair results that would otherwise occur absent judicial intervention.

 

© Copyright Albertson & Davidson, LLP and Michael A. Hackard, 2012. All rights reserved. 

Trust and Will lawsuits often provide different paths to the same destination. My client, a trust beneficiary, recently filed a lawsuit against a trustee of a California trust for financial elder abuse, and at the same time sued for undue influence to set aside the Trust amendment created at the hands of the Trustee/Abuser. In this case the Trustee ended up with a significant portion of the Trust and my client was effectively disinherited.

The Trustee, hoping for an easy out, tried to convince the Court that the elder abuse claim should be dismissed summarily (called a demurrer) because the claim was based on a transfer by Trust, and in his opinion, the abuse of the elder did not actually occur until the trust creators died and their Trust became irrevocable (the “taking argument”). His claim was that the beneficiary cannot use the same undue influence facts to (1) overturn the Trust amendment, and (2) sue for financial elder abuse.  In other words, he may have been an undue influencer for purposes of the Trust amendment, but not for purposes of financial elder abuse.

But California law disagrees. Specifically, there are three different ways in which financial abuse may be pleaded under the Elder Abuse Act found at Welfare and Institutions Code section 15610.30(a), which states a person is guilty of financial elder abuse if they take property of an elder for wrongful use, or with intent to defraud, or by way of undue influence. (Welf. & Inst. Code, § 15610.30, subdivisions (a)(1), (a)(2), and (a)(3).) Thus, the act of undue influence used to overturn a California Trust (or in this case a Trust amendment) can also be used to establish a claim for financial elder abuse. Further, the Elder Abuse Act defines a “taking” to include the receipt of assets by a “testamentary instrument”, which includes California trusts and wills. (Welf. & Inst. Code, § 15610.30(c).)

Does this mean my client would get double damages, one with the Trust set aside and another in the amount of the property taken? No. But it does mean my client can proceed on both claims and take full damages under either one. For example, the elder abuse statute allows for punitive damages and attorneys’ fee whereas the Trust set aside claim does not.

The trial court heard oral argument on the demurrer on May 5, 2011. After hearing oral argument, the trial court was persuaded that the financial elder abuse claim could go forward based on undue influence as it was properly pleaded in my client’s lawsuit, and was supported by the Elder Abuse Act.

The next time you see facts showing a “garden-variety” trust or will contest, think about whether those facts also support a claim based on financial elder abuse.