If you mean it, document it!

If you are dealing with a dysfunctional family relationship, there is going to be some misunderstandings along the way.  Dysfunctional relationships do better with proper documentation. You may have a hard time communicating with dysfunctional family members, but the written word is much harder to refute than a game of he-said, she-said. In fact, the more specific the documentation you have, the better. And a document has the added benefit of allowing people to consider what is being proposed at their own speed, on their own time, and in their own way. We all take in information in a different fashion after all.

Many parents make the mistake of not documenting their thoughts and plans in the first place. If you have children that do not get along, do yourself (and your children) a favor and document what you want. Whatever you do, do NOT make one of your children the Trustee. Even if that one child is the most honest person in the world, the fact that they are one of your children is enough to create a potential fight.

Might I propose naming a neutral third party as Trustee. Preferably a corporate Trustee or a private, professional Trustee. Or at least provide a mechanism that allows a neutral third party to take over in the event there is a fight among the children.

All this is to say that the better you document your desires and wishes, the more likely you are to avoid a mess in the future. When you do document your desires and wishes, think not just of the perfect world you wish existed. But rather, think of how things might go wrong (and with dysfunctional relationships they often do go wrong).

I Hate to Communicate...

The problem underlying many Trust and Will disputes is bad family dynamics and dysfunctional family relationships. People just do not get along. And where there’s dysfunctional relationships, there’s misunderstandings galore.

If you are dealing with a dysfunctional relationship, you have to take a different approach. That approach begins with communication–easier said than done, I know. I didn’t say dealing with dysfunctional relationships would be easy. If it were easy, you’d already be doing it. But it also is not impossible. Here’s a few thoughts on communication:

  1. Cut out the middle men (or women). Oftentimes miscommunication begins with third parties who claim to have heard someone say something about you or about the situation in which you find yourself. Maybe the third person is right, maybe they are wrong; but when gossip is taken as truth, it causes the basis for bad feelings. And those feelings can be hard to address because the other party may have no idea what the problem is to begin with. If you want to know for certain what someone is saying, then ask them about it.
  2. Put the past aside, at least for a little while. We all have done things we later regret. Sometimes the fight people are having now is just a proxy for the actions they took many years ago. How do you even begin to address past insults? Well that’s what therapists are for, not lawyers. But I can tell you from personal experience that sometimes you just have to forgive and forget…or at least forget. Do you really want to spend all your time, money and emotional energy fighting with a family member over a past insult? If you have a current beef with someone, fair enough. But past wrongs should be left in the past.
  3. Let’s focus on facts. Past wrongs make terrible arguments for current lawsuits. Many times people want to dredge up wrongs from years ago to try and support their current legal position. It simply does not work. There is no judge in the State who wants to hear about what someone did 20 years ago and how that affects the current distribution of an estate. If you are going to bring a legal claim in court, then focus on the facts at hand—the facts that prove your case NOW…not in the distant past.
  4. Over inform. If you are a Trustee dealing with a dysfunctional family member do yourself a big favor and over inform them of the Trust activity. Nothing breeds suspicion and fear more than under informing Trust beneficiaries. Especially where you withhold bank account information, income information, or current investment information. If you have the info, give it out.

Not every difficult situation can be solved with good communication, especially if the opposing party refuses to communicate. But shifting your approach and communicating from a different angle can make a difference. If nothing else, you will make yourself look like the reasonable one in front of the Court; and sometimes that is half the battle.

That’s a loaded question.  It all depends on how the asset you are seeking to recover was titled.  Even though you, and probably your parent, thought that all assets were in one basket and you can simply file one document to get what is rightfully yours, you are mistaken (welcome to Trust and Will law—be prepared for confusion).  There are many ways in which assets can be titled so as to avoid the probate process.  Sounds like a good idea, but it makes lawsuits in this area a real mess.

For example, if you have an asset titled ONLY in a decedent’s name (with no one else on title or titled joint as “tenants-in-common”), then that asset falls to the probate estate and the Will controls.  If the Will is not favorable to you, then you have to file a Will contest.

If an asset is held in joint tenancy, then the asset passes automatically to the surviving joint tenant and the Will is meaningless.  If you want to contest that arrangement then you either have to challenge the original account set up or you have to bring a petition in the decedent’s probate estate and claim that it was not his intention to leave the asset to the surviving joint tenant (a claim you are required by law to prove by the higher standard of “clear and convincing” evidence).

If the assets are in a Trust, then you have to file a Trust contest, which is different from a probate Will contest.  With a Trust contest, you have to challenge either the Trust creation or the creation of a Trust amendment if one of the amendments does not favor you.

And if you have some assets in each of these different types of titling, then you have to file each of these different petitions.  It is not unusual to have three or four different petitions filed in a single case.  It can be a complicated affair and it’s easy to file the wrong claim in the wrong way and then lose out on challenging the asset you want to reclaim.

The bottom line: plan out your attack carefully.  You may only have one chance to make things right.

Trust and will disputes are confusing because the way you see your family and their assets can be very different from how the law sees it.  You may see your family as one group of people related by blood.  If one of your siblings is taking advantage of your parents, then you should be able to step in and help protect them.  Or if your parents pass away and their assets are not being distributed according to your parents’ desires, then you should be able to place all the assets in a big pile and force a proper distribution among your family members.Asset Puzzle.jpg

Well not so fast.  The law makes things complicated because it does not see these issues as a “family” problem.  Instead, the law sees individual people, each with their own set of rights—some rights being enforceable now and some being enforceable later (if at all). 

For example, if a parent is being controlled by one sibling and that sibling has taken control of the parents’ trust, you cannot simply demand a Trust accounting from the bad brother or sister.  Why not?  Because you do not have a current right to do that.  When a parent creates a revocable Trust the Trustee only owes a duty to the Trust creator (called a Settlor—i.e., the parent).  Therefore, only a parent can demand an accounting from the Trustee—no one else has that right and no one else can enforce the parents’ rights.  The exception is if a conservator is appointed on behalf of the parent, then the conservator can exercise the parent’s right and force an accounting from the Trustee.  Once the parent dies and the children become vested beneficiaries of the Trust, then the children can demand an accounting (including an accounting for the period while the parent was still alive). 

It may seem like a family matter to you when a sibling is wreaking havoc with a parent, but the law sees individual people with individual rights—not a family matter.

The same is true for disputes over a parents’ assets after they die.  You may see a pile of assets your parents owned while they were alive, all of which they controlled and benefitted from.  Things like their home, joint bank accounts, life insurance, retirement accounts, brokerage accounts, bank accounts, CD’s, etc.  If your parents owed all of these assets then you should be able to deal with them in a single action, just pile them on the table and let the dispute begin. (See our previous discussion on how assets pass at death.)

But after death, the law sees assets very differently.  The law places each asset in its own box that is governed by its own set of rules.  The assets titled in the name of a Trust pass under Trust law, but they have nothing to do with assets passing by beneficiary designation—like life insurance and retirement accounts.  And joint assets pass under their own law, which is different from assets held in an individual’s sole name, which passes under a Will as part of the probate estate. 

Filing a Trust contest will help to undue assets passing under a Trust, but it does nothing for assets passing by joint tenancy or beneficiary designations.  So all those life insurance proceeds and retirement accounts have to be contested in different legal actions.  It is not uncommon to have a Trust contest petition, a Will contest petition, and a third type of probate petition all in a single matter. 

Why is this all so confusing?  Thanks to a few centuries of legal evolution where people came up with new and exciting ways to side-step Wills and the probate process.  Things like Trusts, joint tenancy, and beneficiary designations were meant to make passing assets easier.  That may be true when a parent plans out their assets ahead of time.  But when things go astray and assets have been wrongly distributed, this maze of laws governing different types of assets can be a difficult obstacle to overcome.

So beware, family issue involving Trusts and Wills are far more complicated than they appear.  

It has recently come to my attention that not everyone is accustomed to working with lawyers as part of their daily lives.  That’s a shame since we are so wonderful to be around. Us lawyers are used to working with and around other lawyers, so we sometimes forget that not everyone is accustomed to our ways.  But if you haven’t worked with a lawyer before, what should you expect when you hire a lawyer to handle a Trust or Will dispute for you?  Here’s some idea of what your experience should look like:

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1. The Consultation

First, you need to have a meaningful consultation with the lawyer to evaluate your case.  By meaningful, I mean giving the important facts to the lawyer so he or she can properly evaluate your case.  Don’t give too many facts, but don’t give too few either.  You may think that every fact of your case is important—it isn’t.  Well not to the legal analysis anyway.  That’s not to say what you are thinking and feeling are not important—they are.  But a legal analysis is a different animal that looks only to certain facts…not ALL the facts.

Once you have the facts out, the lawyer should discuss your potential claims and the likelihood of success (the good), any downsides, potential defenses or counter suits that the other party may file against you (the bad), and the costs of moving forward into litigation (the ugly). 

2. Starting the Lawsuit

Once you approve moving forward, then the necessary petition hould be prepared (usually takes about a week or two—not a month or two), filed with the Court and you will get your first hearing date.  Nothing happens at the first hearing date, it’s just a status conference for the court to determine who is objecting.  

3. Discovery

Your lawyer should then start drafting and serving written discovery requests, seeking whatever evidence you require to prove-up your petition.  We like to have a discovery plan written out so we know what discovery needs to be conducted.  Sometimes we only need to serve some simple requests to the opposing party, sometimes we need subpoena’s, sometimes it’s both.  Plus there are usually depositions to take.  All this discovery can easily take 3 to 6 months, or more, to complete.  And then the opposing party will likely serve you with discovery, which should be responded to timely by your lawyer.

4. Expert Witnesses

Next comes the expert witnesses.  In most Trust and Will disputes there is an argument as to the capacity of the decedent.  An expert witness is required to testify in Court on the decedent’s capacity. 

5. Trial

At some point, a trial date is requested from the Court.  If you file your Trust contest in Los Angeles County, then the timeframe to get a trial date will be much longer than one filed in Riverside or San Bernardino Counties.  All of our California courts are backed logged due to the budget crisis, but Los Angeles County is one of the most impacted. 

6. Mediation and Settlement

Usually the Court inquires, and sometimes insists, that the parties go to mediation to try to settle the case before trial.  Most cases do settle before trial—that is very common.  So a mediation can be scheduled at some point to try to reach a resolution.

All told, a Trust or Will dispute can take between 1 and 3 years to complete if it goes all the way to trial.  

This is just a general overview, there can be any number of issues in a case that would change the general information set forth above.  But hopefully this gives you some idea of the process, and what to expect from your lawyer.  

Think you have a slam dunk legal case?  Well in my 12 years of litigation experience (all in California) I’d say there is no such thing.  But if you were to have a slam dunk case, at a minimum you would need at least five different things to come together in your favor.  Here are the five essential elements for a slam-dunk case:

  1. The Law.  The cornerstone to every slam-dunk case is having a good legal argument.  Strike that, a slam-dunk case must have a GREAT legal argument.  You would have to have the law squarely on your side.  But that law, by itself is just one element—you need more than that.
  2. The Facts.  The law is never applied in a vacuum.  There has to be facts that support the legal argument.  And typically facts can be all over the place, some good, some bad, some downright terrible.  To have a slam-dunk you would have to have all the facts on your side and they’d all have to be good.  A caveat: every party always thinks they have nothing but good facts on their side.  This is rarely the case.  Plus, facts can be interpreted differently by different people—including  judges and juries.  To have a slam-dunk case, the facts have to be indisputably good.  But facts alone are not enough either.
  3. The Equity (i.e., fairness).  Judges and juries are people and people want to right a wrong.  This means, to really persuade someone you have to be able to show them the inherent fairness of your position.  Why is your side the fair result?  Not just fair to you, but objectively viewed as being the “right” answer.  You can never underestimate the power of equity.  Even in the best of cases, a fair result is highly persuasive and can even trump the law and the bad facts. Most judges and juries find the fair result in their guts, and then back their way into the legal reasoning and support for the equitable (fair) position.
  4. Money.  Lawsuits of every kind are expensive.  The pursuit of justice takes a toll, and that toll is usually felt most keenly in the pocket book.  Even if the law, facts, and fairness line up in your favor, your slam-dunk case will die a premature death if you don’t have the money to pursue the case as far as is necessary to resolve the dispute—that means getting to an agreeable settlement or trial.  Without either (1) money, or (2) some alternate arrangement to pay for legal services (such as contingency fees for example), your slam-dunk case is just slam sunk.
  5. Time.  To successfully see a case to trial you have to be a master guru of patience.  In our court system, it can easily take 3 to 5 YEARS before you get to trial.  For example, on a case we recently filed in Los Angeles Superior Court in July, the opposing party filed a motion to challenge the pleadings (called a demurrer in legal jargon) and received a hearing date of April 5, 2013.  So we now have to wait until next year just to find out if the defendant will be required to answer the lawsuit.  That means we can’t hope to even go to trial for a very long time—i.e. years from now.  If you don’t have the time, your case won’t make it to the finish line.

In most cases you’re lucky to just have one or two of these items on your side.  In fact, in a recent case we resolved, the client had the first three, which is rare.  But there was a lack of money and time, so the case had to settle.  In other cases we go to trial, but the result is unknown (until a judgment is reached) because of weak facts, law, or equities.  I have yet to see all five of these elements come together.  But if a case ever does meet all five, then you may have the first ever slam-dunk case.  Then again, you may not because nothing is ever certain in litigation.

Objection, hearsay!  We hear that term “hearsay” all the time—in the movies, on T.V., and in real life court proceedings.  The idea behind the “hearsay” rule, which prevents certain statements and documents from being admitted as evidence, is that not everything people say is reliable or even truthful (imagine that).  As straightforward as that rule may sound, it’s much harder to apply—and is the bane of all law students taking an evidence course for the first time.

Judge Noonan, writing for the United States Ninth Circuit Court of Appeals, just clarified an issue on hearsay, the so-called state of mind exception, in a case titled Wagner v. County of Maricopa (a case that originated in Phoenix, AZ).

In Wagner, the Plaintiff wanted to introduce various statements made by the decedent (prior to death obviously) about his impression of being imprisoned for a few days.  The decedent was diagnosed with various mental issues, including being disoriented, paranoid and psychotic.  He had wandered away from home and was arrested after being mistaken for a burglar and then resisting arrest.  In jail, he was placed in isolation, after psychological examination, and then forced to change from civilian clothes to jail-issue clothes, which included wearing pink underwear (?).  The decedent resisted the clothes change and was forcibly undressed, and then dressed in jail garb.  Due to his psychological condition, decedent thought that he was going to be raped by the officers and was traumatized by the experience.

Decedent’s mother bailed him out of prison after a few days and was later involved in a minor car accident with decedent in her car.  Decedent was told that the police would be called to the scene of the accident.  The decedent, in a state of panic, then ran for 4 or 5 miles away from the car accident where he collapsed and died of a heart attack.

The decedent’s family sued and wanted to have decedent’s sister testify to the statements decedent made about his impression of being imprisoned and being forced to change clothes.  The statements were meant to establish the decedent’s state-of-mind about being imprisoned.  The statements themselves, that decedent was being raped by the officers, was obviously false and not meant to prove they were true.

The trial court excluded the testimony on the theory that the statements were hearsay and could not be used to prove the truth of what was said.  The Ninth Circuit Court of Appeals reversed, saying that statements such as these made by the decedent, were not hearsay.  Why?  Because they are not used to prove they are true—no one was asserting the truth of the statements.  Rather the statements were being used to establish the decedent’s state of mind at that time.  And statements that would otherwise be hearsay are admissible into evidence when they go to the state of mind of a decedent.

This state-of-mind ruling provides a great exception to the hearsay rule, especially in the world of Trust and Will litigation, where a decedent’s state of mind is almost always a central issue to California Trust and Will contests.  As long as you aren’t using the decedent’s statements to prove what they said was truthful, only that is establishes their state-of-mind and explains their actions, then the exception applies.