Whoa, slow down, that’s a loaded question.  Filing a lawsuit is easy, right?  You just draw up a few papers, file them with the Court, and get what you want in a few days…actually, no.  It’s not like that AT ALL.  In fact, most Trust and Will lawsuits take some time to plan out, draft and file with the Court; but why is that?

First, you should know that the law is not black and white.  And the law is never applied in a vacuum, instead law must be applied to a set of facts.  The problem is that all the facts and evidence cannot be fully known when you are first drafting a Trust or Will lawsuit because you just don’t have time to uncover the entire truth.  So you work with what you know and you put the facts together as best you can.  Those facts then need to be blended with the law to come up with your legal arguments in the final draft of your lawsuit that is filed with the Court.  Bottom line: this takes time.  To have a good filing, you need to put in the time and effort to make it so.

Second, successful lawyers are already busy with other cases.  So while you Trust and Will lawsuit is undoubtedly important, we lawyers need to make time to fit it into our schedules.  Not always easy, but doable with some patience and work.  Bottom line: it may take a day or two to get started on your Trust or Will lawsuit.

Third, you are the final (and most important) editor of your lawsuit filing.  Yes, you, the client, play an important role in preparing a Trust or Will lawsuit for filing.  You are the one with knowledge of the facts, the past, the history, the backstory—call it what you will, you matter.  And people are different, some prefer a great degree of detail while others prefer a general overview.  No one way is right, both have their advantages and disadvantages.  But as a client, you have the right (maybe even the obligation) to review and edit the court filing your lawyers prepare.  Your input is vital, but your input can also take time.  Time for you to review and comment, time for the lawyers to input your changes or discuss your comments with you, and time to blend this all together into the best possible court filing you can have.  Remember, your court filing need not be perfect, but it should be as good as we can make it with the time we have.  Bottom line: your input matters, but it also adds time to the process.

So exactly how long should it take to prepare and filing the opening filing for you Trust or Will lawsuit?  Typically about two weeks or so.  Sometimes less, sometimes more.  If you are well beyond two weeks, then something may be amiss.

 

A loved one dies, you find out you are disinherited, and you are left to wonder: what happened before he died that caused a drastic change in his Trust or Will?  The one person who could tell you the answer to that question is gone, so it’s now up to you to find the answer from a variety of sources, including the attorney who drafted the Trust or Will.

The problem is that many attorneys will claim the Attorney-Client Privilege applies to their conversation with the decedent and refuse to divulge the information you need for your Trust or Will lawsuit.

That’s where the California Evidence Code steps in to help you obtain the answers you need to know.  Using the following four Evidence Code sections you can get all the information you need to figure out what went wrong with your inheritance:

1.  Evidence Code 957

What the law says:

There is no privilege under this article as to a communication relevant to an issue between parties all of whom claim through a deceased client, regardless of whether the claims are by testate or intestate succession, nonprobate transfer, or inter vivos transaction.

What it means:

If you are claiming a right through a deceased person, you have the right to question the drafting attorney and the Attorney-Client Privilege does not apply.  This is true whether you are questioning a Will, and Trust, or any other type of at-death transfer device.

2.  Evidence Code 959

What the law says:

There is no privilege under this article as to a communication relevant to an issue concerning the intention or competence of a client executing an attested document of which the lawyer is an attesting witness, or concerning the execution or attestation of such a document.

What it means:

Where a lawyer has witnessed a Will, or knows of the intent and possible competency of a client, then you are entitled to ask questions about the lawyer’s knowledge of that intent or competency.  If you look at most Wills, it specifically states in the witness section that the witnesses are attesting to the fact that the decedent did not lack capacity.  When a lawyer signs something like this, it stands to reason that they should answer questions about it and cannot hide behind the Attorney-Client Privilege.

3.  Evidence Code Section 960

What the law says:

There is no privilege under this article as to a communication relevant to an issue concerning the intention of a client, now deceased, with respect to a deed of conveyance, will, or other writing, executed by the client, purporting to affect an interest in property.

What it means:

Where an attorney and a client discuss the client’s intentions in transferring property, there is no Attorney-Client Privilege covering that conversation once the client is deceased.  Again, the law wants to get to the bottom of the client’s intent and so the law cares out an exception to the Attorney-Client Privilege to do so.

4.  Evidence Code Section 1260

What the law says:

(a) Except as provided in subdivision (b), evidence of any of the following statements made by a declarant who is unavailable as a witness is not made inadmissible by the hearsay rule:

(1) That the declarant has or has not made a will or established or amended a revocable trust.

(2) That the declarant has or has not revoked his or her will, revocable trust, or an amendment to a revocable trust.

(3) That identifies the declarant’s will, revocable trust, or an amendment to a revocable trust.

(b) Evidence of a statement is inadmissible under this section if the statement was made under circumstances that indicate its lack of trustworthiness.

What it means:

This is not an exception to the Attorney-Client Privilege, but rather an exception to the hearsay rule that allows a decedent’s statements to be admitted into evidence even though they are not present to testify in court (which would normally be hearsay).  There is an exception if the information is not trustworthy, which the court has great discretion to determine at time of trial.

By the way, just because these rules apply does not mean that every lawyer follows them (I know, big surprise).  We have plenty of cases where we sit down to depose and question the drafting attorney and they wrongly assert the Attorney-Client Privilege.  That requires us to go to court on a motion to compel them to answer the questions asked.  So don’t be surprised if you have to fight for this information, but with these Evidence Code sections, you have an excellent chance at winning that fight.

    1. Surviving Joint Tenants Don’t Have to Share

I have seen it a thousand times, a parent puts one child on title to a bank account or a house to “help manage” that asset.  Well, the law presumes automatically that you want that asset to go 100% to the surviving joint tenant.  If that is not your intent, then DO NOT set up joint tenancies.  Surviving joint tenants do NOT have to share, so keep that in mind when setting up joint tenancy.

    2. Your Will probably Controls Nothing

Your Will only controls assets held in your individual name.  That means any Trust assets, joint tenancy assets, beneficiary designations, and pay-on-death/transfer-on-death account do not pass under the terms of your Will.

    3. Trusts are meaningless without assets

If you created a revocable Trust, but you did not transfer any asset to it, then your Trust is meaningless.  A Trust only controls assets transferred to the name of the Trustee.  Without that transfer, your Trust is a pile of documents that do you no good when you need it most.

    4. Divorce Does Not Affect Insurance Beneficiaries

Here is a shocker, in California a legal divorce will severe all sorts of joint ownership rights, but it will NOT affect the named beneficiary under a life insurance policy.  That means that if your ex-spouse is named in your insurance as a beneficiary, they WILL RECEIVE the death benefit unless you change it after the divorce.

    5. The Law Presumes You Know What You Are Doing

So many people have no idea what affect the titling of their assets have after they are gone, but the law assumes you know exactly what you are doing.  That means it is up to your children to fight about it in court if you do something you do not intend to do.  That’s where planning comes in.  Even if you do not create a Trust, you can still plan out your affairs to be sure that your intent takes affect after your death.

    6. Pay Now or Pay Later—Lawyer’s Prefer You Pay Later

Talking about planning, estate planning is far cheaper than dealing with the messy aftermath of an unplanned estate.  Many people do not engage in planning because they don’t want to pay for it.  But an unplanned estate will cost far more in the long run than the price of a good estate plan.  Where a good estate plan may cost $3,000 to $6,000; a Trust or Will lawsuit can cost $30,000 to $50,000.  Which one would you rather pay?  So pay now or pay later—and lawyers much prefer you pay later by the way.

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.

Let’s pretend you have a crazy uncle that only wears pajamas even when going to places outside his home.  He often goes to his neighbors’ houses and offers to buy all of their furniture even though the furniture is not for sale.  And he sends strange gifts to family members through the mail, which usually consist of raw fish and raw meat.  Does your uncle lack capacity to create a Trust or Will?

Maybe, maybe not, we don’t really know the answer to that questions based on the facts described in the paragraph above because under California Probate Code section 811 you can only prove lack of capacity by first establishing a mental defect.  While all the actions described certainly sound crazy, they do not establish the existence of a mental defect.  Your uncle may just be eccentric or “crazy” in the common sense of the word, but not in the medical sense.

A mental defect is typically a cognitive impairment created by conditions such as dementia or Alzheimer’s disease.  A person with dementia may not do any of the things that crazy uncle above does, and yet a dementia patient could potentially lack capacity to create a Trust or Will.

Crazy uncle on the other hand may or may not have legal capacity, it all depends on whether he has a mental defect.  He certainly has a gifting defect (sending raw fish in the mail), but until a mental defect is established, he is free to create or change his Trust or Will all he wants.

And that’s the difference between lack of capacity and just being eccentric.

If you have an undue influence claim, here are the top five things you must consider in bringing your claim in court:

    1.  It’s a Two-Headed Monster

Starting January 1, 2014, the definition of undue influence was unified under Welfare and Institutions Code Section 15610.70.  That means the same facts and circumstances that you use to directly prove undue influence to overturn Trusts and Wills are also used (or usable) to bring a financial elder abuse claim based on undue influence.  So every Trust and Will contest becomes a potential financial elder abuse case too.  And elder abuse claims are given jury trials, allow for punitive damages, and recovery of attorney’s fees—all things you CANNOT get in a Trust or Will contest lawsuit.

    2.  Equity Isn’t Enough

An unfair result, by itself, is not enough to prove undue influence.  Unfortunately, a parent can treat a child unfairly if he or she chooses to do so.  Undue influence is essentially the replacing of the decedent’s intent with that of a wrongdoer.  So if the parent chose to act unfairly, so be it, the law has no problem with that.  If a wrongdoer coerced the parent into acting unfairly, then you may have undue influence.

    3. Shifting the Burden of Proof

Undue influence is one of the few claims where you can shift the burden of proof onto the wrongdoer to prove that they did NOT engage in undue influence.  But to do so, you first need to prove that (1) the wrongdoer was in a confidential relationship with the decedent, (2) the wrongdoer actively participated in procuring the Trust or Will, and (3) the wrongdoer unduly benefitted from the new document.

    4. You Still Need a Weak Mental State

The first element for undue influence is that the decedent was susceptible to being unduly influenced.  They do not need to be incapacitated, per se, just susceptible to influence.  The other elements focus on the actions of the wrongdoer, but you still need a medical expert to testify to whether the decedent was susceptible to undue influence.

    5. Undue Influence Requires a Good Back-Story

Anytime you are asking the court to overturn a Trust or Will, you need a compelling reason to do so.  California Trust and Will contests are decided by judges (called a bench trial) and judges are people too.  Most judges have seen it all, so while your case may seem outrageous to you, it is just another case to the judge.  And most judges want to reach the “right” result, which means your case needs to compel the judge to make things “right” by overturning the Trust or Will.  Judges are not compelled to do that just because you ask them to do so.  But they are inclined to act when presented with a back-story that shows that someone took an unfair advantage of a decedent.  Therefore, a good back-story of events that occurred leading up to the Trust or Will creation is vital to winning your undue influence case in court.

Make no mistake, litigation is a fight.  If you are going to try to set aside a Trust or Will document, you have a fight coming your way.  And in most cases, it can be a long, tough, expensive fight.  Unfortunately, there is no other way to stand up for your rights but to go to court and fight for what is right.  And once you step into the boxing ring, you have to expect to get hit (and sometimes hit hard).

That does not mean that you fold your tent and go home.  Boxing is a game of endurance and perseverance as much as it is a show of strength.  The longer you hold in there, the better chance you have at achieving a fair and just result.  Sometimes that result comes in the form of a favorable settlement, sometimes it take a full-blown trial, and sometimes even just causes lose.  But if you give up without a fight, then you are guaranteed to lose.  That means the only way to win a just and fair result is to take your chances in the boxing ring.

Better yet, if you want to increase your changes of winning, then put in the effort and work it takes to provide the best effort possible when in court.  Of course, that comes down to the right preparation for your case.  And preparation takes time (and time is money).  But without preparation, you have no idea if you can go the distance in your fight.

So the next time you step in the boxing ring, prepare for a tough fit, but hand in for the distance.  Most people give in far before the case is over, so the long you can go, the better your chances for a just result.

If you are a California Trustee, here are eight must know facts for your to properly administer your Trust and keep yourself safe from any personal liability:

1.  Know Your Duties

Being a Trustee is a thankless job.  You owe many duties and obligations to the beneficiaries, but they owe you no duties at all.  That means, if you are going to succeed as a Trustee, you have to know what your duties are in the first place.

2.  Know the Uniform Prudent Investor Act

If you do not follow any other duty as Trustee, at least know and follow the Uniform Prudent Investor Act.  When the Trust creator was alive, he or she was able to invest however they pleased.  Not so with you.  As a successor Trustee you have a duty to invest prudently.  That means you have to follow the investment rules.  And you really should have an investor’s policy statement (or IPS).  An IPS is an investment plan that your financial professional creates for you.  You can then invest according to that plan and check in with the financial professional once per quarter to be sure the investments are performing as expected.  The law does not mandate an IPS, but when we attack Trustee’s is looks very bad in court to invest without one.  And for good reason, how do you know your are investing prudently if you have no written plan?

3.  Know Your beneficiaries

As a Trustee, you have a duty to know your beneficiaries, especially if the Trust gives you the power to make distributions based on a standard, such as health, education, maintenance and support (the standard “ascertainable standard”).  When you have that power, it is up to you (the Trustee) to determine what the beneficiaries needs are and whether a distribution must be made to meet those needs.  You are not allowed to ignore the beneficiary or even force them to ask for a distribution.  Rather, the Trustee must be proactive and inquire as to the beneficiaries needs.

4.  Know your assets

Trustees must take control of Trust assets (referred to as “marshaling” assets).  But you cannot take control of assets you don’t know about, so your first job is to get to know the Trust assets.  How are they held, how are they invested, and what is the future plan for each asset?  If an asset is in danger of losing value, then the Trustee must take action to protect the assets and prevent a loss, if possible.

5.  Keep all receipts and statements so you can account

Every Trustee must account for their actions (read more about Trust accountings here).  That means you have to demonstrate what assets you started with, what you received in income, what you spent on expenses, the distributions you made to beneficiaries, and what is left at the end of the accounting period.  And each of these categories must be supported by detailed schedules showing each transactions by date, description and amount.  The only way to report that level of detail is to keep all receipts, account statements, and similar financial documents so a thorough accounting can be prepared.

6.  Understand Trust accounting

Trust accounts are VERY DIFFERENT from corporate or business accountings.  If you ask your CPA for a Trust accounting, and they give you a balance sheet and profit and loss statement as you would have for a business accounting, run to another CPA immediately.  Trust accounts do not have balance sheets and profit and loss statements.  In fact, Probate Code section 1061 lists exactly what a Trust accounting mut have, which is a list of charges and credits.  The charges must begin with the assets on hand at the start of the accounting period, the income received and any gain on sale (in other words, every asset coming into the “charge” of the Trustee).  The credits represent the cost side of things, such as the expenses paid, the distributions to beneficiaries, any losses on sale, and ends with the assets on hand at the end of the accounting period.  The charges must equal the credits for the accounting to balance.  And each category must have a supporting schedule showing all the details (for example, all the detail for every expense paid).

7.  Know the Statute of Limitations

How long does a beneficiary have to file a lawsuit against you as Trustee?  It depends.  If you serve Trustee’s notice under Probate Code section 16061.7, then the beneficiary has 120 days in which to file to contest the Trust terms.  As for your actions as Trustee, that statute remains open indefinitely unless you provide an accounting to the beneficiaries.  Once an accounting is provided (assuming is fully discloses all actions you took as Trustee), then the beneficiary has three years to sue the Trustee.  If you file your accounting in court and see court approval, then the beneficiary must either object prior to court approval or be forever barred from suing you as trustee for everything reported in the accounting.

8.  Communication/Information is Key

Being a Trustee is a thankless job, especially if you are dealing with difficult or demanding beneficiaries.  But you have too many duties to ignore beneficiaries.  The key is to communicate as often as possible with beneficiaries.  Send out copies of bank statements, send letters updating beneficiaries on the Trust administration if you have to, whatever it takes.  The more you communicate, the better.

Getting the cold shoulder from your Trustee?  While every Trustee has a duty to communicate with the beneficiaries and provide required information, it does not always happen that way.  Maybe the Trustee does not know their fiduciary duties, maybe they don’t know the answer to the questions your asking, or worse yet, maybe they don’t want you to know what they are up to.

When a Trustee fails to communicate, beneficiaries usually assume the worst.  And, for good reason:  a lack of communication is usually the result of people doing things they should not do.

But as a beneficiary you are entitled to communication from your Trustee.  How do you enforce that? You file a petition in court and demand to receive the information that you requested.  Once the petition is filed, not only can you get the information by way or a court order, but you also have subpoena power.  Said power allows you to subpoena the documents you are after.

While you should never get the cold shoulder from your Trustee, you can take action to stop that.  It’s up to you to act to protect your rights.

If you are the beneficiary of a California Will, there’s a few things you need to know in order to understand and protect your rights.  Here’s  the Top 10 things you must know as a Will Beneficiary:

1.  The Last Will Controls

Sometimes people create more than one Will.  Under California law, the last Will made usually wins.  But that depends on whether the decedent had the capacity to create a Will and was not subject to undue influence.  The key is to find the last Will created.  And it must be an original.

2.  Executor’s Attorney is not Your Attorney

This may sound strange if you are not used to this process, but even though the executor’s attorney is paid from the estate (essentially paid from your assets) that attorney is NOT your attorney.  The executor (or administrator if its an intestate estate) has the right to hire an attorney and that attorney advises the executor ONLY.  Want your own legal advice?  That’s fine, but you will have to hire and pay for your own independent lawyer.  Welcome to probate!

3.  The Empty Will Syndrome

You are named as a beneficiary under a Will, so what?  A Will only controls assets that pass through the probate process.  In todays complicated world, there’s precious little that passes through probate.  Joint tenancy accounts or real property, life insurance, retirement account, trust interests, paid-on-death or transfer-on-death accounts all pass outside of probate.  That means the Will does NOT control those assets.  If there are no assets that pass through probate, then you (as a Will beneficiary) are a beneficiary of nothing.  Congratulations, don’t spend it all in one place!

4.  A Will is not a Will until a Court will call it a Will

So you think you have a Will?  The court will be the judge of that.  In California (and most places throughout the U.S.) Wills must be “admitted” to probate.  Probate comes from a Latin word meaning to prove.  The beginning of the probate process is meant to prove the Will is, in fact, a valid and enforceable Will.  In admitting a Will to probate, the Court is essentially finding the Will to be a valid documents—in other words, the Will was proven to be a true Will.

5.  Know your Bonds

The default rule in probate is that every executor or administrator is required to obtain a surety bond.  A bond is not insurance, not exactly.  A bond provides a source of funds that is paid out to the probate estate in the event the executor or administrator breaches a fiduciary duty.  But a bond does not automatically pay out once an executor breaches a duty—quite the contrary.  Most bond companies will enter the matter and fight in favor of the executor’s actions if a breach of duty is raised.  If a Will beneficiary prevails, then the Court can order payment to the estate by the bonding company, and the bond company then has the right to sue the executor to recover payment.

Bonds are good and important to protect the interests of a beneficiary.  But most Wills have a provision that waives bond, which the Court will do if the Will allows it.  Also, the beneficiaries as a group can waive bond, assuming all beneficiaries agree to do so.  The bond does cost the estate in the form of a bond premium.  But it usually is a small price to pay for the protection a bond provides.

6.  Inventory and Appraisals

All probate estate assets MUST be inventoried and appraised by a probate appraiser (sometimes called the probate referee) assigned to your probate case.  The only thing that is not appraised by the probate referee is cash.  It does not matter that you have your own appraisal or you have an appraiser you want to use.  The probate referee is the only one who can appraise your estate assets.

However, there are times when a probate referee will use an independent appraiser’s information to assemble an appraisal.  This typically happens with unique items that are outside the probate referee’s area of expertise, such as appraisal of race horses.  But most estate don’t have race horses, so be prepared to work with the probate referee assigned to your case by the court.

7.  Creditors Claims

The primary purpose of the probate process is to protect creditors.  There is a mandatory waiting period of 120 days after the estate is opened (and Letters are issued) during which creditors are allowed to make claims against the estate assets.  And creditor’s claims take precedence over any rights of the beneficiaries.  In fact, every executor is required to notify all known creditors and provide them with a copy of the claim form (to make it as easy as possible for the creditor’s to submit a claim to probate).

8.  Reports and Accounting

If you have a probate estate that does not require an estate tax return to be filed (which means your estate is worth less than $5 million—most are), then your executor must either close the estate or file a report within 12 months of the estate being opened.  If an estate tax return is due, then the deadline is 18 months.  Reports allow the probate court to review what is occurring in the estate and ensure nothing is amiss while the estate waits to close.  As a beneficiary, you have the right to object to the report if it contains anything to which you disagree.

9.  Court Order required for distribution

You cannot receive any assets from the estate until a court order is issued.  It does not matter than you are a beneficiary and entitled to the assets, the property does not legally belong to you yet.  It belongs to the estate and it remains an asset of the estate (and in the executor’s possession) until a court orders the property to be distributed.  Frustrating, I know, but that’s the rule.

10.  Executor Fees, Attorneys Fees and Costs

We all love fees (being paid them, not having to pay them).  Fees are a necessary part of the probate process.  In probate, there are two categories of fees you need to know about, statutory fees and extraordinary fees.