Are you Serious!?!

When dealing with dysfunctional family relationships, you have to be ready to adapt and modify. In other words, be creative. Taking a hard stance and expecting others to “take it or leave it” is rarely a successful strategy when dealing with anybody—let alone dysfunctional relations.

While the typical Trust or Will lawsuit is rather complex, there are ways to get creative in nearly every case. Primarily because most people are not necessarily looking to get everything they say they want. What most people want more than anything is a symbolic win. Something that validates their position and provides a sign of respect for their relationship to the decedent. Don’t get me wrong, people want money too, but not every asset is created equal when it comes to family assets.

For example, tangible personal property, things like family heirlooms, photos, furniture, and keepsakes can be paramount in a party’s mind when fighting over an estate. Such items may seem petty or worthless to others, but the symbolic value of such property can carry a good deal of weight. And giving personal items to a party who cares about such things can go a long way to showing respect and providing a symbolic victory. Best of all, the victory can be given without any real loss of monetary value! Talk about a win-win situation.

This is just one example. There have been many times when we have been able to work out creative solutions. Another good example is giving a surviving spouse a life estate in real property—allowing them to live there until they either pass away or move into a care facility—and then allowing the children to obtain the property thereafter is a great strategy for giving the same property to two different people.

A creative solution may not always work, but getting creative increases the chances of finding common ground in litigated matters that otherwise would never be available to parties if they remained entrenched in their positions.

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).

Does your Trust Accounting...

As a beneficiary of a California Trust, you have the right to information and a full and complete Trust accounting.  So often, however, this information is never provided to the Trust beneficiaries.  When that happens, it is up to you to force the Trustee to account.  And once you are in Court, you can issue subpoenas to obtain all the back-up information necessary to double check the Trustee’s numbers.

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.

Bad Trustees = Bad Investing!!!

Trustees have a staggering number of duties and obligations when it comes to investing California Trust assets.  The California Uniform Prudent Investor Act outlines these duties, many of which are simply not followed by individual Trustees.  In this video, partner Stewart Albertson discusses the duties of Trust investing for California Trustees.

For more information, please visit:  http://www.aldavlaw.com/practice-areas/trustee-surcharge-litigation/

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.

Bad Trustees

When a Trustee refuses or fails to properly invest Trust assets, those assets can waste away.  Wasting Trust assets in one of the basis on which you can seek removal of your California Trustee.  In this video, partner Keith Davidson discusses Trustee removal based on wasting Trust assets.

For more information, please visit:  http://www.aldavlaw.com/practice-areas/trustee-surcharge-litigation/

Where in the World do I file my Lawsuit?

Where do you sue your Trustee?  If you want to sue a Trustee in California, there are two issues you need to consider: (1) jurisdiction, and (2) venue. Jurisdiction is the big question—can this Trustee be sued in California? Venue is the smaller question—where in California must this Trustee be sued?

Jurisdiction — The Big Question

Under Probate Code section 17300, any person who accepts trusteeship of a Trust having its principal place of administration in California submits personally to the jurisdiction of the California courts. In other words, if you choose to become Trustee of a Trust that is being administered in California at the time you take over, then you agree to come to court in California if there is ever a problem in the future.

That is a pretty broad standard. But it gets broader still under Probate Code section 17004, which allows the court to exercise jurisdiction under any basis that can be used for civil lawsuits under Code of Civil Procedure section 410.10. Section 410.10 is California’s so-called Long Arm Statute that allows jurisdiction where people have sufficient minimum contacts with this state. This includes concepts like “in-rem” jurisdiction that allows California to hear cases involving California real property in this state. In short, if you are Trustee of a California Trust or a Trust that has California real property, pack your toothbrush because you’re coming to California if you are ever sued.

Venue — The Small Question

Once jurisdiction is established, you then have to consider where to sue—that’s a matter of venue. Under Probate Code section 17005, the proper county in which to sue a Trustee is where the place of Trust administration is located. The place of administration is where the Trustee resides or where they do business. If you have more than one Trustee, then it is where either of the two Trustees reside or do business. If there is no Trustee, then venue is proper where any assets of the Trust are located. This standard is different from probate estates—where the proper venue is where the decedent resided at the time of death. For Trusts, you go where the Trustee is in order to file suit. If the Trustee is out of state, then follow the Trust assets for filing suit.

We seem to be seeing more instances of people moving out of state after accepting to act as Trustee of a California Trust. Now you know that just because the Trustee is no longer in California, California courts may still be the correct jurisdiction and venue in which to file a lawsuit.

Trust

You will never know for certain what your rights are under a California Trust or a California estate without first seeing the Trust or Will documents.  But how do you obtain those documents when a Trustee refuses to provide them to you?  In this video, partner Stewart Albertson describes the process of obtaining Trust and Will documents.