"California Trust and Will Litigation"

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Hi, this is Stewart Albertson with Albertson & Davidson.  I want to talk to you about contingency fees, and how they can give access to some beneficiaries who don’t have the ability to pay lawyers on an hourly basis.  The traditional way that many people hire lawyers is they give that lawyer a retainer (for example, $10,000-$20,000 retainers are common), and then the lawyer bills against that retainer, according to their hourly rate. When that retainer runs out, the lawyer asks for more money.

However, beneficiaries are not in a position where they can pay lawyers to represent them in a trust contest or a will contest case. So, there is an option for contingency fee.  Now, keep in mind, you generally do better overall to hire a layer on an hourly basis, if you can, because you’ll spend less overall on a case than you will if there’s a successful outcome in a contingency fee case, as far as attorney’s fees go.

Let’s give an example.  You hire a lawyer to handle a case for you.  You’ve got a million dollars at stake and you pay that lawyer $100,000 in hourly fees to get you your access to that million dollars.  Well, that’s a pretty good result for you. You paid $100,000 in hourly fees to that lawyer and you end up getting the million dollars that was supposed to come to you.

If you didn’t have the money to pay the lawyer on an hourly basis, you could hire that same lawyer on a contingency fee basis, which is a percent of the recovery.  Generally speaking, most cases are going to be 40% in California.  So, using the same example, a lawyer works the case for a year and a half or two years, and just before trial, the case settles and it’s a million-dollar recovery to you.  If you apply the math at 40%, that would be a $400,000 attorney’s fee and the balance would go to you.  You can see the difference.

It generally makes sense to hire a lawyer on an hourly basis, versus a contingency fee basis, but if you don’t have the ability to hire a lawyer on an hourly basis, then the best option for you to do is to consider the contingency fee, which is a way to recover something for you that you normally couldn’t get access to if you didn’t have a lawyer willing to take your case on a contingency fee basis.  So that’s just a little bit on how a contingency can work to return assets to you that are rightfully yours.

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Hi, this is Stewart Albertson with Albertson & Davidson and I want to talk to you just briefly about three important sets of documents that we need to get quickly in any type of trust or will contest.  So this happens when a client has already shown up and hired a lawyer.  They’ve already filed their trust contest or their will contest and now the question is what documents do we need to begin the case?  To begin our discovery, to begin strategizing how we’re going to overturn the trust or the will that is a product of undue influence or lack of capacity.

And these come down to three subpoenas and they should go out quickly.  You want to get these documents quickly, to make sure you get the full set of documents, and then you want to have the right people review them once you have them so they can help shape your case going forward, help shape your discovery and, hopefully, shape a successful outcome in invalidating a trust or a will that is the product of undue influence or lack of capacity.

The first set of documents that we want to subpoena right away are from the estate planning attorney.  So the estate planning attorney who drafted the trust or the will or both, we want to get a letter to them immediately telling them to safeguard their file and they can be accept – expecting a subpoena.  Once they receive that subpoena, they have a short time to respond and most estate planning attorneys will send us their files so that we can review them to see what were the circumstances around the creation of the trust or the will.

Sometimes, these attorneys though, they decide they don’t want to send the file and that’s not a problem.  Because then we can file a motion to compel, is what we call it, file that in court and we’ll get a judge to order them to give us the documents.  In many cases, once we file this motion to compel, the estate planning attorney will agree and send over the files.  So that’s the first set of documents you must get in a trust and will contest – and the sooner, the better!

The second set of documents will be the medical records and these are rich – especially if the decedent had multiple providers.  So you want to subpoena out to every single medical provider that you are aware of.  Once you have the first set of medical records, there’ll be other doctors, other hospitals, other medical providers that you’ll in those medical records.  In many cases, neurologists and those are really good medical records to get – so you’ll want to send out subsequent subpoenas for those documents as well.  Most big medical providers are very good at responding to subpoenas and in short order, if you give them a subpoena that’s well drafted and it details exactly what you’re looking for, you will have medical records that you can review to look for things such as dementia, Alzheimer’s and other mental/cognitive deficits that may have impacted the decedent at the time that the will or trust was created that you’re alleging was the product of undue influence of lack of capacity.

Finally, the last set of records are the financial records, and they’re also rich.  Especially if there’s a wrongdoer who did exercise undue influence over your mom or dad before they passed away.  This person generally can’t wait to get their hands on the money until the person dies, so they get their hands on the money during lifetime and they start taking a lot of cash withdrawals from the ATM, they’ll write checks to themselves calling them cash.  They may even sign them for the decedent, your mom or your father, and take this money and start spending it, using it for whatever it is they want to use it for.

So once you file the trust or will contest, you want to jump quickly on these three sets of documents.  Once you have them, they’re going to go a long way in getting you to a good settlement, or you’re going to be able to prove at the time of trial that, in fact, undue influence or lack of capacity did take  place in the creation of the will and the trust.

This is part three of a four part post discussing the newly created standard for proving undue influence directly in California Trust and Will contests.

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Effective January 1, 2014, the California Legislature has introduced a new standard for proving undue influence directly (found at Welfare and Institutions Code Section 15610.70; and made applicable to the Probate Code by Probate Code Section 86), and it consists of the following four factors:

  1. The vulnerability of the victim,
  2. The influencer’s apparent authority,
  3. The actions or tactics used by the influencer, and
  4. The equity of the result.

We covered vulnerability and apparent authority in my last posts.  Now let’s discuss the third factor—actions or tactics used by the influencer.

Actions or Tactics used by the Influencer.  How do undue influencers act?  Do they exert their abnormally strong influence out in the open for all to see?  Not usually.  In fact, the actions or tactics used by an undue influencer are so universally common that it represents one of the four factors for proving undue influence in California. 

Under 15610.70(a)(3), evidence of actions or tactics of the influencer include:

  1. Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep;
  2. Use of affection, intimidation, or coercion; and
  3. Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

Sounds a bit like a day-time soap opera.  Unfortunately, this happens all too often in real life.  The common effect of each of these items is to control the victim, conceal the wrongdoing, and coerce the victim into signing documents favorable to the influencer (the three “c’s”: control, conceal, and coerce).  You do not need to prove all three of the items listed above, they simply provide an example of actions/tactics that come into play to prove undue influence has occurred.

The actions that are most troubling are (1) controlling necessaries of life and medication, and (2) using haste, secrecy, and initiating changes at inappropriate times.  Not only are these actions evidence of coercion, they can be downright dangerous to the victim—especially the medication issue.  For that reason, family members should be careful whenever these signs arise.  Oftentimes, people will tell me after the fact that they thought something may be wrong, but didn’t know what to do about it.  Simply put, take action if you think necessaries of life and medication are being manipulated. 

As for proving undue influence, the more actions and tactics you can prove, the more likely you will be in overturning a California Will or Trust based on undue influence.

No Photo.jpgPredicting the outcome of a Trust or Will contest lawsuit is a bit like forecasting the weather.  You may have some idea of what is to come, but clear skies can turn into a thunderstorm with very little warning.  And when lawyers predict the wrong result for their clients, most clients get angry—even though the prediction was never guaranteed.  Angry clients lead many attorneys to be severely risk adverse, never wanting to take any risks whatsoever.  So when a client asks “can I legally take this action” it is safest from the lawyer’s perspective to say “NO”!  Only bad things can come from saying yes and then being wrong about it later.

The problem is that saying no may be safe for the lawyer, but it does the client no good.  If all a client wants is to be told “don’t do that” they don’t need to pay a lawyer for that advice.  They can just sit on their hands and do nothing.  What clients want, or should want, is practical advice.  Something that explains the risks and the benefits, leaving the client in the best position possible to make a sold, informed decision on how to proceed.

How is that accomplished?  First, you need a lawyer who knows about the area of law on which you are seeking advice.  Having someone with experience, who has walked through the fire (so to speak) makes a big difference.  It allows the lawyer to separate facts from fiction.

Second, you need someone who knows what is worth worrying about and, more importantly, what is NOT worth worrying about.  Rather than focusing on all possible arguments and problems that may come your way, lets focus on all probable arguments and problems.  “As our collegeue Stacy Kemp with Kemp & Ruge Law Group puts it, ‘it is not enough to have an educated attorney, you need an efficient one, as well.” Also, as a Judge once told me during a Trust contest trial “It may be possible that a monkey can play the piano, but it’s so highly improbable that we don’t need to talk about it.”  That’s great advice.  After that, I stopped telling clients about every conceivable problem, and instead focused on the probable problems that were material to the case.  This allows clients to be fully informed and make good decisions about their case, without being bothered with unlikely results that they need not worry about.

Third, sometimes you just have to stick your neck out to help clients resolve their problems.  The resolution you get when you do nothing is nothing.  You must do something if you hope to resolve your California Trust or Will matter.  Of course, there are no guarantees in life or in the law.  You can lose a great case and you can win a bad one.  But you develop a good strategy, inform the client of the risks, and then proceed to put full effort into the case.  More times than not, good things will happen with that strategy. 

In the end, practical advice is far better than technical advice, but neither is perfect.  You take your best shot and live with the result.  Now that’s as practical as it gets.

How do you get a private trustee to take action?  A parent dies, one or more of the kids take over as trustee, and nothing happens.  The assets of the Trust aren’t gathered together (called marshaling assets), notice is not given to the beneficiaries (as required under P.C. section 16061.7), beneficiaries are kept in the dark, real property is not sold and sometimes the trustee goes so far as to move into the property and live there rent free.  It is a common occurence, and yet none of it is allowed under California Trust law; what is a beneficiary to do?

Under California law a trustee owes countless duties and obligations to the beneficiaries, and the beneficiaries owe no duties whatsoever to the trustee.  The law presumes that trustees will discover what their duties are and then follow them.  But for private individuals acting as trustee, they often make the mistake of believing that they can do whatever they want now that they are “in charge.”  Not true.  While parents who create a trust can do whatever they want (because as the settlors of the Trust they have that power), successor trustees are not so lucky.  Successor trustees owe duties to the other beneficiaries and must act under the duties and obligations imposed on trustees.

Yet, individual trustees persist in not doing the right thing.  So what is a beneficiary to do?  Take action!  Fortunately, beneficiaries have rights and those rights have to be asserted and enforced.  Unfortunately, there is only one way to force a trustee to act, and that’s by going to court.  But there are some steps you can take as a beneficiary before running to the courthouse.

For example, under Probate Code section 17200(b)(7), you are entitled to information regarding the Trust and its assets, and you are entitled to accountings every six months to one year.  And the law requires that the demand for information and accountings both be submitted in writing to the Trustee.  Once sent, the Trustee has 60 days in which to respond with the requested information.  Thus, the first thing you should do is send the trustee your demand for information in writing.  Since you can’t go to court without that demand having been made and giving the trustee 60 days to respond, you might as well start the clock now.

It makes no difference if the trustee responds.  If the trustee gives you what you are asking for, great you just saved a trip to court.  If the trustee ignores your request or does not provide you with sufficient information, now you’re ready to file in Court.

What about removing the trustee?  Not the easiest thing to do, but not impossible either.  Take a look at some of our other posts about trustee removal here, here, and our video here.

The bottom line: sometimes you have to stand up for your rights.  Since private trustees don’t always understand the many duties they owe to their beneficiaries, and they don’t seem to have anyone educating them on those duties.  That’s when a beneficiary may need to educate the trustee to ensure their rights are protected.

Trust and Will litigation is a bit of a shell game.  You remember the shell game, where a pea is placed under one of three shells and then the shells are re-sorted as quickly as possible so as to lose track of which shell has the pea.  The observer is then asked to pick the shell with the pea—it’s a 1 in 3 shot of getting it right.

The reason Trust and Will litigation is like a shell game is because so much depends on how assets are titled at death (see our earlier blog post on this issue).  The Trusts and Wills are the shells and the assets are the peas. 

For example, a decedent may die with a Trust, but if nothing is titled in the name of the Trust, then there may be nothing to contest regarding the Trust.

And a Will only controls what is in the estate, which means only those assets titled in the decedent’s name alone (this excludes property titled in joint tenancy, by beneficiary designation, or in the name of a trust).  However, in most cases, people have “pour-over” Wills that pass all assets from their estate to their Trust.  Thus, a Trust may not have any assets to begin with, but can obtain assets from a pour-over Will.

Sound confusing?  It is.  So where do you start when you want to contest a Trust and a Will (or is it a Trust or a Will, or just a Trust, or maybe just the Will…)?

Step One.  You have to determine where the assets are located.  Often, they are scattered all over the place, with some in a Trust, some in the decedent’s own name (so those are in the probate estate), and some passing by joint tenancy with right of survivorship (which pass outside the Will and the Trust). 

Step Two.  Once you have identified where the assets are located, you need to know what documents you are working with.  Is there a Trust, what does it say, and when was it last amended?  Is there a Will, what does it say?  What about joint tenancy property?

Step Three.  You have to decide what to attack first.  Typically that would be the vehicle that has the assets.  So if the assets are in the Trust, contest the Trust.  If the assets are in the probate estate, contest the Will.  (You’ll have to open probate to contest a Will, if probate is not already opened.)  If the assets are in joint tenancy, you have to file that lawsuit in the probate estate (see Probate Code Section 5302), but it will take clear and convincing evidence to dislodge the joint tenancy.  Sometimes, you will want to attack all three at the same time if there is a chance that assets may pass from one vehicle to another (such as from a pour-over Will to a Trust).  Other times, you will attack just one and save the other contests for later if the need arises. 

The mistake you want to avoid is attacking a vehicle that has no assets and never will have any assets.  So if an asset is passing by joint tenancy (which passes outside a Will and a Trust) and you want to attack that transfer (i.e. the joint tenancy transfer, such as a jointly held bank account), then you have to file a lawsuit in the probate estate and request that the joint tenancy asset be returned to the estate.  If you are successful, then (and only then) the asset would pass by Will, if the Decedent had a Will, or by intestate succession if there is no Will.  You most likely do NOT want to contest the Decedent’s Trust in this scenario because the Trust does not own the joint tenancy asset.  In fact, the Trust has nothing to do with joint tenancy assets in most cases.

The bottom line is to map out the location of the assets and the documents you are contesting.  Of course, there has to be a reasonable legal basis for the contest and you have to watch out for any no-contest clauses (see our earlier posts on no-contest clauses).  But once the facts are mapped out, you can then plan your attack on the document that holds the asset(s).