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

Hi, this is Stewart Albertson with Albertson & Davidson and I want to talk to you about undue influence cases.  What makes a good undue influence case and what makes a not-so-good undue influence case?  And let me just set this out as we meet with lots of people that come into our office saying, “Hey, I want to contest my mom or dad’s trust or their will because I know that my brother Bob exercised undue influence over my parents and I’ve been written out of the will or the trust and I will receive no inheritance and I’ve got the best evidence you’ve ever seen Mr. Albertson, or Mr. Davidson, and we’re going to come in here and we’re just, this is going to be a slam-dunk.  You’re going to have no problem winning this case!”

The type of evidence you need to have a good undue influence case, it’s a high bar.  The burden of proof that’s required for you is high.  It’s not easy to invalidate a trust or a will.  So that begs the question, “OK, well then what makes a good undue influence cases versus a not-so-good undue influence case?”

Well, let’s talk about some of the elements that you need to meet to prove that undue influence did, in fact, take place.  One of the first things we have to show is we have to show that the decedent, your parent in this case, was a vulnerable individual.  We can show that several ways.  The most easy way to show that is that they’re over the age of 65 or they’re a dependent adult.  So if they’re over 65, chances are, you could show that they have some vulnerable to them.  The State of California has addressed financial elder abuse and said, “Look, we see a lot of financial elder abuse happening in our state, so we want to stop that.  And so what we’ve done is we’ve set out some criteria for people to look at.  This, these are the elements that we look to to prove an undue influence claim.”

The other way you can look to see if a person is vulnerable is what if they have some type of a medical issue?  What if they have some diagnosis for dementia or Alzheimer’s or anything of the like that affects their mental cognition?  That is something that also will support the element of the decedent being vulnerable.

We also want to look to other elements.  What about the actions or the tactics of the wrongdoer?  The wrongdoer is the person that exercised undue influence over the decedent.  And a lot of times this is not something that you see that’s nefarious or evil or somebody yelling or screaming at the decedent, it’s actually done in a very nice manner.  And it happens like this:  The wrongdoer comes to the decedent while they’re still living and says, “How come your son, Johnny, doesn’t come visit you anymore?  Oh, you know, I don’t think Johnny cares about you.  It’s too bad that Johnny’s not here to take care of you like I’m taking care of you.”  And it’s just done over time.  And, of course, this person already – the decedent already is vulnerable, because they’re older, over 65 or older, they may have a health issue, and so now you have this person who is doing deceitful actions and tactics to influence the elder that their son Johnny really doesn’t care about them and we see this element time and again in a good undue influence case.

We also want to look to another element and that is what type of authority did the wrongdoer have over the decedent?  And authority can come in many forms.  Authority can be that this is the person’s agent, under their durable power of attorney, or maybe they’re already the trustee of the trust.  They can also be somebody that the decedent relies on for their necessaries of live, such as daily medication.  Somebody to drive them to doctor’s offices.  Somebody to help change their diaper in bed.  Somebody that makes sure that hospice is taking care of them.  Here we see the decedent, the elder, is being very reliable on this person who has this apparent authority over them.

The last element that you want to flush out in a good undue influence case is there is an inequitable result.  This is most easily shown in cases where the decedent had a preexisting estate plan that gave everything equally to all of their children.  And we see this time and again.  And then just before they die, they make a change to that trust that did give everything equally to all their children, and they give everything to one person, either one of their children or the wrongdoer who has come into their life and has now exercised undue influence over them.

So in order to have a good undue influence case, where you can meet the burden of proof which is a high bar in the State of California, you’re going to have to show that the victim was vulnerable, that the wrongdoer used actions or tactics that were deceitful, that the wrongdoer had apparent authority over the decedent, and the results that the wrongdoer got was inequitable.  If you can pull all of those elements together through a totality of the circumstances and showing the evidence, you probably have a good undue influence case.

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

Hi, this is Keith Davidson at Albertson & Davidson.  And in this video, I want to discuss step-parents.  And I don’t mean to disparage step-parents, there’s a lot of very good step-parent and step-child relationships out there.  But, there’s also some bad ones.  And a lot of times we’re asked, “Can my step-mom or step-dad, can they change the estate plan after my parent dies?”  So, typically, in this scenario, maybe you have a father who married somebody new and that’s your step-mom.  And then your father passes away and you always thought you had a good relationship with your step-mom, but after your dad passes, things start to get a little strained and awkward and you start to wonder can she actually change the estate?

In some cases, it might actually get downright hostile and maybe the step-mom actually tells you, “I’m changing the estate and I’m leaving it all to my kids and I’m not going to leave your father’s share to you after all.”  And you wonder, can she do that?  And the answer is maybe.  And that’s a typical lawyer answer, right?  But it depends; it depends on what your father did when he planned out his estate.  Or, if he didn’t have any planning at all, that could be a real problem.

So the best case scenario would be if your father had created a trust prior to his death, he has the right to leave assets to step-mom and that’s fine.  But, typically, what you’d want to see is that he left money to step-mom in a trust.  So she can use that money for her care and support during her lifetime, but she can’t change the ultimate distribution of it.  Whatever’s leftover after step-mom passes, has to go to you.  But that only works if your dad created a trust and if he had a trust created that had those type of terms in it that allowed the step-mom to use the assets but not control them.  That required that the assets go to you after death.

If your father didn’t do that, then you probably are not going to be entitled to his share of the estate.  And so what happens a lot of times is, either your father leaves everything to the step-mom, in which case she can do whatever she wants after your father dies, and she can cut you out.  Or, he just doesn’t plan at all and things just pass to the step-mom because it’s in joint tenancy or she’s the beneficiary on life insurance, or whatever the case may be.

So when these things are not planned out and if the assets actually pass to step-mom after your father passes away, then you’re really in trouble, because the step-mom can do whatever she likes.  She becomes the owner of those assets and she can do whatever she wants with them as the owner.

The fact that your father may have had a family home that you grew up in and lived in and has been in the family for decades, the law doesn’t care about that – if your father didn’t plan it out property.  And so that’s really the big question.

So anytime somebody approaches us and says, “Can step-mom change the estate after my father passes away?”  The first question we’re going to have is, “Well, what did your dad have in place?  Did he have a trust?  Did he have a will?  Did he have something that we can look at to see if you, as a child, have any rights to any of those assets?” And if you were to tell us that no, he didn’t have any of those things, then chances are, you’re out of luck.  And that’s a little something about the downfalls of step-parent and step-children relationships when it comes to passing assets.

 

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

This is Stewart Albertson with Albertson and Davidson, and I want to talk to you about an issue that we do see from time to time called advances on inheritance. Advances on inheritance are essentially a loan that mom or dad makes to one child. They don’t want to be unfair in giving that loan to one of their children when they have several other children. So they basically tell the person they made the loan to, well that is an advance on your inheritance so that when I die, you’re going to have to take that into account based upon whatever your share of my estate is.

There’s a real problem with advances on inheritance though because the probate code has some technical requirements that must be met to qualify as an advance on inheritance. Otherwise, that payment of money from a parent to a child will be looked at as a gift.  If it’s a gift that makes a big difference because when the estate is distributed after mom and dad have passed away it’ll be distributed equally between all of the children without taking into account the “loan” that was made to one of the children during lifetime.

So how can you tell the difference between an advance on inheritance and a gift? The advance on inheritance can be proven in three primary ways. There’s actually a fourth way, but that gets a little complicated. If you really want to look into this, you can go to Probate Code section 21135, and you can read how you establish an advance on inheritance there.

Generally, the way you prove an advance on inheritance is:

  1. The trust or will terms themselves have in there saying, I’m giving $100,000 loan to my son Johnny, and when I die, this counts as part of his inheritance at the time he receives his ultimate distribution. That’s the first way that an advance on inheritance can be included and be supported by the evidence.
  2. The next way you can establish an advance on inheritance is did your mom or dad have a writing outside the trust or will that simply says: I hereby am making a loan to Johnny and after I die, that should be considered as part of his inheritance for distribution purposes. That would be the second way that you can establish an advance on inheritance.
  3. The third way is you have Johnny acknowledged in a writing that he’s already receiving some of his inheritance by way of a loan prior to mom and dad passing.

If you have any of those three, chances are you can establish an advance on inheritance.

As you can see, this is not always easy to do. If there is money that is given to one child, a lot of money, say several hundreds of thousands of dollars to one child and not to the other, and there’s nothing to establish an advance on inheritance, what is the argument the child makes who received the money during the parents’ lifetime? And that is, it was a gift. If it’s a gift, it won’t be chargeable against their share of the estate. It won’t be an advance on inheritance.

 

Is an oral promise to make a will or trust enforceable under California law? Contrary to what many believe, California law provides for the enforcement of oral promises to make a will or trust.

How does the promise to make a will or trust arise? Generally, a parent orally promises a child, a friend, or a caretaker some or all of their assets once they die, if the child, friend, or caretaker agrees to do something for the parent. The “something” can be anything of value, but usually takes the form of the child, friend, or caretaker taking care of the parent until the parent’s death.

But what if the parent didn’t get around to writing a will or trust that states the child, friend, or caretaker gets some or all of the parent’s assets after they die? Or what if the parent never intended to write a will or trust reflecting the promise to the child, friend, or caretaker? Can the child, friend, or caretaker enforce the now deceased parent’s oral promise to give them assets? The answer is ‘yes’.

California Probate Code section 21700, entitled “Contract to make will” has a provision that allows a person to establish an oral promise by establishing that there was an agreement between the parent and the child, friend, or caretaker that the parent would leave some or all of their assets to the child, friend, or caretaker after they died.

But this is where it gets a bit tricky. The procedural hoops one must jump through to make a an initial claim to enforce an oral promise to make a trust or will under California requires the following:

  • First, one has to pay attention to the applicable statute of limitations. The statute of limitations simply tells us how long we have to file a lawsuit to enforce an oral promise. The applicable statute of limitations for filing a lawsuit to enforce an oral promise to make a will or trust is one year from the date of death of the parent. So if the parent dies on January 1, 2014, then the child, friend, or caregiver would have one year (to December 31, 2014) to file an actual lawsuit to enforce the claim.
  • Second, it gets even trickier. Before one can file a lawsuit based on a broken promise to make a will or trust, one must file a “creditor’s claim” in the estate of the deceased parent. The creditor’s claim is not difficult to complete and file, but if one fails to complete this step, and one year passes from the date of death of the parent, one is very likely barred forever from filing an actual lawsuit to enforce the parent’s promise.
  • Third, it’s still tricky. What if nobody has opened the deceased parent’s estate with the probate court? Can one simply wait until an estate is opened, whether that’s one or two years from now, and then file their creditor’s claim? The answer is very likely ‘no’. The applicable statute of limitations states that to enforce an oral promise to make a will or trust, a lawsuit must be filed within one year of the date of death of the parent. So if the probate estate is not opened, then one needs to file a petition for probate to open the parent’s estate with the probate court, file a creditor’s claim, and then file a lawsuit—all before the one year passes from the parent’s date of death.

Each of these steps must be completed before one can have their day in court to prove a claim based on an oral promise to make a California will or trust. If the one-year statute of limitations (calculated from the deceased parent’s date of death) is blown for any reason, the claim to enforce the oral promise is barred forever from being heard. Thus, it’s very important for one to understand and meet the procedural loopholes required to make a claim to enforce an oral promise.

There’s Trusts that run smoothly, there’s Trusts that have a few problems, and then there’s Trust where everything is a fight from start to finish.  Which Trust sounds most like yours?

  1. Smooth Sailing.  This is the way Trusts are supposed to work.  The successor Trustee takes over management of the Trust, the assets are collected and inventoried, assets are sold as needed, bills are paid, beneficiaries receive their fair share, and the Trusteereports his actions with an accounting.  If there is a continuing Trust for a beneficiary, then the assets are properly invested using a financial planner and an investor policy statement to be sure investments are appropriate.  And the Trust administration is complete, without Court intervention.
  2. Houston we have a problem.  The troubled trust administration is where a Trust has a few problems along the way, but nothing serious enough to force anyone into Court.  Maybe the Trustee needs a gentle reminder on what to do.  Maybe a beneficiary is being unreasonable, or a piece of Trust property is particularly hard to sell.  Whatever the problem, a few arguments back and forth, some slight corrections, and the Trust administration is back on track.  All’s well that ends well.
  3. All-out Warfare.  This is where a Trust administration goes completely off-the-rails.  A bad Trustee who refuses to follow the Trust terms, refuses to communicate and refuses to make mandated Trust distributions. Or Trust investments that are not planned out and are not appropriate for the Trust, or a Trustee who fails to account.  Any one of these scenarios can end up with the whole mess in Court, for a judge to decide.

Notice something about the last approach?  All the examples involve Trustee misconduct because the Trustee is the ONLY person who owes duties to the beneficiaries.  The beneficiaries, in turn, owe no duties to the Trustee.

Unfortunately, even though the Trustee’s duties are well outlined in the California Probate Code, when a Trustee fails or refuses to follow the rules, only a Court can make them behave.  There is no action a beneficiary can take, besides making demands, to force a Trustee’s hand other than seeking a Court order.  Once in Court, the judge can issue an order and force the Trustee to act.  Or the judge can remove the trustee, personally fine the Trustee, or any number of other actions to force compliance with the California Probate Code.

If you find yourself a beneficiary of Trust scenario number 3, you had better be prepared to fight for your rights.

3491 Concours Street, Suite 201
Ontario, CA 91764
909.466.1711 phone
909.354.3460 fax
http://www.aldavlaw.com/practice-areas/litigation/abused-estate-and-trust-beneficiary-litigation/

The confusing world of Trust and Will lawsuits, it can be quite a quagmire.  Especially if you are looking on the internet for information because every state does things differently when it comes to the trust and will arena.  Even the term “Probate Court” can mean vastly different things in different states.

Let me see if I can demystify some of the confusion I hear about as it relates to California Trust and Will lawsuits.

Practice Area:
http://www.aldavlaw.com/practice-areas/litigation/estate-and-probate-litigation/ 

1.         Can a Court other then where the Trust matter is filed remove a Trustee?  No.  In California, Trust matters are filed in the Probate division of the Superior Court.  There is no other Court that can take a Trust action and remove a Trustee.  Oftentimes I hear people ask if they can bring a “civil suit” after something is filed in Probate, or a small-claims action, none of that is possible (generally speaking) if you are dealing with a Trust or Will matter because the proper venue for anything that takes place under the Probate Code is the Probate division.

I have heard that some states (like New York) provide a choice of venue between Probate and civil, but that does not apply to California.

2.         Is Probate Court the same as Civil Court in California?  Yes.  Actually the term “Probate Court” is a misnomer because both Probate and civil departments are part of the Superior Court (as is family law “court”).  That means the “Probate Court” has all the same powers and abilities to decide and rule on lawsuits as the civil department of the Superior Court.

3.         Can a Trust beneficiary file a legal action in the state where the beneficiary resides instead of in the state where the Trustee resides?  No.  Under California law, any action against a Trustee, whether it be a Trust contest, and accounting, or some other breach of trust action, must be filed where the “place of administration” is located.  If the Trustee has not specified a place of administration, then the proper venue is where the Trustee resides or his/her place of business.  In any event, jurisdiction and venue usually depend on the location of the Trustee, which is where the action is filed, NOT the location of the beneficiary.

4.         Is Probate Court only for filing Wills (or estates that have no Will)?  No.  the Probate division of the California Superior Court is also the forum for Trust lawsuits, conservatorships, power of attorney disputes, and oftentimes guardianships (dealing with minors—although the venue for guardianships can vary from county to county in California).

5.         If a person dies with a Will, does it still require Probate?  Yes.  Wills do not avoid probate.  Probate simply being a process where people can prove the validity of the Will and then ask the Court to start the estate administration process following the terms of the Will.  If a person dies without a Will, probate is also required.  What’s the difference then between having a Will and not having a Will?  While probate is required in both cases, if you have a Will then your estate will pass pursuant to the Will provisions.  And your named executor will act to manage your estate during the probate process.  If you don’t have a Will, then your assets pass per the intestate statutes, which generally follows bloodlines to children first, and then to more distant relatives if there are no children.

So there is a brief recap of five of the most confusing myths and misconceptions about probate.  Do you have a misconception or question you need answers on California probate or trust actions?  Feel free to send me an email at keith@aldavlaw.com and I will include it in a future blog post on the myths of probate.

How much do lawyers cost?  Well that’s a loaded question that no lawyer wants to answer.  And yet, every client and potential client wants to know—“what’s this gonna cost me?”  Well as a lawyer I have no desire to discuss this on a blog post put out into the public realm.  Or if I do discuss it, I want to state it in either general terms that avoids the question, or highly specific terms that makes no sense to anyone—even me.

As a human being, however, I have a desire to just tell it like it is.  We all know legal services are not free.  So why not talk about the costs using specific examples that gives people some idea of what they are in for?

Part 1: Transactional Lawyer Work (and Fees)

Before we start throwing out numbers, we need to discuss the different type of legal services a firm, such as mine, undertakes.  There’s two broad categories: “transactional” services which are things like estate planning, uncontested trust administrations, probate (uncontested), and the like; and “litigation” which is all the contested court work like Will and Trust contests, Trustee breach of duty, abused beneficiary cases, and the like.  In this post, I will discuss the transactional attorneys fees you can expect to pay:

1.         Estate Planning–$2,500 to $5,000.  If you are going to use a lawyer to create an estate plan for you, then you should expect to pay in the range of $2,500 to $5,000.  Some attorneys will flat fee an estate plan for you, and others do not.  And I’m sure there are some lawyers who bill less than $2,500 (and I know there are lawyers who charge more than $5,000), but this is the typical range you can expect from a lawyer drafted estate plan.

I tend to charge around $4,000 to $5,000 for estate plans that I do.  Why so much?  Well I like to spend a good deal of time preparing a proper estate plan.  Throwing together a Trust and Will for someone without thinking through how that affects all of their assets and family situations is not helpful to anyone.  I think I provide more in value than I charge, but not everyone agrees and that’s okay.  The point is to find a lawyer with whom you feel comfortable.

Practice Area:
http://www.aldavlaw.com/practice-areas/transactional/estate-planning-and-advanced-estate-planning/ 

2.         Probate—Percentage of the estate Probate fees are set by statute, you can read my previous post on how they are calculated.  I have heard some people (o.k. lawyers) say that the statutorily set fee is a “mandatory” fee or a “minimum” fee—not true.  The statutory fee is a maximum fee that goes to the attorney who handles the probate.  In most modest estates, those with assets less than $1 million, the statutory fee is about right for the amount of work to be done.  For estates in excess of $1 million, the statutory fee may be more than is necessary to handle the estate, especially if it is an easily handled, liquid estate with no contestants.  In those cases, lawyers can reduce their fees from the statutorily set maximum, but few do so.

I have reduced my probate fee on estates in excess of $1 million depending on the underlying circumstances, so ask around and see what kind of deal you can get if you have a larger estate to probate.

Practice Area:
http://www.aldavlaw.com/practice-areas/litigation/estate-and-probate-litigation/ 

3.        Trust Administrations–$2,500 to $5,000 (to $10,000??).  When someone dies who has created a revocable, living Trust during his lifetime, the Trust has to be administered in order to pass the assets to whoever receives them.  Sometimes the assets are placed in Trust for a surviving spouse, sometimes in Trust for children or grandchildren, and sometimes it is just an outright distribution to children.  In each of these cases, an administration is necessary because there are notices that must be sent, appraisals that must be obtained, rules to follow, and Trust terms to carry out.

The Trustee is entitled (and encouraged) to have a lawyer help them through this process to be sure it is all done correctly.  What does that cost?  Well that depends on many factors such as the size of the Trust, the complexity of the Trust provisions, the difficulty of the beneficiaries, and the issues that arise in dealing with the beneficiaries.

In my experience that typical range for a run-of-the-mill trust administration is $2,500 to $5,000.  If, however, the estate is big enough to trigger the need to file an Estate Tax Return, then you can add $10,000 or more to that number.  Of course, your Trust estate would need to be in excess of $5.325 million as of 2014 to trigger a Estate Tax return so an extra $10,000 shouldn’t be too problematic for an estate that large.

But when the Trust administration becomes contested, due to a disagreement between a Trustee and beneficiary, that can also add anywhere from $2,500 to $5,000 or more to the cost even if the problem does not end up in court.

You also have to add to that the hard-costs of obtaining things like appraisals, recording deeds, and hiring accountants for Trust accountings (if one is required).  So all told, attorneys’ fees and hard-costs will likely cost from $4,500 to $8,000 or so.

Well that’s the deal for transactional matters.  My next post will talk about the fees for litigation matters.

Practice Area:
http://www.aldavlaw.com/practice-areas/transactional/probate-and-trust-administration/ 

Did you know that there are situations where you could revoke your Will without meaning to do so?  In this video I discuss the unintened Will revocation:

 

 

For our email subscribers: please click the title to view this video on our website.

I have heard it a million times before: “I don’t need a Trust because ____________” you fill in the blank: I don’t have enough money, I won’t care when I’m dead, California probate is easy, my wife and I own everything in joint tenancy…there’s many, many excuses and misinformation regarding Trusts in California.

iStock_000016768581_ExtraSmall.jpg

In California, a probate must be opened for anyone dying with more than $150,000 in personal property (things like bank accounts, brokerage accounts, stocks, bonds, etc); or more than $50,000 in real property (which in California is almost all real property).  That means that if you own a home, regardless of whether the home has a mortgage or not, your estate will likely have to go through probate before it can transfer to your heirs. 

Probate is no easy task. See our prior posts on probate here and here.  It can take 12 to 18 months (or more) to complete, and it costs a lot.  For even a modest estate worth $500,000, the statutory attorneys’ fees alone are $13,000.  Add in another $13,000 for the executor and anywhere from $1,500 to $2,000 in hard costs (such as court fees, probate appraiser fees, publication of notice, etc.) and the total probate fees and costs can be around $28,000 for a $500,000 estate.  That’s far more than the typical fee for a lawyer to prepare an estate plan, which can run from $2,000 to $3,000 on average. 

How about estate taxes?  Luckily, California does not have an estate tax or inheritance tax.  But the Federal Government does have an estate tax, and the current estate tax limit is $5 million (plus a little more for inflation).  That means that anyone with an estate worth less than $5 million will pay no tax. 

There was a time when a Trust was necessary to save substantial money on estate taxes, back when the estate tax limit was only $600,000.  Now that the estate tax limit is $5 million, most people don’t need a Trust to save on estate taxes.  But a Trust still saves the trouble and expense of probate if you own real property or have more than $150,000 in personal property.  It also allows for someone to manage your financial affairs if you ever lose capacity, which is reason enough to have a Trust.

Still not convinced?  That’s okay because us lawyers make far more money on estates where proper planning is not done.  We would much rather earn a big, fat probate fee or spend years litigating your estate after you’re gone.  Not planning is a great way to make a lawyer a beneficiary, and maybe even the biggest beneficiary, of your estate. 

That may sound a bit jaded, but I have learned over the years that no matter how much sense planning makes, many people just won’t do it.  If you really want to save money, time, and trips to the Courthouse, it’s time to put your Trust in Trusts.

Lawyers have rules that we must follow (no, seriously we do), and one of them is that any engagement where we estimate the fees to the client will exceed $1,000 must be documented by a written fee agreement—sometimes called retainer agreement or engagement agreement.  See Bus. & Prof. Code Section 6148.   The California Court of Appeals clarified last year that written fee agreement are not required, however, where an attorney is representing the executor of a probate estate.

Written Agt.jpg

First, let’s sort out who the attorney is, and is not, representing in a probate estate.  Any probate has three potential groups of interested people: (1) the executor (or administrator, both are referred to as the Personal Representative); (2) the beneficiaries; and (3) the creditors of the decedent.

When a client enters my office to discuss a possible probate, they are usually the person named as the executor under a decedent’s Will.  They are asking me to represent them and handle the probate estate; who do I represent?  The answer is I represent the client in his or her capacity as executor.  Technically they are not an executor of the estate yet—not until the Court orders their appointment—but they are the proposed or named executor and that is the capacity in which I would represent them.

More important question: who am I NOT representing?  I do not represent the “estate”—which only exists through an executor—the beneficiaries or the creditors of the decedent.  This is a common misconception, many beneficiaries believe that an attorney for the executor represents the estate and, therefore, also represents the beneficiaries—not true.  The attorney represents the executor, and only the executor.

So why does a lawyer not need a written fee agreement for representing an executor?  According to the California Court of Appeals (in Estate of Dennis Wong) it’s because the client (i.e., the person acting as executor) will not incur any fees whatsoever in the representation.  Therefore, the requirements of Section 6148 are not triggered. 

Let me explain.  Section 6148 states that a written agreement is required whenever the “client” will incur fees in excess of $1,000.  In a probate estate, the executor does not pay the attorneys’ fees, the estate does.  In other words, the executor, as an individual, is never liable for payment of fees—but the estate assets are. 

You can think of the estate as a pool of assets guarded by the Court.  Before the estate is closed, the Court decides who gets paid and by how much.  For attorneys, the fee is set by statute, which is calculated by a percentage of the estate.  And the statute also sets the procedure by which the attorney asks for those fees.  Once granted by the Court, the fees are paid from the pool of assets and the rest is distributed to the estate beneficiaries.

I know what you’re thinking, if the executor is one of the estate beneficiaries, then isn’t the executor paying some portion of the attorneys’ fee?  Well yes, but not directly.  Remember the estate assets are not really assets of the beneficiaries until the very end of the probate process when the assets are distributed out to them.  Before that, the assets belong to the decedent’s estate and the Court has say on who gets paid and how much.  That’s true for creditors too.  But the executor pays nothing from his or her own individual wallet, so Section 6148 is never implicated, so a written fee agreement is not required.

Now that we know that it is perfectly legal NOT to obtain a written fee agreement, should we throw out our engagement agreements?  No.  I have always used written fee agreements even in probate matters, and why not use them?  In my experience, surprising clients about fees is a bad idea (“You owe me $20,000…SURPRISE”).    Better to put it all down in writing up front so there are no surprises down the road.  Each side knows what to expect and knows that the fees will not be paid until ordered by the Court.

For those of you (attorneys and clients alike) not using fee agreements in probate, however, you can no longer be surprised that fees will be paid…it’s just the amount that might catch you off guard.  You’ve been warned.