Just hearing the word “litigation” can trigger feelings of unease for many, but in reality, trust litigation is just a tool, a formal process through which an heir, beneficiary or fiduciary who has been aggrieved has the ability to ask a third party, here a probate judge, to resolve a dispute. Trust litigation begins with the filing of a probate petition, which initiates the probate court process. Once the responding party responds, the parties engage in discovery, where they get documents and information from the other side and third-parties. As soon as discovery is complete, the parties are ready to schedule their trial, which can last days, weeks or even months. Importantly, however, at any point in the process the parties retain the ability to settle their dispute, which often happens because they have been able to obtain additional information that either helps or hurts their case. The entire process can take 1-2 years, sometimes longer.
Scott’s experience, alongside his peers at RMO, allows them to compress those timeframes through efficient execution of sound strategies aimed at securing better results sooner for their clients.
Below, we speak to him about trust litigation, where he sheds light on how RMO gets client results.
For UHNW families their assets and wealth are usually held in trusts, which can lead to trust disputes. What are the more common reasons for disputes to occur here?
Some of the most common reasons for trust disputes involving UHNW families include:
1) disputes caused by an “out” child who, oftentimes, suffers from control issues, a personality disorder or other mental health issue, and who self-medicate with drugs and/or alcohol. As result, they may demand or require more attention than what the family can or is willing to provide;
2) blended families, where a new spouse is unwelcomed by children of a previous relationship or vice-versa, which fractures the family and leads to estate planning that is objected to by one side or the other;
3) a lack of family discussion concerning the family’s estate plan, which leads to unrealistic expectations by one or more family members;
4) an opportunistic sibling or surviving spouse who, once in charge of the family estate, takes advantage of their position of power to the detriment of other family members; and,
5) opportunistic care providers, who take advantage of their position of trust and confidence to secure benefits for themselves beyond the value of the services they provide.
What could be done to omit risks of a dispute for the above?
Communication is the key to the success of any relationship. Trust relationships are no different. Families shy away from having uncomfortable discussions about money and expectations, but they shouldn’t. Explaining your desires to your family will not only help them understand why your plan is designed as it is, but it will highlight issues at a time when you are still able to address them, whether they are family disharmony, the need to plan for a child or spouse’s medical needs, or identify who really should be in charge of your affairs after you pass.
Obviously, no one can fully eradicate the risk of family jealously or bitterness – but from your experience, is there anything that can be done to help lessen disputes arising within family relations?
The ability to minimize family disharmony only becomes more difficult post-death, after the matriarch or patriarch who “kept the peace” has passed. The only way to reduce disharmony post-death is to communicate openly during life about your estate plan, why it functions the way it does, and what your expectations are, and if your family circumstances necessitate it, bring in a professional to help facilitate those communications.
Are there any steps that should be taken to avoid family embezzlement?
The best way to avoid family embezzlement is to appoint a professional to manage your financial affairs. It’s that simple. A family friend, lawyer, accountant or other trusted adviser may be your best choice, or perhaps a licensed, bonded, and insured private professional fiduciary. If you insist on relying on family members, make sure your family members have clarity over your assets and the ability to help protect you, should you need it.
In such cases, should the trial go to civil or criminal court? What are the differences and advantages of either one?
Civil and criminal processes may move on similar tracks but they are very different and operate independently. Criminal proceedings are prosecuted by the district attorney, and private citizens have no ability to prosecute criminal acts. Conversely, civil proceedings provide private citizens with the ability to address family embezzlement, but recovery is limited to financial recourse. That being said, a well-strategized and executed civil case can provide a family with the evidence needed to help convince a district attorney that an embezzler should be prosecuted criminally.
What are the signs of family embezzlement?
Family embezzlement often starts off with small amounts of cash and/or personal property that “goes missing”. Unchecked, those “test” thefts grow larger, as the embezzlers become more emboldened. Family members and friends would be well-served to pay attention to their loved one’s personal property, ask questions about finances, and ask to receive copies of financial account statements to help monitor improprieties. Also, let other family members or interlopers, including specifically those who might otherwise be thieving, know that you’re watching. Deterrence and prevention are always less costly and more efficient and effective than having to address wrongdoing.
Do such cases always have to result in litigation? When is litigation not the best option?
No, trust disputes do not always have to result in litigation. As mentioned previously, litigation is merely a tool, a formal process to ensure your grievance is addressed. We examine every case to determine what other tools we might be able to use to get clients better results sooner, including early disputes resolution, negotiated settlement, and mediation. Not every case will qualify, but we continually monitor our cases for those opportunities, again to get our clients better results sooner and for less legal spend.
Are cases whereby family relations cause child disinheritance a different process from embezzlement?
Every trust dispute, whether caused by a child’s disinheritance or embezzlement, will involve the same general probate court process – i.e. petition, discovery, settlement or trial. However, the extent, length and amount of discovery that may be required will differ depending on the specific facts of each case. The goal in either case is to prioritize information gathering so that you are getting the most bang for your buck and pushing the case to the best result possible sooner. No client wants to spend more time or money involved in a dispute than they need to.
What are the signs that the disinheritance was unjust or the product of undue influence?
Importantly, a court will not disturb a disinheritance, even an unfair one, unless it was the product of fraud, undue influence or incapacity. Everyone has the ability to leave their estate to whomever they want, however they want, no matter how capricious. That being said, to examine whether a disinheritance arose from fraud or undue influence one does need to ask whether the result was unfair, but that’s only part of the analysis. You also need to look at whether the testator was in a position to be unduly influenced – for e.g. did he/she have medical, mental or physical limitations that made them susceptible? Did the “influence” (because influence is not actionable, only undue influence) rise to the level that the disinheritance was the product of the influencer and not the testator? This is proven by examining the decedent’s historical estate planning documents, (perhaps from times before they became susceptible to undue influence, from family, friends, care providers, etc.), reviewing the estate planning attorneys’ estate planning files and notes, examining the decedent’s own writings, and investigating the decedent’s life for other evidence of abuse – for e.g. was the influencer helping him/herself to the decedent’s estate pre-death?
How can someone prove that the aforementioned is what occurred?
Taking all of the above into account, there seldom is a single fact that determines the outcome of any fraud, undue influence or incapacity case. There is no “silver bullet”. Instead, in these cases, you build momentum for and establish your case much like a paint-by-number. You go out and collect as many paints as you need to paint your picture of what happened for the court, and if you’ve done your job, by the time you’re done the court will see clearly what you’ve painted for them. It takes time. It takes a strategy. It takes a team with the experience to execute on that strategy.
What if the parent wanted to change their trust – what complications can arise and how should they approach the situation to avoid repercussions?
If a parent wants to change their estate plan they should work with a well-heeled member of the trust and estate planning community to ensure their estate plan resists challenge by layering in protections, like: having a certificate of independent review done by a separate lawyer, having a forensic gerontologist report done establishing capacity and the reasons for the changes. Finally, communicate the changes and the reasons for them to the family so that everyone understands what is going to happen and why.
READ FULL ARTICLE AT LAWYER MONTHLY: https://www.lawyer-monthly.com/2020/09/trust-litigation-what-does-it-entail/