Trust Contests - Litigation

Law Office of George F. Dickerman
3879 Brockton Avenue
Riverside, California 92501
Tele: (951) 788-2156

ELDER LAW NEWSLETTER

Trust Contests - Litigation

A trust contest occurs when someone believes that the “trustor” (the deceased person that made the trust) was mentally incapacitated and/or unduly influenced when s/he signed the trust document.

A contest petition is filed in court, and requests that the improper trust instructions be stricken.

One BIG caveat: Most living trusts contain a clause that states that any beneficiary who challenges any of the terms of the trust will be automatically disinherited. This is called a “no contest” clause.

If a beneficiary files a petition that challenges the terms of a trust, then the court can rule that the filing violated the no contest clause. The proper approach (2009) is to first file with the court what is called a declaratory relief action under the California Probate Code’s “Safe Harbor” rules. This petition asks the court to render a ruling on whether the proposed filing of a trust contest petition would violate the no contest clause of the trust. if the court rules in favor of the “Safe Harbor” petition, then (only after the applicable appeal time has run) the actual trust contest petition can be filed.

Generally, most trust contest petitions are difficult to win. The policy of the legislature and courts is to honor the intent of the trustor. The court knows that, many times, trust contests are made simply because a family member or friend of the deceased thought that they would receive a portion of the estate. When they found out they were disinherited, they got upset and automatically concluded that the decedent must have been tricked or fooled into disinheriting them.

However, there are many cases where the trustor was susceptible to undue influence or lacked the mental capacity to understand what they were doing when they signed the trust document. When this occurs, a trust contest can be filed to challenge the document’s validity.

The evidence must be focused on proving the trustor’s mental state at the time the document was signed. This can be difficult, especially when the only witness present during the signing may be the person who unduly influenced the trustor.

The test for determining whether sufficient mental capacity existed to make a trust is not a high standard, but the test is greater than that required to simply create a will. As stated, the court will bend over backwards to honor the written instructions of the trustor and to presume this is what the trustor’s wishes were. It must be shown that the trustor knew what his/her estate consisted of (house, bank accounts, furniture, etc.) and was aware of the “natural objects of his bounty”. These natural objects would be a spouse, children, brothers, sisters, etc.

If the trust made no mention of these people and, instead, instructed that all estate assets were to be given to a person that the trustor had only met a few times, a red flag would raise indicating foul play and the liklihood of undue influence.

A successful trust challenge must prove that the trustor lacked legal mental capacity. Legal mental capacity is, in large part, determined by Probate Code Section 811, which identifies numerous mental/psychological categories that must be examined to determine whether the trustor possessed the required mental capacity.

Medical records are a great source of evidence, if they have discussed the trustor’s mental capacity at or near the time that the questionable trust document was signed. It’s unlikely that you’ll find a medical document that attests to the trustor’s lack of mental capacity, and was prepared on the same day the questioned trust document was signed. However, these records can be subpoenaed and then examined to determine whether they support the case of undue influence or lack of mental capacity.

Family members and friends can also be a valuable source of evidence, particularly if these people spent a great deal of time with the trustor and were intimately familiar with his or her beliefs, wishes, mental state, and relationships with family members and others. This personal knowledge can greatly assist the court in determining whether the trustor possessed the requisite mental capacity.

Expert witnesses can also assist. Great care needs to be exercised in the selection of such an expert. This person must be thoroughly qualified and reputable in order to provide a meaningful and persuasive opinion as to mental capacity.

Given these difficulties of sufficient evidence, the law does provide a remedy when the truth is that the trustor lacked mental capacity or was unduly influenced into signing the trust document.

Special Powers of Attorney - How They Work

Law Office of George F. Dickerman
3879 Brockton Avenue
Riverside, California USA 92501
(951) 788-2156

ELDER LAW NEWSLETTER

Special Powers of Attorney - How They Work

Special powers of attorney for financial management carry the same caveat as general powers of attorney: placed into the wrong hands, they can become a license to steal. Like all financial powers of attorney, you must be certain that the person you appoint to act as your agent is absolutely trustworthy. Here are some examples of special powers of attorney and how they work.

A special power limits your agent's authority and is generally used only in specific circumstances. For example, you may be in the process of purchasing a home but, nearly a year ago, you purchased a non-refundable European vacation and you won't be available to sign all of the real estate documents. A special power of attorney can authorize your agent to act on your behalf and sign all necessary papers to complete the purchase.

Under this scenario, your agent's authority is very limited.

Contrast this to a general power of attorney for financial matters. With this document, you are granting authority for someone else to handle all of your financial matters - opening and closing bank accounts, withdrawing money, purchasing or selling real property - essentially, your agent would have the ability to transact every type of financial business that you would. A very dangerous document if placed into the wrong hands.

Usually, a general power over finances should only be granted if it utilizes a "springing power". This means that your agent has no authority to act unless two qualified medical doctors provide written declarations, under penalty of perjury, that you are incapacitated and unable to make sound financial decisions. Then, and only then, does the power "spring into being", as it were, and allow your agent to act on your behalf.

A special power of attorney generally becomes effective immediately. It is granted to allow your agent the authority to handle one or more specific transactions and, again, is usually done out of convenience because you are unavailable to timely act.

Using a boilerplate form where you just fill-in the blanks to specify the exact authority you wish to grant can be a mistake. Sometimes the authority is too limited and could prevent your agent from being able to complete the particular financial transaction. For example, granting authority to "sign all documents required by my real estate broker" may not be acceptable to the lender or the escrow company. They may have different requirements and do not feel comfortable in recognizing your agent's authority under the special powers you have stated.

An attorney can assist with the creation of a special power of attorney for financial matters and, in doing so, should contact all of the companies and agencies involved to ensure that their requirements are met. The exact language used in the document can then be tailored to meet all of these needs.

Special powers of attorney can be very useful in completing certain transactions but should be tailored to meet very narrow and specific situations. If properly drafted, they are a valuable financial tool.

Elder Law Attorneys

George F. Dickerman, Attorney

Elder law attorneys address the legal issues that arise as a consequence of the aging process. Elder law is a rather large umbrella and covers the areas that are most practical to the problems that seniors face. Here are the top five ways that these lawyers can assist the elderly:

- 1. Elder Financial Abuse. These are cases where financial predators use undue influence, manipulation and coercion to take property and money from elders who have diminished mental capacity. The perpetrators can by anybody, but are usually family members, caregivers or friends who have the most access to the elder and are least likely to be challenged by outsiders.
- 2. Nursing Home Abuse. Abuse or neglect of a nursing home patient generally results from inadequate staffing where there are too many patients and not enough nursing assistants. Sometimes, this is a conscious policy on the part of the nursing home owner who puts corporate profit ahead of patient care. Fortunately, there are many legal remediesavailable to stop these wrongful acts and to compensate the elderly victim for injuries suffered.
- 3. Conservatorships. When an elder is no longer able to make sound financial and healthcare decisions, and no other alternatives are available, then a request can be made for the court to establish a conservatorship and appoint someone to have the legal authority to make such decisions. This is an involved process but provides a solution to assist an elder who can no longer protect them self.
- 4. Estate Planning. "Living trusts", powers of attorney for financial and healthcare decisions, and wills are the primary documents that constitute a person's estate plan. These written instructions assist the elderly client both during their lifetime and afterwards. A proper estate plan can also avoid the need to establish a conservatorship if the elder becomes unable to make sound decisions. These documents grant all of the legal authority needed to carry on the elder's affairs - without having to seek court involvement.
- 5. Medi-Cal Planning. This term applies to California residents and involves the process of obtaining Medi-Cal benefits to pay the sky-rocketing costs of long term care in a skilled nursing facility. Planning involves three stages: (1) Thorough analysis of the client's financial status to develop a written strategy to obtain eligibility, reduce any share of cost, and avoid recovery claims; (2) Execution of the written strategy; and (3) Completion of the application process. Medi-Cal law is complicated and requires a lawyer experienced in the nuances of the various rules and regulations.
There are many other sub-fields that fall under the elder law umbrella. Each has its own peculiar application and importance as a piece of the elder law puzzle. This brief article has addressed only the top five ways that elder law attorneys can assist their clients.

Law Office of George F. Dickerman
3879 Brockton Avenue, Riverside, California 92501
(951) 788-2156
www.Elder-Law-Advocate.com

Stopping Financial Thefts

George F. Dickerman, Attorney

Elder financial abuse is not only a crime, but invokes a civil cause of action as well. There are many remedies to stop financial thefts and this article will discuss a powerful law that protects elder victims through civil litigation.

Many states have laws that specifically protect seniors from such abuse. California, in particular, has enacted the Elder Abuse and Dependant Adult Civil Protection Act (EADACPA). The civil courts in Riverside County, for example, are now familiar with the remedies that EADACPA provides. One of the primary advantages of EADACPA is the right to recover postmortem pain and suffering damages (general damages). Prior to EADACPA, a lawyer might refuse to accept a financial abuse case because it was quite possible that his or her frail elderly client might pass away before the case got to trial. If so, the right to recover general damages died also.

Under EADACPA, this right continues even after death. Interestingly, one of the primary reasons the California legislature passed this set of laws was to encourage attorneys to take on such cases. The law requires that it be proven, by clear and convincing evidence, that the defendant committed acts of fraud, malice, oppression or recklessness. EADACPA claims involve intentional torts and, when proven by these higher standards, provide nearly every remedy that the elderly victim could hope for.

Out of pocket monetary losses are recoverable damages. These may include interest on money that was wrongfully taken by the defendant, or lost rent on a home that the defendant lived in without making any payments. As mentioned, general damages (pain and suffering) are recoverable. There is no measuring stick to determine the amount of money that would compensate the elder for this loss. A jury must put aside passion and sympathy and award only the amount that appears reasonable under the circumstances.

Exemplary, or punitive, damages are also recoverable. The purpose of such an award is to both punish the defendant and also to set an example that despicable acts of elder financial abuse will not be tolerated in a civilized society.

Enhanced remedies may also be available in which the court, under circumstances of particularly egregious acts, may double or triple the amount of certain damage claims. As mentioned, an award of attorney fees is another remedy for the elderly victim. Under certain circumstances, these fees are mandatory. Appropriate costs are also recoverable.

If an EADACPA lawsuit is brought on behalf of an elder who is under a conservatorship, then a jury verdict can include monetary compensation to the conservator for services rendered in furtherance of the civil lawsuit.

Imposition of constructive or resulting trusts can also be imposed against a defendant. If the defendant wrongfully acquired title to the elder's real or personal property, then the court can order that the defendant's interest was solely as a trustee and such property must be returned to the elder.

These are just some of the many remedies available to an elder who has been victimized by financial abuse.

Law Office of George F. Dickerman
3879 Brockton Avenue, Riverside, California 92501
(951) 788-2156
www.Elder-Law-Advocate.com
george@Elder-Law-Advocate.com

ELDER ABUSE - Constructive Fraud

George F. Dickerman, Attorney

In elder financial abuse cases, it is often difficult to prove that the defendant intended to commit a fraud against an elder. Many times, the elder is incapacitated and unable to give meaningful testimony at trial and the only eyewitness that can testify is the defendant.

Constructive fraud can then play an important role in proving the case of financial abuse. The defendant's actual fraudulent intent is not required. Instead, the law looks to other factors to show that a fraudulent occurrence took place. These other factors include the existence of a confidential or fiduciary relationship where the defendant had the opportunity to take advantage of, or exercise undue influence over, the elder.

For example, a paid caregiver who spends a substantial amount of time with an elder will have developed such a special confidential relationship. When this occurs, the caregiver owes a moral, social and domestic duty not to take advantage of the elder's weaker state of mind. But how can a fraud be committed when the defendant did not have an actual intent to commit fraud?

Here's an example: A caregiver wants to receive a cash gift from the elder and convinces her that it would be wonderful if she would sign several checks to the elder's children, and then also drops a hint that the caregiver would also appreciate such a gift. The elder agrees, signs all of the checks, and the caregiver agrees to deliver them to the children. However, the caregiver then decides that she wants all of the money, and forges the signatures of the elder's children and endorses each of their checks to the caregiver. Under this scenario, the fraudulent intent was not present until after all of the checks were signed by the elder. However, the totality of the circumstances, including the caregiver's initial desire to receive her own gift, clearly show that the caregiver's actions were fraudulent and that she breached her duty in order to gain an advantage over the elder.

In California, the fiduciary relationship has been extended to every possible case in which a fiduciary relation exists as a fact. Such relation need not be legal; it may be moral, domestic or merely personal (Foster v. Keating (1953) 120 CA2d 435).

When such a special relationship can be shown, the law then imposes a presumption that the elder was subjected to undue influence. This acts to shift the burden to the defendant to prove that fraud did not occur.
This presumption is implemented to further the public policy of securing an elder's property and money when they have been entrusted to others.

Constructive fraud is another theory to prove that elder financial abuse occurred when the evidence is limited because of the elder's incapacity. The theory should be utilized by attorneys as one of numerous other causes of action to be included in a lawsuit for financial abuse.

Law Office of George F. Dickerman
3879 Brockton Avenue, Riverside, California 92501
(951) 788-2156
www.Elder-Law-Advocate.com
george@Elder-Law-Advocate.com

If you would like to submit a question please contact Jennifer Trebler at jtrebler@ramonavna.org.