Don’t delay: allegations of incompetence could give beneficiary standing, but delay in taking action could bar a beneficiary from contesting a trust or will at a later date (laches), Drake v. Pinkham

Drake v. Pinkham (California Court of Appeal, Third District, Case No. C068747, decided May 28, 2013, ordered for publication June 21, 2013).

This case involves a daughter’s (Gina) contest of two of her mother’s (Josephine) trust amendments (amendments dated 2001 and 2004) on the grounds that at the time of the amendments Josephine lacked mental capacity, was unduly influenced by a second daughter (Janice), and did not understand the amendments or her estate.  On a motion for summary judgment the trial court found that Gina’s contest was barred by the statute of limitations and principles of collateral estoppel.  On appeal, the Court of Appeal did not consider the statute of limitations or collateral estoppel issues, but instead found that Gina’s contest was barred by the defense of laches.

Gina filed her contest after her mother’s October 2009 death.  However, several years earlier, in 2005, Gina had filed a petition requesting the court to confirm her appointment as co-trustee under the terms of the trust and amendments dated 1992, 1993 and 1999.  Gina claimed that Josephine lacked the ability to care for herself or act as trustee and Janice’s alleged undue influence over her – Gina alleged that after the death of Josephine’s husband Theodore Janice began progressively isolating Josephine to the point that Gina no longer had contact with her mother, and that Janice had complete control over Josephine including her finances and was acting as the sole trustee of the trust.  Filed an objection to Gina’s 2005 petition and attached to her objection copies of her 2001 and 2004 trust amendments. The 2001 Fourth Amendment eliminated Gina as a beneficiary and named Janice as the sole successor trustee, and the 2004 Fifth Amendment designated Janice as Josephine’s acting co-trustee and sole successor trustee.  At that time in 2005 Gina did not challenge the 2001 or 2004 amendments.  Instead, Gina entered into a settlement agreement in which Josephine represented that she was the sole acting trustee, and in her capacity as such on behalf of all successor trustees, she agreed not to sell, encumber, lease, rent, transfer or otherwise take any action affecting any real property of the trust without prior notice to Gina and Janice as provided in the trust.

On appeal the Court addressed several important issues that could have ramifications or that might at least be considered in cases where issues exist relating to mental capacity, undue influence, and understanding of the trust or will documents and the nature of the estate and its assets.

  1. On appeal Gina argued as a defense that in 2005 she did not have standing to contest the 2001 and 2004 amendments pursuant to Cal. Probate Code sections 17200 and 15800 because the trust was still revocable in 2005.  The Court of Appeal noted that under sections 17200 and 15800 a beneficiary lacks standing to challenge a trust so long as the “trust is revocable and the person holding the power to revoke the trust is competent.”  The Court held that it was not persuaded by Gina’s argument, holding that since Gina alleged in 2005 that Josephine was incompetent, those allegations by Gina in 2005 took the matter outside of the terms of section 15800, and with those allegations Gina had standing in 2005 to contest the trust amendments, although at trial she still would have had the burden of proving her contest of the amendments.
  2. The Court further held that laches barred Gina from contesting the 2001 and 2004 amendments after her mother died in 2009.  In pertinent part, the Court discussed that the defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from any delay – and that any delay is measured from the time that the plaintiff knew or should have known about the alleged claim.  In 2005 Gina had the usual rights of a trust beneficiary and beneficiary legal standing if Gina simply alleged that Josephine was incompetent, which Gina did in fact allege in 2005.  Further, “Finally, Gina’s failure to bring the action until after Josephine had passed away was necessarily prejudicial where, as here, each and every cause of action set forth in the underlying petition centered on Josephine – her mental capacity, defendant’s influence over her, and her understanding of the Fourth [2001] and Fifth [2004] Amendments and her estate.  (See Bono v. Clark (2002) 103 Cal.App.4th 1409, 1420 [the death of an important witness may constitute prejudice]; Stafford v. Ballinger (1962) 199 Cal. App.2d 289, 296 [same].”

Take away from Drake v. Pinkham, assuming that the case is not further appealed to the California Supreme Court.

  1. As always, before you file any pleading, claim, allegation or paper with any court relating to a trust, will or other document with a no contest clause or to which a no contest clause applies, you must evaluate and make sure that the filing will not trigger the no contest clause.  If such a clause is triggered, the result might be that you are disinherited.  These are complicated issues – you need to consult with an attorney on these issues.
  2. A simple allegation that the trustor is incompetent might allow or provide the trust beneficiary or potential beneficiary with legal standing and certain beneficiary rights in an otherwise revocable trust under Cal. Probate Code sections 17200, 15800, the terms of the trust, accounting and information provisions, and other statutes.  Of course, the proof of those claims must still be established by the evidence.
  3. Allegations and claims, statements, and knowledge of facts by a beneficiary or potential beneficiary, or facts that a beneficiary or potential beneficiary should know, could trigger a requirement that the beneficiary or potential beneficiary bring suit and not delay bringing suit to enforce his or her rights and entitlements, or be barred from doing so later pursuant to the defense of laches such as if the testator dies or the testator’s mental competency declines as time passes.
  4. The defense of laches, i.e., delay, and case law relating to laches now take on renewed potential importance in trust, will, conservatorship and power of attorney litigation.  For example, if a beneficiary or potential beneficiary knows of a trust or will, or a trust amendment or will codicil, that is contrary to the beneficiary’s rights or interests, and the beneficiary simply believes that the trustor or testator might have had capacity issues or might have been unduly influenced, or that testamentary document seems contrary to what the trustor or testator would have naturally done or wanted or understood about his or her assets or estate, might that beneficiary or potential beneficiary be required to file a legal action on those possible claims without delay, or be barred by laches from doing so at a later time?  I have seen trust, will, conservatorship and power of attorney situations where people have delayed taking action – under the holding in Drake v. Pinkham they now need to consider the possible effect of delay and possible laches defenses against them if they do delay in bringing a legal action.

Best to you, David Tate, Esq.

Disclaimer and Warning.  This blog post and the contents and information contained in the post are not legal advice, do not create or cause an attorney client relationship with your or anyone else, and do not relate or pertain to any person, entity or factual situation, and I do not know the facts of your situation.  The contents of this blog post are only a summary of information which could change over time.  I have not advised you about your situation, and you definitely should consult with an attorney for your particular situation.

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New FinCEN and Consumer Financial Protection Bureau Memo re Efforts to Combat Elder Financial Exploitation

At the bottom of this post you will find a link to a new Financial Crimes Enforcement Network (FinCEN) and Consumer Financial Protection Bureau memorandum about efforts to combat elder financial exploitation, which the memo identifies as the illegal or improper use of an older person’s funds, property or assets. And I have also included additional links below. As the memo notes, “Financial institutions can play a key role in detecting, responding to, and preventing EFE [Elder Financial Exploitation]. The memo also encourages collaboration between financial institutions, law enforcement and APS [Adult Protective Services]. This is a topic that I have handled in many actual cases, and about which I have given presentations and written blog posts. I have also seen a recent article discussing the rather large percentage of incidents in which physical elder abuse is not reported by medical facilities such as hospitals.

It has long been my view that the collaboration effort must also include private attorneys, for the simple reason that law enforcement and APS simply do not have the resources to handle the numbers of cases, or how long it takes to prosecute them to obtain recovery. Reporting is one thing, prosecuting the cases is an entirely different matter. Law enforcement and APS are not staffed to obtain recovery through the court system. The district attorney and attorney general are staffed to prosecute these cases through the court system, but again, the resources available are inadequate. These cases can involve complicated legal and evidentiary issues including mental capacity, undue influence, dependence, consent, fiduciary and other duties, burden of proof, etc.

In addition to the below link to the FinCEN/Financial Protection Bureau memorandum, I have also provided below a few links to some of my prior posts on this topic and elder abuse.

Best regards, David Tate, Esq., Royse Law Firm, Menlo Park office, http://rroyselaw.com/

http://files.consumerfinance.gov/f/documents/201708_cfpb-treasury-fincen_memo_elder-financial-exploitation.pdf

Elder Abusers Use The Legal System Also – Video http://wp.me/p1wbl8-jp

Elder and Dependent Adult Resources are Ridiculously Inadequate and Archaic http://wp.me/p1wbl8-cV

Elder Abuse and Protection Slides 2015 http://wp.me/p1wbl8-dm

Counties Need to Refer Elder Abuse Cases to Private Attorneys – Video http://wp.me/p1wbl8-ke

Everyday is elder abuse prevent day – cartoon video http://wp.me/p1wbl8-lE

Completed (mostly) a will contest and trust real property percentage trial on Friday – read more

I have been away from the blog for a while, preparing for a very contentious and time-consuming trial.

This past week I was in trial on a will contest action, and also on related but separate real property ownership and trust beneficiary percentage ownership claims. The witnesses and experts included my client who was the named beneficiary, the contestant(s), documents in which the decedent expressed her wishes including a police report and APS records in addition to other documents, forensic document examiners, forensic psychiatrists, and third party witnesses including a very spry 102 year old woman who was a friend of the decedent (the decedent executed the will at age 103, and passed away approximately 9 months later at age 104). Issues also involve the validity of a power of attorney that the decedent executed in June 2015 (she died one month later in July 2015), mental capacity, undue influence, elder abuse, trust and power of attorney accountings, costs and attorneys’ fees, and other issues.

As you may be aware, issues of mental capacity and undue influence are not the same for wills, powers of attorney, and trusts, variously including California Probate Code §§810, etc., and 6100.5, etc., and California Welfare and Institutions Code §15610.70, and various other statutes and case law.

The will contest was denied, and my client will receive what the decedent wished and intended.

So . . . I will be back on this blog and other networking, and also on my other blog http://auditcommitteeupdate.com.

Best to you, and thank you for following my blogs and posts. Dave Tate, San Francisco Bay Area and California.

 

Everyday is elder abuse prevention day – video cartoon – please pass it along

Here’s a different presentation approach – please do pass it along to your contacts and people who would be interested. This is an important topic that needs more discussion. Thank you. Dave Tate, Esq. (San Francisco and California)

New California Case – Gregge v. Hugill – Probate Code Section 17200 Petition Improperly Dismissed, And Policy Favors Trials And Determinations On The Issues And The Claims Alleged

On July 14, 2016, the California Court of Appeal for the Sixth District issued its decision in Gregge v. Hugill, Case No. HO40663. Viewed most simply, the Court determined that Appellant had standing to bring his petition under California Probate Code section 17200 in which he alleged lack of testamentary capacity, undue influence and elder abuse, and that Probate Code section 17202 and another beneficiary’s disclaimer did not operate to defeat or eliminate Appellant’s pecuniary interest and standing to bring his petition and for trial thereon.

But viewed in its entirety, the decision in Gregge v. Hugill affirms policies that favor a party’s entitlement to a determination on the issues and the claims alleged, arguably disfavors claim forfeiture arguments, and affirms that estate planning document, i.e., will and trust, and inheritance contest determinations and findings should be based on the decedent’s intent.

The following are six snapshots from the opinion in Gregge v. Hugill which will provide you with some of the Court’s insight (the first snapshot is only of the case caption).

Gregge v. Hugill image 1 of 6

 

Gregge v. Hugill image 2 of 6

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Gregge v. Hugill image 5 of 6

Gregge v. Hugill image 6 of 6

 

Is This Undue Influence – It Could Be – You Decide

I was reading an article recently. It in part described a situation where one of Dad’s adult children said that Dad could not see his granddaughter anymore because the son was upset with Dad’s estate plan, but that Dad could see his granddaughter if he made some changes to the plan.

Undue influence is described in several different ways, including by statute and by case law. When are statements or discussions merely opinions, or influence, or persuasion, or even argument or disagreement, but not “undue” influence in nature? It’s not always easy to tell; but on other occasions it is obvious. You judge the above scenario using the below definition of undue influence. It sounds like undue influence, and quite possibly also elder abuse, if it meets the below criteria.

The following information is copied from my elder abuse presentation slides.

California Welfare & Institutions Code §15610.70 provides the following statutory definition of undue influence:

(a) “Undue influence” means excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity. In determining whether a result was produced by undue influence, all of the following shall be considered:

(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.

(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following: (A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep. (B) Use of affection, intimidation, or coercion. (C) 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.

(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.

(b) Evidence of an inequitable result, without more, is not sufficient to prove undue influence.

 

Ombudsman Services San Mateo County – A Snapshot Of Great Accomplishments

The following are two snapshots of the accomplishments of Ombudsman Services of San Mateo County. As you might be aware, Ombudsman services are mandated by law to advocate on behalf of better and proper care of residents at care facilities, to work to improve the care provided by the facility, to investigate situations and improper care, and report improper care and abuse. The following are two snapshots of activities from Ombudsman Services of San Mateo County, which is an active advocate on behalf of care facility residents – and you can view their website at the following link CLICK HERE

2016-02-18_9-37-57

2016-02-18_9-38-43