With unprecedented family wealth transferring from our “Greatest Generation” and “Baby Boomers” to younger generations, competition among family members for that wealth is becoming an increasing reality. Additionally, when individuals fail to establish effective estate plans, it sometimes becomes necessary to invoke a court’s authority to either provide protection for a disabled person or interpret estate planning provisions to protect the integrity of a person’s estate plan.
Fiduciary litigation is a rapidly growing area of the practice of law that addresses these issues. There are three primary areas of such litigation.
Guardianships of disabled adults are becoming more frequent. A guardian is someone appointed by a court to assume legal responsibility for another person, another person’s property, or both. A guardianship proceeding is necessary when a disabled person is unable to make responsible decisions concerning his or her medical care or financial matters, usually because of a physical or mental illness, and that person has done no planning to avoid a guardianship. Common areas of contention among family members in guardianship matters are the need for a guardian, and the selection of the guardian.
Transfers During Lifetime
Transfers during one’s lifetime, or “inter-vivos” transfers, are another area of fiduciary litigation that is exploding. Usually, this type of litigation is prompted by transfers of real property, bank accounts and/or stocks prior to death by a person who is lacking capacity to make such a transfer, or transfers by a someone entrusted to be an agent under a general power of attorney or trustee of a trust. For example, a child may have mom or dad retitle real estate, bank accounts or stock accounts with the child as a joint tenant with rights of survivorship. Upon mom or dad’s death, that child would automatically become the sole owner of that property and that property would pass outside of mom or dad’s estate, thereby bypassing mom or dad’s wishes as set forth in their Will. Often, these transfers do not come to light until after mom or dad passes away. However, when the transfer is discovered either before or after death, a civil action may be filed to invalidate the transfer based on undue influence, breach of a confidential relationship, or breach of a fiduciary duty.
Will caveats, also known as “contesting” a Will, have become a hot topic in fiduciary litigation. All too often, the elderly are victims of fraud and undue influence exercised upon them by a family member, caretaker, or “friend” who want to obtain control of their assets after their death. They often have their Last Will and Testament changed to leave everything to just one of their children or to someone who is not related to them. At times, they do not have the mental capacity to make such a decision. Often, the family is unaware of any changes to mom or dad’s Will until after they die. A Will caveat is a method by which disgruntled beneficiaries can seek to set aside a Will that they believe was unfairly obtained from an enfeebled member of the family.
Effective communication within the family as to mom or dad’s wishes, coupled with an estate plan incorporating both disability and estate planning tools, should minimize the need for fiduciary litigation. With estates becoming larger, the more issues that can be addressed among family members prior to mom or dad’s death or disability, the fewer issues will have to be resolved by a court.
For questions about this article or any other litigation matter please contact an attorney in our Litigation practice group.