Will & Trust Litigation

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Will & Trust Lawsuits

One of the main purposes of trusts is to avoid the courtroom since trusts can provide for the distribution of assets at death, avoiding the need for a will that would require probating through the courts.

Trusts, however, like any other contract or testamentary document, sometimes become the subject of disputes. Sometimes trustees, beneficiaries, or others with an interest in the trust’s assets will challenge a trust, the actions of a trustee, or the validity of the trust itself, and lawsuits will be filed.

Sometimes former beneficiaries, those who claim they should have been beneficiaries, or that the trust should not have been (or was not) executed, will file a lawsuit challenging the validity of a Trust.  These trust lawsuits may challenge the trust in a number of ways, including:

  • Mistake in Execution: A written trust must be executed in the manner required by governing statutes. If the statutes are not followed, the trust may not be enforced.
  • Undue Influence– If the person making the trust did not do so of their free will, but was instead coerced by a person who was in a position of confidence or control, the trust may not be enforced.
  • Lack of Capacity – A person executing a trust must have testamentary capacity, which generally means the person must have the mental ability to understand
    • the amount and nature of his property;
    • the family members and loved ones who would ordinarily receive such property; and
    • how the trust disposes of such property.

A trust lawsuit may be necessary even when the trust is properly executed and formed.  Sometimes a trust lawsuit is necessary to challenge the actions of the trustee in implementing the language of the trust, and not challenging the content of the Trust itself.

Lawsuits addressing the actions (or inactions) of the Trustee can include:

  • Breach of Fiduciary Duty – a trustee has duties and responsibilities owed to beneficiaries of the trust. The trustee’s failure to properly administer a trust can result in a lawsuit.
  • Removal of Fiduciary – a fiduciary may be removed by the court for cause.
  • Discovery of assets/Accounting – Beneficiaries have a right to know what assets are held by the trustee, and the disposition of any assets the trustee has sold or conveyed.  Sometimes a lawsuit is necessary for this purpose, and the lawsuit is known as a discovery of assets or an accounting.

Breaches of Fiduciary Duty

In order for a lawsuit based upon breach of fiduciary duty to proceed in Missouri courts, the plaintiff needs to show that one party has accepted the trust and assumed the duty to protect a weaker party. See generally, Zakibe v. Ahrens & McCarron, Inc. 28 S.W.3d 373 (Mo. Ct. App. E.D. 2000).

Normally most of us have no reason to believe our loved ones have betrayed us, however it is important to know the warning signs and how to respond accordingly. As a result, heirs and beneficiaries, as well as wards, should be concerned about the possibility that there has been a breach of the fiduciary duty owed to them if they:

  1. Suspect that the trustee, guardian, or personal representative may be self-dealing in some way. Self-dealing is the conduct of the fiduciary that consists of taking advantage of his or her position in a transaction and acting for his or her own interests rather than for the interests of the beneficiary. Examples might include selling or renting property to friends or family members at a bargain rate; taking assets (cars, computers, boats) for personal use, etc;
  2. Believe that the trustee, guardian, or personal representative is paying themselves too much. While fiduciaries may be legally allowed to receive payment for their efforts as well as reimbursement for legal expenses, these amounts must be reasonable. Excessive compensation is a breach of fiduciary duty;
  3. Be of the opinion that the trustee, guardian, or personal representative may be intentionally stealing assets, or using these monies for their own personal gain; or
  4. Believe that the trustee, guardian, or personal representative is making poor or improper investment choices.

 

Inheritance Disputes

Inheritance disputes include not just trust and will disputes, but also disputes relating to transfers made and documents executed by a person with diminished capacity.  There are many potential ways that a family, friends, and neighbors may try to take advantage of an elderly person and interfere with the inheritance rights of others.

For example, real property and financial accounts may be transferred by the execution of a deed or simply taking the elderly person to a bank. Powers of attorneys may be abused, or assets improperly transferred to a power-of-attorney.

If you are a family member of an elderly person or the rightful beneficiary of the elderly person’s estate, you should act quickly to intervene.  The best-case scenario is that the questionable transactions are discovered while the elderly person is alive. In that case, the dispute can be heard by the Court while the elderly person is alive, and the court can hear directly from the elderly person regarding their intentions.

If the elderly person is deceased, the dispute can still be decided by the court.  The court in these cases will often address issues common to trust and will disputes, including:

  • Testamentary capacity/competency
  • Undue Influence
  • Fraud
  • Mistake in execution

Testamentary Capacity & Competency Challenge

To execute a will or trust, the law requires that you be “of sound mind.” What does this mean in terms of executing a valid will or trust? Generally, it means you must be mentally able to:

  • Understand the ordinary affairs of life;
  • Understand the nature and extent of your property;
  • Know persons who were the natural objects of your bounty (heirs); and
  • Intelligently weigh and appreciate natural obligations to those persons and know that he or she is giving the property to persons mentioned in the document.

The test is the decedent’s ability to comprehend and understand the ordinary, as distinguished from the intricate and complicated affairs of life.” Testamentary capacity is not the same as contractual or legal capacity – it is a lower standard. A popular saying is that the law allows even a “lunatic” to make a will or trust, as long as the document is made in a lucid interval.

Lack of capacity must be proven by “clear and convincing evidence.” It can be the result of the natural aging process, the result of organic brain diseases such as Alzheimer’s or dementia, or the result of a person being on a substantial amount of medication, such as heavy morphine to treat end-stage cancer.

While these things often are associated with lack of capacity, courts have held that “mere proof of illnesses, or imperfect memory, or forgetfulness of names and persons, or old age with its attendant physical and intellectual weaknesses, or mental confusion, or arteriosclerosis, either singly or in combination, do not prove lack of capacity, unless it further appears that grantor did not understand the nature of the instant transactions, and did not with such understanding voluntarily enter into and consummate the transactions.” Vineyard v. Vineyard, 409 S.W.2d 712, 716 (Mo. 1966).

The fact that a person is suffering from senile dementia also does not alone prove he lacks testamentary capacity. Matter of Brown’s Estate, 230 Kan. 726, 640 P.2d 1250, 1254 (1982). The diagnosis of Alzheimer’s or other organic brain disorder also does not establish a lack of testamentary capacity. Wright v. Kenney, 746 S.W.2d 626, 631 (Mo. App. S.D. 1988) (“Eccentricities and an organic brain syndrome or senility do not establish the absence of testamentary capacity.”); In re Gene Wild Revocable Trust, 299 S.W.3d 767 (holding diagnosis of “moderate stage dementia” did not establish lack of testamentary capacity). Other characteristics such as “personal eccentricities”, “suspicious” behavior, stubbornness, lack of affection for relatives, and the onset of a quick and explosive temper do not constitute substantial evidence of testamentary incapacity. Dorsey v. Dorsey, 156 S.W.3d 442, 451 (Mo. Ct. App. E.D. 2005). 

Lack of capacity litigation relies on medical records and the irrational conduct of the deceased prior to executing the Trust or will. For this reason, you will need an attorney who is familiar with the medical issues associated with capacity and has experience building a case to prove or disprove capacity.

Trust Lawsuits

 

Undue Influence

An undue influence claim involves one person taking advantage of their position of power over another person. Sometimes this power can be used to influence an individual’s Last Will and Testament. An undue influence claim is asserted by arguing the testator was controlled by persuasion, pressure, and outside influences to the point that he did not act voluntarily but was instead subject to the will and power of another individual when executing his Last Will and Testament.

Generally, the party challenging the will in asserting undue influence has the burden to establish that undue influence did in fact exist, which can be met by showing that the undue influencer:

  1. stands to benefit under the will
  2. was in a confidential/fiduciary relationship to the decedent, and
  3. was “active” in procuring the will

These three elements of undue influence all have a body of case law interpreting their meaning, with the first two prongs being considerably easier establish. For the “active procurement” prong, Missouri case law lists non-exclusive factors to assist courts in determining whether there was active procurement. Listed below are a few examples:

  • The beneficiary is present at the execution of the will
  • beneficiary recommends a specific attorney to draft the will
  • The beneficiary has extensive knowledge of the will prior to execution
  • beneficiary instructs the testator on how to construct the will
  • witnesses to the will are secured by the beneficiary
  • beneficiary safeguards the will or insists on retaining possession of the Will

See, Simmons v. Inman, 471 S.W.2d 203 (Mo. 1971), Salisbury v. Gardner, 515 S.W>2d 881 (Mo. App. 1974), Duvall v. Brenizer, 818 S.W.2d 332 ( Mo. App. 1991).

Once the party challenging the will based upon undue influence successfully convinces the court that there should be a presumption of undue influence, the burden to prove there was no undue influence will shift to the party attempting to admit the will into probate.

Will & Estate Fraud

According to Missouri law- RSMo. §461.054- a Will is void if procured through fraud. Fraud occurs when the wishes of the testator are defeated through deceitful means. Missouri courts have outlined four (4) general elements of fraud:

  1. An individual misrepresents material facts to the testator
  2. The individual had knowledge that the misrepresentations are false
  3. The individual had the intent that the material false information be acted upon
  4. The testator sustained an injury.

Regarding Wills, there are two types of fraud:

  1. Execution Fraud
    • Fraud in the execution of the will occurs when the testator signs a document that is not the Will but is believed to be the Will.
    • An example of this is a family member having an elderly member of the family sign a document, believing it to be something as simple as a bill, when in fact it is that person’s Will.
  2. Inducement Fraud
    • Fraudulent Inducement occurs when the testator is intentionally misled by material facts which in turn are the cause of the testator making a device he or she would not have made otherwise.

Will Execution Formalities

When evaluating a Missouri will contest the case, the first consideration is whether or not the will was executed properly. Attacking a will based upon proper execution is much simpler and less expensive than it is to argue undue influence or lack of capacity.

In Missouri Wills contests, the requirements for proper execution and qualification rendering a will valid are controlled exclusively by statute.

The body of law that outlines the qualifications for making a valid Missouri Will is RSMo. §474.310. The law states that the testator (person making the Will) must be of sound mind, at least 18 years of age or any minor emancipated by adjudication or marriage, or entry into active military duty.

If it is believed that the testator was qualified to make the will, then one can look to RSMo. §474.320 in order to determine whether or not the Will was executed according to statutory formalities. Such formalities are listed below:

  • Will must be in writing
  • Will must be signed by the testator (or another at the testator’s direction)
  • The testator must acknowledge signing (or directing another to sign) in the presence of two witnesses

These two witnesses must sign in both the presence of each other and of the testator [this factor is of critical importance and is the one most likely to be done improperly]. Missouri uses what is known as the “Line of Sight Test” wherein the testator does not actually have to see the witnesses sign the will, but must be able to see the witnesses were the testator to look. As a result, the testimony of eyewitnesses to the Will execution is of great weight.

Many Wills include a “self-proving affidavit,” which is an attachment with an oath that states that the testator and the witnesses signed in the presence of each other and took that oath in front of a notary public. The form of language is set forth in RSMo. §474.337. A properly-executed self-proving affidavit makes it more difficult to challenge a Will on the grounds of improper execution; however, sometimes the affidavit itself is improperly prepared and therefore requires careful scrutiny.

Will/Probate Disputes

In many instances, the beneficiaries, heirs, and other interested parties will not know the contents of a loved one’s Last Will and Testament until after his or her death, when the document is revealed as a part of the probate administration.  A will contest is a proceeding brought in probate court as part of the probate administration.

It is critical for anyone wishing to contest a will to know the time deadlines.  According to Missouri law, a person must appear in the probate court to contest a will, or the rejection of a will, within 6 months after probate or rejection of the will, or 6 months after publication of notice granting letters of the estate, whichever is later.

There are several common grounds for contesting a will, including:

  • Lack of capacity/competency: A person executing a trust must have testamentary capacity, which generally means the person must have the mental ability to understand:
    • the amount and nature of his property;
    • the family members and loved ones who would ordinarily receive such property; and
    • how the trust disposes of such property.
    • Execution Formalities: A will must be executed in the manner required by governing statutes. If the statutes are not followed, the will may not be enforced.
    • Undue Influence: If the person making the will did not do so of their free will, but was instead coerced by a person who was in a position of confidence or control, the will may not be enforced.
    • Fraud: If the decedent was tricked or defrauded into executing a will, the will may not be enforced.

In Missouri, will contests are usually decided by a jury.  The jury decides whether the decedent did, in fact, sign the will and declare it to be his or hers. The jury next determines whether the decedent was of sound mind, i.e., whether he had testamentary capacity, and, if there is a claim of undue influence, whether the decedent executed the will of his own free will.  If a will is successfully contested, the estate is distributed by the decedent’s prior will, or if there is no prior will, the estate is by law distributed as if there had been no will.

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