by Judy S. Bae
We last discussed how to prevent unnecessary trust litigation. We will now explore what to do if you suspect that a trust does not express the last wishes of the deceased. Despite good intentions and planning, there are instances when a trust does not contain the wishes of the deceased individual. But how do you know whether the trust is a diamond or only a cubic zirconia?
A common scenario which leads to questioning the validity of a trust happens when there is a significant unequal distribution of the trust’s assets. Often one child will receive more than the other children, or the children are surprised to discover that only one of them will inherit their parents’ assets. This is despite the fact that they had heard over the years that everyone would get an equal share of the assets. Keep in mind that people have the right to change their minds and their trusts. There is no requirement that a parent has to give each child an equal share. Further, there is no requirement that only children can inherit from a parent’s trust.
However, there are instances when one may suspect that the trust does not accurately reflect the wishes of the deceased. The most common situations arise from lack of capacity and/or undue influence. However, there are other reasons to set aside a trust or trust amendment, such as mistake or fraud.
Lack of Capacity. A person lacks capacity to change his or her estate plan when he or she does not fully understand the consequences of the change. For example, what if Dad, who suffered from Alzheimer’s or progressive dementia (or confusion from a new medication), changed his trust a few months before he passed away? Your sister is now the sole trustee of the trust (as opposed to being a co-trustee with you) and she has just informed you that she will be getting the family home and the majority of Dad’s assets. You are surprised that Dad did not leave an equal share to each of his children, especially since you and Dad never had a falling out and he always seemed to look forward to your weekly visits. This sudden change to his trust does not make any sense to you.
In this scenario, Dad may have lacked capacity to make changes to his trust. Although individuals suffering from Alzheimer’s/dementia have lucid periods and can therefore be capable of changing their trusts, there are instances when the individual may no longer be able to make such decisions.
In order to validly make an amendment to his trust, California law requires Dad to be able to understand and appreciate the following:
The rights, duties and responsibilities created by or affected by the decision;
The probable consequences for the decision maker, and where appropriate, the persons affected by the decision; and
The significant risks, benefits, and reasonable alternatives involved in the decision.
A person suffering from Alzheimer’s/dementia might not be able to appreciate and understand the consequences of disinheriting a child. Dad may not have been able to understand the effect and consequences of leaving the house and most of the assets to your sister and how his decision to name your sister as trustee would affect his trust. If Dad did not comprehend these things, the trust could be invalid due to lack of capacity.
Undue Influence. Undue influence can also invalidate a trust. A person who exercises too much control over the will of another may be unduly influencing him or her. For example, assume that Mom, who is no longer able (or willing) to live alone moves in with your brother. He agrees to take care of her and look out for her interests. Over the years, you notice that Mom is becoming more and more reliant on your brother. She is no longer interested in spending time with her other children. In addition, you notice that your brother is acting as a gatekeeper and will not let people visit Mom unless he is at home. Your brother is now managing all of Mom’s finances and takes her to all her appointments. Mom will no longer leave the house unless your brother is with her; she no longer comes over to your home for dinner. After Mom passes away, the family learns that they have all been excluded from Mom’s trust except for your brother. You now suspect that your brother was keeping Mom away from the rest of the family on purpose and that he was convincing Mom that he deserved to receive her entire estate.
What to Do. Before you run out and file a lawsuit to have the trust/trust amendment set aside, there are a few steps you can first take to evaluate your potential claim:
Find your parent’s date of birth and social security number. This information will be necessary to obtain copies of the death certificate and medical records.
Contact friends. Call the people with whom your parent socialized. These individuals may have spent time with your parent. During their visits, they probably talked about their children and how they felt about their children. These individuals may know about your parent’s feelings and wishes for his or her trust and assets. These friends may have had concerns about the influence that one of your siblings had over your parent. They also likely observed changes in your parent’s mental and physical health and if your parent was having problems with memory and other cognitive abilities. They are potential witnesses who can be of great help.
Make a list of the medical providers who treated your parent. These doctors will have information in their records about your parent’s physical and mental health. They may have specific recollections about your parent and any changes that they personally observed.
Obtain the medical records. Once you have your parent’s date of birth, social security number and the names and addresses of his or her medical providers, you will be able to obtain his or her medical records pursuant to California law. Medical records are often a great source of information concerning a person’s physical and mental health. The medical records will likely have documentation concerning any mental defects or concerns about mental status, dementia and decision-making ability. These medical records will be invaluable if it turns out that your parent had health and medical problems that would have made him or her susceptible to undue influence or unable to understand decisions concerning the trust. You may learn through the medical records that your parent was completely competent and did not have any health problems that would have contributed to undue influence or a lack of capacity. The medical records will be an important component in deciding whether or not you should make a claim that the trust/trust amendment is invalid.
Look for prior estate planning documents. It will be important to see what the prior estate planning documents provided. You may learn that the most recent trust or trust amendment may not differ from your parent’s trust 12 years ago. You may learn that your parent went to the same attorney for 30 years and suddenly went to a brand-new attorney to have the last trust amendment prepared. If the latest trust/trust amendment is invalid, the Court will have to go back to the last “good” document so it will be important to locate and obtain copies of those prior documents. The prior estate planning documents may also show how your parent consistently provided for an equal distribution of assets. This will be important in showing undue influence and/or lack of capacity.
Retain the services of a well-qualified probate litigation attorney to assist you in evaluating your potential claim. An attorney that specializes in probate litigation will be able to review the evidence and information and help you determine whether you should make a claim to dispute the trust/trust amendment. An experienced probate litigator will be able to discuss your options and the realistic costs of filing a lawsuit over your parent’s trust/trust amendment.
When it comes to litigation over your parent’s trust, it is important to recognize and understand that filing a lawsuit will change your family relationship. Before filing a lawsuit over your parent’s trust, you will need to understand and think about the fact that this will forever change your relationship with your sibling(s). If your sibling is accused of having unduly influenced your parent to change the trust or you claim that your sibling was instrumental in having your parent sign a trust amendment when your parent lacked capacity, it will likely be impossible to have a relationship in the future with that sibling, regardless of the outcome of the lawsuit. Keep in mind that not all of your siblings may agree with you and that other family members may take sides about whether the trust is a diamond or a cubic zirconia.