Deadly Claims in Trust and Estate Law

“Deadly Claims in Trust and Estate Law,” that’s the subject of today’s ACTEC Trust and Estate Talk.

Transcript/Show Notes

This is Stacey Singer, ACTEC Fellow from Chicago. As the estate and trust litigation intensifies around the country, a wave of novel claims has been evolving. Most trust and estate professionals need to be educated about these claims and may not be aware of them at all. ACTEC Fellow Steve Mignogna of New Jersey shares significant developments and identifies pitfalls for T & E professionals across the United States. Welcome, Steve.

Background and Societal Changes: Impact on Trusts and Estates

Steve Mignogna:  Well, thank you very much, Stacey. Happy to talk about this. This is a project that several of us, Bob Goldman from Florida and Terry Franklin from California, have worked on for probably about 15 years. We decided over those years to try to track unique claims involving estates and trusts. We found that over that time- I don’t think this will surprise anyone- society has become more litigious and there has been more litigation involving estates and trusts and fiduciaries and the elderly.

There’s also been more splintering of families and more disharmony among families, and, likewise, less trust in institutions. A lot of that is a matter of perception. Nevertheless, Bob, Terry and I felt that that was occurring and that led to what we believed were very creative or novel claims involving estates and trusts.

So, reaching back 15 years or so, we started to track them and see how different states were handling them. And this is a version of the ones that we think are the current interesting, unique, and novel claims. We always joke that this area reminds us of the phrase, “that a lawyer is a learned person who rescues your estate from your enemies and keeps it for himself.” Litigators can be a little cynical that way.

That’s the nature and background of the project. And I always want to acknowledge the work [Terry] Franklin and Bob Goldman have done with me over the years in trying to, as I say, monitor these claims because they are ever-evolving. And if you survey the states, you’ll see that states have handled these differently. And if you check in with one state in one year, you’ll find it two or three years later that state may handle them differently. So let me go through what we would call the seven main claims.

Pre-Death Will Contests

The first one would be pre-death will contests. Now, I’ve been practicing for a few decades and, when I started practicing law, a will contest was fairly straightforward and simple. Now, estate litigation is much more complicated. There can be pre-death transfers or changes in beneficiary designations. Those are much more common than just a will contest. In fact, because of that, this issue of pre-death will contest has become more common.

The issue is that the traditional rule is that a court will not want to hear a will contest until the person has passed on, and therefore, the final will is determined. Against that, though, is the problem that you might have litigation involving asset transfers, gifts, or beneficiary designations. Those are all done within the framework in which the will itself was changed.

So more and more courts are saying, well, if we’re going to have a trial regarding these other issues, we might as well go ahead and address pre-death wills, will contests. So, pre-death will contests are now evident in many states. In fact, some states have statutes addressing the viability of these claims specifically.

Tortious Interference with Inheritance

Number two, we would list tortious interference with inheritance. I think the best way to describe this is to give two examples. If my current will benefits Jane and I want to change my will to benefit John, Jane may find out about that and Jane may decide: OK, I don’t want Steve Mignogna to change his will because I want to get his assets when he passes away, everybody knows he is worth billions of dollars. So Jane may preclude me from changing my will, especially if I have any type of debilitation, and therefore there is no will to challenge for the person who would have become my beneficiary. That’s one example. That’s why this tort would be more viable because there is no will to challenge, as I was prevented from fulfilling my intent and wishes.

The second is, which I mentioned before, that a lot of times assets are transferred outside of the will and therefore a person may be a beneficiary of the will, but decide that assets that should have passed under the will don’t. And they want to bring this tort to say these assets should be brought back into the estate. So that’s number two: tortious interference with inheritance.

Various Trust-Related Claims

We’d say that number three is various trust-related claims. Trust protectors are, I think, a relatively new concept and there is more and more case law about claims involving trust protectors, as well as claims involving the amendment, interpretation, and reformation of trusts. So, we categorize those collectively but, as you can see, there are a number of sub-claims there involving trusts. And we think that will continue all the more.

Various Divorce-Related Claims

Number four, various divorce-related claims. More and more palimony claims are now being brought against estates and various states have enacted statutes to deal with palimony claims. There’s also the intriguing area of post-death divorce, while the traditional rule was that a person’s passing would terminate a divorce proceeding. That’s started to change because of equitable considerations and whether it’s fair to have the deceased person’s assets pass in such a way as though the divorce had never occurred. So we’re seeing a lot of that as well. And there’s an awful lot going on right now with trusts and divorce. I’ve had experience with this and I know others have as well, where judges have to deal with whether a trust would get pulled into a divorce and the assets of the trust would become part of the divorce. One of the recent ones I had to deal with- and I think this happens often- the issue arises in family court, in the divorce court, and the judge may not be very conversant in trusts and it makes it all the more complicated.

Guardianship-Related Claims

Number five would be guardianship-related claims, more and more multi-jurisdictional disputes involving guardianships, wards, and incapacitated persons being moved around- whether by convenience or for medical reasons, or nefarious reasons- and similarly, whether the doctrine of substituted judgment is effective, where the person’s assets are defined at their death by some type of substituted judgment that occurs in the framework of a guardianship.

Writings Intended as Wills

Number six, we’d say are writing’s intended as wills, and this is a whole separate lecture, but the bottom line is that many states, including my state of New Jersey, have statutes that say non-traditional wills, which don’t meet the usual standards but can be shown by clear and convincing evidence to be testamentary, can still be valid. These statutes define the “documents” very broadly and also, in most instances, do not even require a signature. The idea is for our area of the law to keep up with technology. So, for example, there are cases that we’ve tracked that have iPads and iPhones, and DVDs all admitted to probate. I, myself, have had cases where post-it notes have been admitted to probate. Heck, in one of the cases here in New Jersey, a codicil to a will written in the person’s blood was admitted to probate.

So this writing’s intended as wills seems to be on the upswing and I think will become more common, but there’s a real tension between the traditional requirements for a will versus the idea of trying to fulfill a testator’s intent, even if the document is not in traditional fashion.

Insane Delusion and Duress

And then finally, number seven would be insane delusion and duress, which are not really undue influence but are often confused with undue influence. And the thinking is that insane delusions and duress are more common but still often forgotten, especially as the population ages and becomes more susceptible to those types of delusions or duress.

Conclusion

Those are really the main ones, the seven ones. As you can see, it’s hard to really pinpoint the number because it’s ever-changing. But the fun part is that Bob, Terry, and I have gotten together every few years to talk about this. And as we chart these claims, they have changed. Some have been dropped and some of it added. But it’s always fun to see how the various states handle them and how judges struggle with them. We think it’s important that we, as practitioners, are aware of them. So, I appreciate your time and attention.

Stacy Singer:  Thank you for that great presentation on the seven deadly claims. And thank you, everyone, for listening.

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