Trust and Probate Challenges: Minimizing and Litigating Claims of - - PowerPoint PPT Presentation

Trust and Probate Challenges: Minimizing and Litigating Claims of Undue Influence, Fraud, Capacity and Mistakes

Overcoming Evidentiary Hurdles with Medical Records, Documentation, Experts and Other Witnesses Today’s faculty features:

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THURSDAY, JANUARY 16, 2014

Presenting a live 90-minute webinar with interactive Q&A James A. Bush, Of Counsel, Van Dyke & Associates, San Diego Anthony R. La Ratta, Partner, Archer & Greiner, Haddonfield, N.J.

• J. Brian Thomas, Attorney, Burdette & Rice, Dallas

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Minimizing and Litigating Claims of Undue Influence, Fraud, Capacity, and Mistakes

Topics To Be Covered

 Substantive Bases for Will and Trust Document

Litigation – James A. Bush, Esq.

 Evidentiary Challenges – Brian Thomas, Esq.  Planning Techniques to Prevent or Mitigate Evidentiary

and Proof Issues – Anthony R. La Ratta, Esq.

 Questions – Panel

6

Substantive Bases for Will and Trust Document Litigation

James A. Bush Van Dyke & Associates 501 W. Broadway Avenue, Suite 1600 San Diego, CA 92101 (619) 344-0977 jbush@vdalaw.com

7

Challenges Based on Incapacity

 A person over the age of majority is presumed to have

capacity to make a will or a trust; any contestant has the burden of proving otherwise.

 Capacity is determined as of the date the document is

executed, although proof of incompetency before or after may be offered if probative of capacity on the date of execution.

8

Challenges Based on Incapacity

 Capacity to make a will or a revocable trust means the

ability to:

 Understand the nature of the act  Understand and recall the nature and situation of the

subject property

 Know and understand tranferor’s relationship to the

natural objects of the tranferor’s bounty and of other persons affected by the document.

9

Challenges Based on Incapacity

 Incapacity based on insanity, hallucination, or

delusion

 Except where condition is so pervasive as to constitute

mental incompetency generally, it does not void a will or trust unless it causes transferor to distribute property in a way he or she would not have done but for condition

 Being the subject of a guardianship or conservatorship

does not conclusively establish incapacity

 If condition is such that transferor has lucid periods, it is

rebuttably presumed that instrument was executed during a lucid period

10

Challenges Based on Incapacity

 Generally speaking, most conditions that might lead a

person to lack capacity are only some evidence of incapacity and are not conclusive.

 The terms of the testamentary document itself may be

considered in determining incapacity. A document that gives away property in an unusual or unnatural way and which does so without any explanation may tend to show incapacity at the time it was executed

11

Challenges Based on Undue Influence

 Undue influence means influence that overrides the

transferor’s free will at the time the document is executed

 Influence must be undue; anyone may solicit a transfer  The exercise of influence alone is not sufficient; it

must result in the challenged transfer

12

Challenges Based on Undue Influence

 Undue influence does not require proof of a weakened

mental state, but proof of such a state may make it more likely that tranferor’s act was the result of undue influence rather than transferor’s free will

13

Challenges Based on Undue Influence

 Burden usually is on contestant to show undue

influence

 Burden to show transfer was not the result of undue

influence shifts to transferee where:

 There was a confidential relationship between the

transferor and transferee

 The transferee actively procured the execution of the

contested document

 The transferee unduly profits by the document

14

Challenges Based on Undue Influence

 Confidential Relationships

 Question of fact  Relationship exists where transferor places trust and

confidence in the integrity and fidelity of the transferee

 Some relationships may raise a presumption of undue

influence by law of relevant jurisdiction

 Drafting attorney  Care custodian of transferor  Attesting witness

15

Challenges Based on Undue Influence

 Transferee’s participation in procuring document

 Although all of these may be some evidence of active

participation, none of the following alone conclusively establishes active participation:

 Transferee procures drafting attorney  Transferee brings transferor to attorney  Transferee sits in waiting room while transferor consults

attorney

 Transferee is present during physical execution of document  Transferee urges transferor to make a testamentary document

without urging a particular transfer

16

Challenges Based on Undue Influence

 Undue Profit

 Usually a question of fact focused on the relationship

among all the parties, and circumstances that may be considered include:

 Prior versions of estate plan  Past expressions of transferor’s testamentary intentions  Extent to which parties would benefit absent the challenged

document

 Not undue to provide for one who has a particularly

close relationship with transferor or is in need of greater financial assistance

17

Challenges Based on Undue Influence

 Recent Development: California recently enumerated

these relevant circumstances, all of which must be considered and which “supplement” common law:

 Transferor’s vulnerability, including mental state, age,

isolation, and dependency

 Influencer’s apparent authority over transferor  Influencer’s conduct, including control over transferor’s

day-to-day life

 Equity of challenged result

 Outside California, considering these factors can only

strengthen effectiveness of testamentary document

18

Challenges Based on Fraud

 Similar to undue influence  Key difference: Fraud exists even where transferors

exercise free will but do something they would not have done but for deceit of challenged transferee

 Fraud also requires proof that challenged transferee

intended to deceive the transferor or intended to induce the transferor to execute the challenged document and that fraud was effective at the time the document was executed

19

Challenges Based on Mistake

 Where transferor by mistake signs wrong document or

signs a document with terms materially different from what he or she believed it contained, document can be set aside

 Otherwise, mistakes that require reformation without

creating new terms may be cured under court’s equitable powers

 Mistakes resulting in omission of a transfer may not be

cured through reformation as they would result in making a new will or trust (still good law?)

20

Effect of Upholding Challenge

 If provision subject to undue influence or fraud can be

severed without subverting transferor’s intent, challenged provisions may be stricken

 Otherwise, estate plan reverts to most recent

documents that were not the result of incapacity, undue influence, fraud, or mistake or, if there are no such documents, to distribution through intestate succession

21

Trust and Probate Challenges:

Minimizing and Litigating Claims

• f Undue Influence, Fraud,

Capacity and Mistakes

Burdette & Rice PLLC www.dallasprobateattorneys.com

Evidentiary Challenges in Probate Litigation

• J. Brian Thomas

Burdette & Rice PLLC 4851 LBJ Freeway, Suite 601 Dallas, Texas 75244 (972) 991-7700 brian@dallasprobateattorneys.com

23

Burdette & Rice PLLC www.dallasprobateattorneys.com

Evidentiary Challenges in Probate Litigation

Core Evidentiary Concepts to Cover

• 1. Effective use of witnesses
• 2. Key Records and documents
• 3. Experts

24

Evidentiary Challenges: Effective Use of Witnesses

 Matching Witnesses to Themes and Stories

Burdette & Rice PLLC www.dallasprobateattorneys.com

What is our substantive claim or defense?

 Challenges Based on the Testator / Settlor

 Lack of Capacity  Mistake

 Challenges Based on Another Actor

 Undue Influence  Fraud

25

Evidentiary Challenges: Effective Use of Witnesses

What Witnesses Can Tell (Sell) This Story?

Burdette & Rice PLLC www.dallasprobateattorneys.com

 Family  Friends  Neighbors  Drafting

Attorneys

 Faith Workers  Gardeners  Mechanics  Church

Members

 Bank Tellers  Financial

Advisors

 Dry Cleaners  Doctors  Nurses  Handymen  Business

Associates

Choose the right ammo for the battle.

26

Evidentiary Challenges: Effective Use of Witnesses

How Should we Organize Our Witnesses?

Burdette & Rice PLLC www.dallasprobateattorneys.com

Hammons'Witnesses'

! Section!684!/!867!Findings!Required:! ! C&C!evidence! ! KH!is!incapacitated! ! In!KH’s!best!interests!to!appoint!a!guardian!for!KH’s!person!

• In!KH’s!best!interests!to!create!a!trust!for!KH’s!property!

! KH’s!rights!and!KH’s!property!will!be!protected!by!appointment!of!a!guardian!and!the!creation!of!a!trust! ! Preponderance! ! Court!has!venue! ! Greg!/!3d!party!is!eligible!to!act!and!is!entitled!to!appointment! ! KH!is!totally!or!partially!incapacitated!

• Evidenced!by!recurring!acts!or!occurrences!in!the!preceding!6!months!

! It!is!in!KH’s!best!interests!that!Jack!Wilburn!serve!as!867!management!trustee!

• Greg!has!been!unable!to!locate!an!institution!in!the!geographic!area!willing!to!take!the!trust!(diligence)!

!

Us' Them'

Crowder! Kathryn!Hammons! Greg! Kathy!Hammons! David!White! Chafetz! Jack!/!Carol! Blaik! Andy! ! Ava! ! Cara! ! ! ! !

27

Evidentiary Challenges: Effective Use of Witnesses

How Should we Organize Ourselves?

Burdette & Rice PLLC www.dallasprobateattorneys.com

Witness! By! Theme! Practical'Proof'Points! Statutory'Proof'Points!

Pat!McArdle! BT! Court!Investigator!confirms! that!guardianship!and!trust! are!in!KH’s!best!interests! ! Expertise!(social!worker)! ! Field!is!suited!to!examine! KH’s!situation!and! environment!to!determine! whether!or!not! guardianship!is!in!KH’s! best!interests! ! Comprehensive!visit!w/! KH! ! Reviewed!file!(incl.!med! records!and!applications)! ! Interviews!with!Kathy!/! Greg!/!Family! ! Results!of!visit!w/!KH! support!conclusions! ! McArdle!believes:!

• Total!incapacity!

(checklist)!

• Environment!safe!(for!

now)!

• Kathy’s!questionable!

prior!choices!render!her! unsuitable!on!all!fronts!

• Greg!would!be!suitable,!

but!family!discord! makes!this!difficult!

• Trust!and!3d!party!

guardian!are!least! restrictive!alternatives! ! KH!is!incapacitated! ! In!KH’s!best!interests!to! appoint!a!guardian!for!KH! ! In!KH’s!best!interests!to! create!a!trust!for!KH! ! Kathy!is!not!eligible!to!act! as!guardian! ! Greg!is!eligible!to!act!as! guardian! ! Chris!Klausen!is!eligible!to! act!as!guardian! ! Jack!Wilburn!is!eligible!to! serve!as!trustee! ! There!is!no!less!restrictive! alternative!for!KH!other! than!what!Greg!has!asked! for!

28

Evidentiary Challenges: Effective Use of Witnesses

How Can We Prepare These Witnesses?

Burdette & Rice PLLC www.dallasprobateattorneys.com

Witnesses bring their own anxiety, emotion, honesty (or dishonesty) and credibility. Effective counsel can overcome a witness’s shortcomings and emphasize the best parts of their performance.

 Interview: Leave few stones unturned, if any.  Depose:

Know what your witnesses are going to say.

 Secure:

Assume that witnesses do not like testifying.

29

Evidentiary Challenges: Effective Use of Witnesses

How Can We Maximize Witness Utility?

Burdette & Rice PLLC www.dallasprobateattorneys.com

Repetition

30

Evidentiary Challenges: Effective Use of Witnesses

What Can the Client Add to Their Own Advocacy?

Burdette & Rice PLLC www.dallasprobateattorneys.com

In some cases, a client’s testimony is crucial and vital. In

• ther cases, it may not even be necessary, or could be

detrimental to success.

 Venting:

Is the client attempting to force empathy on an objective judge or juror?

 Testifying: Is the client attempting to persuade a

reasonable person to view facts from a unique perspective?

31

Evidentiary Challenges: Key Records

What Documents Bolster Our Claims / Defenses?

Burdette & Rice PLLC www.dallasprobateattorneys.com

 Correspondence  Checks  Telephone bills  Bank statements  Previous estate

planning documents

 Other

applications completed by the Testator

 Records of a

treating physician

 Nurse notes  Nursing home

staff notations

32

Evidentiary Challenges: Key Records

Know What the Documents are Telling You.

Burdette & Rice PLLC www.dallasprobateattorneys.com 33

Evidentiary Challenges: Key Records

Organize the Records in a Meaningful Fashion.

Burdette & Rice PLLC www.dallasprobateattorneys.com 34

Evidentiary Challenges: Key Records

Organize the Records in a Meaningful Fashion.

Burdette & Rice PLLC www.dallasprobateattorneys.com 35

Evidentiary Challenges: Key Records

Organize the Records in a Meaningful Fashion.

Burdette & Rice PLLC www.dallasprobateattorneys.com 36

Evidentiary Challenges: Expert Witnesses

Know What Matters Most to Judges and Jurors

Burdette & Rice PLLC www.dallasprobateattorneys.com

Texas law does not favor expert testimony over lay

• witnesses. Know where expert testimony can help

the fact-finder understand fact theories, but understand the faith that judges and juries place in attesting witnesses and individuals that have connected with the Testator / Settlor on a more personal level.

37

Evidentiary Challenges: Expert Witnesses

Know What Matters Most to Judges and Jurors

Burdette & Rice PLLC www.dallasprobateattorneys.com

In Schmidt v. Schmidt, 403 S.W.2d 531 (Tex. Civ. App.—Waco 1966, no writ), the Testator was 94 years old, sick, and in bed when he executed the will. The two attesting witnesses testified that the will was signed on February 10, 1964, between 12:00 and 3:00 in the afternoon, and that the Testator had testamentary capacity. A medical doctor testified that; he made a house call to the Testator in the afternoon between 12:00 and 2:30; that the Testator was sick and unconscious; was not able to recognize his relatives or know the nature and extent of his property; and that he did not have sufficient memory to collect in his mind the necessary elements to make a will or form a reasonable judgment. The jury found that he had testamentary capacity at the time of making the will, and the appellate court upheld this finding.

38

Trust and Probate Challenges:

Minimizing and Litigating Claims

• f Undue Influence, Fraud,

Capacity and Mistakes

Archer & Greiner, P.C. www.archerlaw.com

Planning Techniques to Prevent or Mitigate Future Litigation

Anthony R. La Ratta, Esq. ARCHER & GREINER, P.C. One Centennial Square Haddonfield, New Jersey 08033 (856) 354-3094 alaratta@archerlaw.com

40

Archer & Greiner, P.C. www.archerlaw.com

How to Avoid Future Litigation

Outline

• 1. Warning Signs
• 2. Internal Protections
• 3. External Protections

41

Warning Signs:

 Omission of a Family Member  Change in Direction in Planning  Second Marriage

Archer & Greiner, P.C. www.archerlaw.com 42

Warning Signs (cont’d):

 Unnatural Will or Non-Family Devises  Unequal Treatment of Children  Payment for Estate Attorney Services by

the Beneficiary

Archer & Greiner, P.C. www.archerlaw.com 43

Warning Signs (cont’d):

 Restrictions on Devises  Elderly or Disabled Testator

Archer & Greiner, P.C. www.archerlaw.com 44

Internal Protections: Knowing the Client

 Multiple Meetings with Client  Appropriate Questioning and

Documentation

 Knowledge of Prior Wills and Governing

Instruments

Archer & Greiner, P.C. www.archerlaw.com 45

External Protections

 Medical History  Affidavits from Reliable Witnesses  Dealing with a Disinherited Heir

Archer & Greiner, P.C. www.archerlaw.com 46

External Protections (cont’d): Dealing with a Disinherited Heir

 Contemporaneous Gift to Disinherited Heir  Multiple Wills  Small Bequest in Conjunction with In

Terrorem Clause

Archer & Greiner, P.C. www.archerlaw.com 47

External Protections (cont’d):

 In Terrorem (or No Contest) Clause  Witnesses

Archer & Greiner, P.C. www.archerlaw.com 48

External Protections (cont’d):

 Will Signing Environment  The Debate about Videotape

Archer & Greiner, P.C. www.archerlaw.com 49

External Protections (cont’d):

 Will Alternatives

Archer & Greiner, P.C. www.archerlaw.com 50

CONCLUSION

 Importance of Documenting the File

Archer & Greiner, P.C. www.archerlaw.com 51