Stories, at their best, should help educate others rather than confuse and hurt them. So, when I tell stories drawn from my own law practice, I make an effort to emphasize the positive. To look for hope – not despair. To provide helpful information.
A valuable lesson from Proverbs 29:18 provides guidance for approaching the problems of the day. “Where there is no vision, the people perish.” If we look only at the past and its failures, we learn nothing. We need to look forward, and it helps to be positive
It’s said that to a hammer, everything looks like a nail. It’s understandable that lawyers who litigate trust and estate quarrels often see lawsuits as the remedy to family estate disputes. Litigation is our hammer. A lawsuit in the local probate or civil court is often our nail. This isn’t necessarily good. In fact, it can be bad.
Other professions offer some examples as to how to look forward instead of into the past.
Engineers point out that preventive maintenance is more economical and efficient than breakdown maintenance. It’s surely better to identify problematic issues before equipment failure through routinely scheduled maintenance. Physicians teach us that prevention is better than cure. It makes sense that treating a precondition as a medical issue, rather than waiting to treat after an illness begins, saves time and lives.
So, in the spirit of identifying some preconditions to estate disputes as helpful to prevention, I’ll tell a few stories about trust and estate house disputes that may help family members spot problems early. Family home disputes encompass painful family legacies. Here are only a few.
Second marriages are commonplace. They contain well-known stressors. Second marriages often form stepfamilies – a family where at least one parent has children that are not genetically related to the other spouse. Second marriages begin later in life and are more likely to end when a spouse dies.
North American women have an average life expectancy of 81. North American men’s life expectancy is five years less at 76 years. Female survivors represent about 80% of the widowed population in the United States. Probability theory, confirmed by anecdotal evidence, confirms that an estate or trust dispute embroiling the survivor of a second marriage will more likely be focused on a stepmother.
Disputes often arise from changes to a second marriage estate plan amended by the survivor after the death of their spouse. Spouses to a second marriage often establish a revocable trust as part of their estate plan. These trusts allow estates to avoid probate – a process that lacks privacy and increases expense.
Let’s assume that Harry and Sally, each divorced from their first spouses, meet and marry.
Harry has three biological children from his first marriage and Sally has two from her first marriage. Harry and Sally execute a trust that provides for an equal split between the biological children of each spouse’s first marriage. In this case, the trust estate would be split five ways at the death of the survivor of Harry and Sally.
Harry and Sally’s second marriage trust affords the surviving spouse the power to amend, revoke or terminate the trust, either whole or in part. Harry and Sally have formed the makings of an estate dispute. Kindle for a later fire. So, what happens?
Harry dies. Harry and Sally have been married for twenty years. They’ve been living in the same home since their honeymoon. Sally continues to live in the home after Harry’s passing.
Sally’s children cut off all contacts between Harry’s children and their stepmother, Sally. Sally amends the trust and removes Harry’s children as beneficiaries. Harry’s children are now completely disinherited. Sally’s new trust provides that at Sally’s death, the family home goes to Sally’s daughter and the residue of the estate to Sally’s two sons, Tim and Tom. The family home is in San Francisco and has a fair market value of $1.9 million.
Sally dies and Harry’s children first learn of the trust changes when they receive a California Probate Code Section 16061.7 notice. Harry’s children have a problem. They research whether Sally lacked testamentary capacity. They also wonder whether Sally’s isolation from them enforced by Sally’s children might be a factor supporting undue influence in an elder financial abuse case.
Ultimately, Harry’s children file a petition in the probate division of the California Superior Court. There are a number of litigated issues. And, there is at least one lesson. Things might be different if Harry and Sally’s original trust included an irrevocable provision that each of their biological children would receive their respective share of the trust estate upon the demise of the second spouse to die.
They could have insisted that upon the passing of the first do die, an irrevocable trust be created in his or her name. Let’s call this the “B” trust. The surviving spouse would receive the use and benefits of the proceeds in the irrevocable “B” trust during her lifetime. The decedent’s children would be fully vested in the “B” trust and the survivor could not disinherit them. Sometimes these are called decedent’s trusts.
Sally would have had the full right to income and principal invasion in her own trust, the survivor’s trust. This would have helped. And the likelihood of estate fortune turning to misfortune would have been diminished.
Family home disputes are not limited to battles between stepchildren. Sibling rivalry can be corrosive. Particularly corrosive when it comes to the family home. Misfortune becomes predictable when sibling rivalry is coupled with the long-term impacts of alcohol and drugs. This is true when the substance abuse is that of the parent, a child or both.
Substance abuse is devastating to the addict and their family members. Step Eight of Alcoholics Anonymous is part of AA’s 12 Steps and 12 Traditions to help one another stay sober. The step is difficult. It requires the alcoholic to look at how their behavior impacted the people around them – behavior quite unlikely had they not been under the influence.
I’ve litigated cases where a parent, a homeowner, disinherits a child or children based upon unfounded allegations of theft or other wrongdoing. Acute intoxication can cause alcohol-induced psychotic disorder (AIPD). Such disorder can include hallucinations, persecutory delusions, and persistent thoughts. These persecutory delusion cases often involve undue influence. The undue influence may be exerted by a neighbor, caregiver of family member on the vulnerable victim. However exerted, the goals are often the same: Have the victim transfer assets to the undue influencer either during life or at death.
These cases can be particularly challenging. The innocent family member is saddened and frustrated by false accusations. Logic doesn’t help. The delusion seems irrevocably attached to their parent’s mind.
Common delusional beliefs include an unassailable conviction that a family member or members want to take everything from the deluded parent to make the deluded person homeless. Such delusions are often spawned by the active suggestions of alcoholic or addicted children to a parent. The suggestion can be that the parent’s other children are stealing parental assets.
A parent doesn’t have to be addicted to be vulnerable. Age, dementia, Alzheimer’s, grief, stress and other factors can all cause or increase vulnerability. Of course, the addicted child’s accusations can often be the pot calling the kettle black. It can be a bit like a bank robber accusing the bank clerk of embezzlement.
Things don’t have to make sense to cause serious problems. And, when these problems arise, the expense of a trust challenge in both emotions and finances can be high. It can feel unjust. It can be unjust. Still, it is a common feature of the landscape.
In any event, the battle over the family house, whether prior to a parent’s passing or after, constitutes a painful family saga. Overturning misguided house transfers requires a careful look at family history. It feels like a detective story. It is a detective story. There is a lot to look at.
Medical records certainly come to mind. Bank transfers, family testimonies and timelines are important. The process is not short. It requires a great deal of time for the challenger and their attorneys. Our law firm regularly litigates in trusts and estates family home disputes. I hope one or more of the cases that I’ve talked about might help families take preventive measures.
If you have a case that is likely to be litigated and you want more information, call us at 916 313-3030.
We focus on substantial cases where we think that we can make a significant difference and there is a wrongdoer who can be made financially accountable for their wrongdoing. We represent foreign, out of state and California clients in California’s largest Superior Court probate and civil divisions, including Los Angeles, Orange, Santa Clara, San Mateo, Alameda, Contra Costa and Sacramento Counties.