Trust and Estate Disputes in Massachusetts

Undue Influence: When Justice is Due

The scenario is a common one. A child of a recently deceased parent comes into my office, having finally seen the will or trust that his/her parent made or amended just prior to their passing. The client was a loving son or daughter who tended to their mom or dad and tried to be the child that they were raised to be, yet the will or trust doesn't reflect that loving relationship. In many instances they have been entirely left out of mom or dad's estate.

For many of these clients, that event is seen by them as an indictment of their worth as a child. It evokes a range of emotions: anger, bitterness, self-doubt, and despair. Yet there is quite often an explanation for the events that led to the client's victimization. It is known in the law as "undue influence" .

Undue influence is not an uncommon phenomenon. When people grow older, they become more dependent on others--whether family members, caregivers, friends or professionals--to assist them in managing their health, finances and general well-being. Undue influence can occur where these various persons use these roles as a subtle mechanism for acquiring the right to greater wealth--in the form of part or all of the elder's estate.

Fortunately, a body of law has sensibly developed to deal with these circumstances.    

In a series of cases decided largely in the last 10 years, Massachusetts courts have held that someone who is a "fiduciary" to a decedent (person who has died) and who has benefited from a transaction involving a trust or estate (e.g. a will or trust or amendment of a will or trust) has the burden of proving that a particular transaction was NOT the product of undue influence.    It represents one of the few areas of our law where the burden of proof actually shifts from the plaintiff to the defendant.

Our courts have stated that there are four considerations present in a case of undue influence:

1.  An unnatural disposition.

2.  Disposition by a person susceptible to undue influence

3.  The transaction is facilitated by a person with an opportunity to exercise undue influence

4.  That person has in used the opportunity to affect the transaction through improper means.

These factors often look more daunting than they really are.    Consider the following example:   A man takes his elderly mother to make a will just weeks before her passing.    Son takes mom to his own lawyer,   who prepares a will leaving everything to the son and cutting out mom's two other children.   The son has been managing mom's money for years through the use of joint bank accounts and a power of attorney.    

This presents a plausible case of undue influence,  particularly if one or more of the children who were cut out of the estate had loving, supportive relationships with their mother.     The disposition becomes "unnatural",  and the son of course used his relationship with his own attorney to engineer the transaction.   Under this scenario the son would have the burden of proving that the transaction was not the product of undue influence.

Fee Arrangements in Probate Litigation

There are feelings that clients experience when they first walk into my office with a potential probate litigation matter.    First and foremost,  they are bitter and angry over the manner in which a will or trust  was made or amended,   property was distributed,  or an estate was administered.   The second emotion they experience is the apprehension--even fright--over what it will cost them to vindicate their rights.   

These feelings are quite natural,  and any attorney who you choose to consult with must validate and give voice to them.  However, unlike the emotions about the events of the past that lead the client to want legal help,  issues pertaining to fees can be discussed and can often be resolved in a reasonable, expeditious and client-focused manner.

Litigation can be--but does not always have to be--an expensive undertaking.    For far too long our profession has used the "billable hour" as the mechanism for determining what attorneys should charge clients for their services.    More recently,  as the economy has soured,  attorneys have awakened to the realization that the billable hour is generally a poor device for determining a reasonable fee to charge a client.     This is particularly true in probate litigation.

Nearly all of the clients who come into my office lack the resources to finance expensive litigation.  However,  if the merits of a potential case are strong enough,  and the possible damages substantial enough,  it is possible to structure fee arrangements that are "incentivized".    These include everything from a straight "contingency" fee--where a fee is only payable if money or property is recovered for the client--to a non-refundable "fixed" fee with a bonus for obtaining "success" in the matter (with the definition of "success" being clearly written into the fee agreement).

These arrangements are best first discussed in the initial consultation.  Of course,   no such arrangements can be sensibly proposed unless and until the attorney has thoroughly reviewed the facts and legal considerations involved in the particular matter.   But I find that far too often that discussion never occurs;  clients simply assume that they will have to go "on the clock".   We owe it to clients as a profession to employ fee agreements that do not reward inefficiency,  but rather place the financial interests attorney and client in alignment with one another.

Is it Medicaid planning, or Something Sinister?

Every so often an issue will come up in a trust dispute that forces the parties to confront the question of whether a particular transaction was made for purposes of protecting an aging parent from the clutches of Medicaid.     The issue presents with this profile:    One of mom or dad's children convinces them to transfer their house to them.     They take mom or dad to an attorney who prepares a deed trnasferring the property.   Mom or dad dies, and after death the other sibling(s) learn of the transfer and immediately believe that the sibling who engineered the transaction has done something crooked.

Here's where it gets tricky.   Medicaid regulations DO  permit the transfer of the Medicaid recipient's principal residence to a family member in a way that exempts that property from the reach of Medicaid.  However,   the family member must reside full-time with the recipient and his or services as a caregiver must be necessary for the health and well-being of the parent.

These regulations lead to all sorts of issues when it comes to property that is transferred to a child.   These include the following:

1.  Did the parent need long-term care at the time the transfer was made?
2.  Did the parent want long-term care,   or was he/she repulsed by the idea of being in a long-term care facility?
3.  Was the child's services as caregiver/caretaker necessary?
4.  Did the child actually provide the lion's share of the care to the parent,  or were other siblings or relatives providing some or all of the care?

To the extent that the evidence raises questions about the justification for the transfer or the services that the sibling provided,   it increases the likelihood that the court will declare the transfer void and return the property to the estate.

Putting up the Partition: Breaking the Real Estate Stalemate

Whether in marriage or in real estate, the law does not force people into togetherness.   It is a frequent occurrence that two or more people own property jointly and either cannot get along or agree on how to manage, hold or otherwise deal with that property.   Thankfully, Massachusetts law offers an "exit strategy" for this potential mess, in the form of a petition for partition.   This petition can be filed in either the Land Court, or the Probate Court in which the property is located.    A person seeking partition has an absolute right to it,   though the price one must pay for it can often be significant.

The filing of a petition for partition results in the court appointing a "commissioner"--typically an attorney--to sell the property.    The commissioner typically engages a real estate broker,  and of course both of them get their fees paid from the proceeds of the sale.     The partition proceeding is known as an "equitable" proceeding,  which means that the court may,  upon the request of any of the parties,  adjust the amount of proceeds due the parties based on their relative contributions to the property.   So if, for example,  one of the parties occupied the property and paid no rent while another party consistently paid the mortgage,  taxes and insurance,  you can bet that the proceeds due the "freeloader" will be reduced and the proceeds due the "payor" increased from what they otherwise would have received.

These proceedings tend to be long and drawn out,  and are often characterized by squabbling, bitterness and anger.    In my experience they are among the category of cases that lend themselves most appropriately to mediation and settlement,   as one can reconstruct the contributions of the respective parties through forensic accounting,  thereby leaving the parties with a relatively undisputed factual record.

Prior to filing such petitions,  I try to bring my client together with the other owner(s) in an effort to craft solutions (e.g. a buyout by one owner of the other's interest) that avert protracted partition proceedings.    Unfortunately these informal efforts often bump up against the emotionality of the parties, causing the petition to be filed.

Elder financial abuse on rise, according to Boston Globe

The Boston Globe reported today that confirmed cases of financial, physical, emotional or sexual abuse of elderly people more than doubled over the first four months of the 2009 fiscal year (July-October, 2008) from the same period in the prior year.   State officials cited job losses, shrinking investments, and the dramatic increase in foreclosures as the primary causes for the steep increase,  but also cited cuts in home care services and stress management programs for family caregivers as playing a role.

Joint Bank Accounts: They Don't Always Bypass Probate

It is commonly assumed that if a person dies with a joint bank account,  the surviving account holder automatically takes over sole possession of the account, and the account bypasses the probate of the decedent account holder's estate.

That assumption can in several instances be wrong.

Under Massachusetts law, the question of whether a bank account ultimately belongs to the co-owner of the account following decedent's death,  or whether it should be part of the decedent's estate,  is a question of fact.    The considerations that courts examine in answering the question are the following:

1.   The decedent's intention in opening the account.   That is,  did the decedent place the co-owner on the account for the convenience of the decedent,  or did he/she do so to allow the co-owner to use the account in the same manner as the decedent.

2.   Whether the surviving co-owner ever had interest from the account reported in his/her name for tax purposes.   If interest was regularly reported by the bank in the decedent's name,  this counsels in favor of a finding that the account is truly an asset of the estate.

3.   Whether the surviving co-owner regularly made withdrawals from the account.    If he/she did not make such withdrawals,  this likewise counsels in favor of the account as being part of the decedent's estate.

4.   Who kept possession of passbooks for the account.     If the decedent kept possession of the passbooks (and passbooks, until recently, were commonly used for certificate of deposit accounts),  then this would support an argument that the account should be part of the estate.

Disputes over these bank accounts usually arise when the executor or administrator of a decedent's estate also happens to be the surviving joint account holder.      In such instance the appropriate remedy is for the heirs of the estate (who presumably would have divided up the proceeds of the account were it to have gone through the probate process) to sue the executor or administrator in what is known as an "equity" proceeding.     

A Creative Way to Sue an Attorney

One issue that comes up time and time again in settlement discussions over a wide array of cases is whether, as part of a settlement,   one party can assign another the right to bring a legal malpractice claim or lawsuit against the party's attorney or former attorney.     The issue comes up as often as it does because quite frequently parties end up in litigation because an attorney inartfully drafted a legal document or gave incorrect advice to a client.

Until 1999,   it was believed that legal malpractice claims were not assignable.    However,  in New Hampshire Insurance Co. v. McCann,  429 Mass. 202,  707 N.E.2d 332 (1999),  the Supreme Judicial Court held that certain legal malpractice claims may be "voluntarily assigned".  The court rejected the defendant's assertion that allowing assignment would create "open trading" of such claims as if they were commodities.   The court also rejected the argument that permitting assignments would discourage lawyers "from zealously representing a client out of fear that the client may later offer a malpractice action against the lawyer as a part of the resolution of another case."

While the court in McCann had plenty of positive things to say about the assignability of legal malpractice claims,  it also stated that "(w)e are not persuaded that every voluntary assignment of a legal malpractice claim should be barred as a mater of law."    This language should throw up something of a cautionary flag to those seeking to negotiate assignments of such claims.     It is fair to say that assignments that are negotiated by parties who are represented by attorneys (other than the attorney who is the potential defendant in the malpractice claim) are likely to survive a legal challenge.    

One area that is fertile ground for assignments of legal malpractice claims is in the estate and probate litigation arena.    In most instances,   persons who are aggrieved by estate dispositions and instances of disinheritance (e.g. amended wills) cannot sue the attorney who prepared the will, trust or other estate planning document.    However,   in my practice we are now negotiating assignments of these claims with the executors or administrators of estates.

An illustrative example is as follows:   A woman has three children and visits a lawyer to prepare an estate plan.     The woman makes out a will leaving all of her real and personal property to one of her children,  who happens to be the child who engaged the lawyer,  took mom to the lawyer's office,  and even paid the lawyer's bill.     When mom dies,   the other two children are shocked to learn that they were left with nothing.    Of course,  the two "disinherited" children might decide to challenge the validity of the will through a will contest in the Probate Court.     They also have the possibility of being able to negotiate an assignment by the estate of a legal malpractice claim the estate may have against the attorney who drafted mom's will.    You can thank the McCann case for that!

Advancing claims of "undue influence"

The stories are legendary,  sometimes the stuff of which novels are written or movies are made.

Indeed,  sometimes money is thicker than blood.    Loving,  supportive family relationships can be quickly undone when a loved one dies and his or her will is published.

First,  some comfort.    Like most states,  Massachusetts requires that a person who seeks to omit a child from his or her will must express a specific intent in the will to do so.     However,  that doesn't preclude a jealous or greedy sibling from exercising the "undue influence" sufficient to prompt a parent to specifically exclude one or more children from their estate.

Undue influence is a legal term that describes a process by which one individual can use the force of their position over another to persuade that person to change the disposition of their estate.     We see undue influence situations quite often where a person is managing the financial affairs of an elderly or ill parent who is incapable of managing their own finances.   That person,  by reason of their hold on the pursestrings,  is in a position to wield undue influence over the parent.

Fortunately the law has found a way to address this potential injustice.     Recent decisions from Massachusetts appellate courts now shift the burden of proof in cases involving persons who use undue influence to bring about changes in another person's estate.    The law now provides that if a person stands in a "fiduciary" relationship to another--such as by managing their finances or advising them regularly in financial matters--the burden of proof shifts to the fiduciary to show that any estate disposition that benefitted them was not the product of undue influence.

Of course,  not every relationship between parent and child,  or an elder and a caretaker, qualifies as a "fiduciary" relationship for undue influence analysis purposes.    These are fact-intensive questions that often consume time,  expense and emotion to litigate.

A will can be challenged not only on undue influence grounds,  but also by claiming that the testator (the person making the will) lacked sufficient mental capacity to make a will.     This again is a fact-intensive inquiry,  one that can involve the retention of expert witnesses to review the testator's medical and/or mental health records.

The procedure for challenging a will is full of pitfalls and deadlines.     The testator's heirs at law (spouse, children) receive notice from the executor (the person nominated by the will to manage the testator's estate) that anyone choosing to challenge the will must enter an appearance by the "return date",  which is set forth in the notice.     You then have 30 days from the return date to submit an "affidavit of objections".   The affidavit must have certain content in order to properly preserve a challenge to a will.