April 24th, 2013

Thomas and Michael Tessier allegedly bilked Frederick and Thaddeus Jakobiec and the estate of their mother, Beatrice Jacobiec, out of millions of dollars.  One part of that scheme allegedly involved the theft of approximately $100,000 in life insurance proceeds due a trust benefiting Thaddeus.   After Beatrice’s death, Thomas was rummaging through Beatrice’s items and found that a life insurance policy existed on the life of Beatrice.  That policy was payable to a trust known as the Smillie Trust.  So began this alleged criminal enterprise.

Thomas and Michael filed an ex parte petition to remove Frederick as trustee and install Michael as the trustee of the Smillie Trust for the benefit of Thaddeus.  Nearly simultaneously, Thomas fraudulently created a second trust for Thaddeus.  Through alleged fraud, forgery, and subterfuge, Thomas convinced the insurance company to pay the death benefit to the fraudulent trust rather than to the correct trust.  Thaddeus sued the insurance company for breach of the insurance contract by making out the insurance proceeds check to the wrong trust thereby allowing Thomas to steal the money.

In Jakobiec v. Merrill Lynch Life Insurance Co., a New Hampshire federal court dismissed the claims against the insurance company and a federal appellate court agreed.  The reasoning was that, even if the insurance company made a mistake by making out the check to a fraudulent trust, the insurance company was not the cause of the beneficiary’s loss.  Because the Tessiers were hellbent on stealing the money and because they had gained control of the legitimate trust, too, they would have stolen the money even if the insurance company had made the check out to the correct trust.

You have to wonder how far this protection extends. (more…)

April 16th, 2013

We’ve previously noted that litigation involving powers of attorney is popular right now.  Powers of attorney take on particular importance in undue influence cases because they can turn the case on its head by creating a presumption of undue influence.  The reason why is that a power of attorney can create a fiduciary relationship between the principal and agent.

But not all powers of attorney are created equal.  In In re: Estate of Stahling, an Illinois appellate court recently answered the important question of whether a health care power of attorney creates a fiduciary relationship with respect to the execution of a deed transferring property to the agent which, as a matter of law, raises a presumption of undue influence. (more…)

March 28th, 2013

The potential fallout for an individual trustee who has breached a fiduciary duty can extend beyond a judgment against him or her.  In In re Application of Wiseman, the Supreme Court of Ohio held that a bar applicant who “engaged in prohibited self-dealing while serving as the fiduciary of a trust” would not be admitted to the state bar.

Although the Ohio Supreme Court identified additional “underlying improprieties” that prohibited the applicant’s admission to the bar, the court separately identified “probate litigation” and “breach of fiduciary duties as trustee of life insurance trust” as several of the grounds for disapproving the applicant’s application for admission to the state bar.  Let’s take a brief look at these two issues which might give already-licensed attorneys some pause about serving as fiduciaries.  Because if it’s grounds for denial of admission to the state bar, can the same conduct be grounds for reprimand, censure, suspension or disbarment? (more…)

February 27th, 2013

Whether a testator had the requisite capacity to execute a will is often the subject of lay testimony.  We’ve frequently talked here about how important the testimony of the drafting attorney, the attesting witnesses, and the notary are in undue influence or lack of testamentary capacity cases.  But, sometimes it may be worth getting an expert to testify in these cases especially when there may be some complex capacity issues.  If you get an expert, however, there’s still the issue of qualifying him or her.

And, even if you have an expert, here’s another reminder of how important the drafting attorney and witnesses to the will are.  In Fowler v. Kulhowvick (Rule 1:28 decision), a Massachusetts probate court actually rejected the expert testimony of a psychologist who failed to interview the drafting attorney and witnesses before offering an opinion on the testator’s testamentary capacity. (more…)

February 7th, 2013

When trust beneficiaries fight, the trustee usually ends up stuck in the middle.  The trustee is often then forced into taking a position in the dispute.  Not surprisingly, judges tend to be very interested in what the trustee thinks, especially if the trustee is a corporate fiduciary.  Chances are that the trustee’s position in the litigation is aligned with one set of beneficiaries but is adverse to the positions being advocated by another set of beneficiaries.  So, how far can or should a trustee force the issue of upholding the settlor’s intent as expressed in the trust instrument?  In Shelton v. Tamposi, the Supreme Court of New Hampshire gives us some thoughts under the Uniform Trust Code in a case involving an in terrorem clause, and the court suggests that there is a bright line the trustee shouldn’t cross. (more…)

February 4th, 2013

There is a surprising but growing split of authority on the extent of fiduciary duties a trustee owes to beneficiaries of a revocable trust other than the settlor.  Remarkably, state appellate courts are dealing with these issues for the first time now.  We previously took a look at this issue when a Missouri appellate court ruled in In re Stephen M. Gunther Revocable Living Trust that “[b]ecause the trustee owed no duty to the beneficiaries prior to the settlor’s death, they are not entitled to an accounting of trust transactions prior to that date.”  In ruling this way, Missouri joined other states, such as Louisiana, in reaching this conclusion.  We also looked at an Arizona appellate court apply Michigan law to reach the same conclusion.  Seemed to make sense.

But, in late 2012, a closely divided California Supreme Court ruled in In re Estate of Giraldin that after a settlor’s death, remainder beneficiaries of a revocable trust have standing to sue the trustee for breach of fiduciary duty to the settlor occurring while the trust was revocable “to the extent that violation harmed the beneficiaries interests.”  In ruling this way, California joined other states, such as Florida, in reaching this conclusion.  The gist for these states is that once the settlor dies, the beneficiaries succeed to the settlor’s interest in the trust and a trustee shouldn’t get away with wrongdoing it might have concealed during the settlor’s lifetime.

So, now in In the Matter of Trust #T-1 of Mary Faye Trimble, Judith R. Cunningham, Trustee, Iowa has weighed in for the first time.  What side did it come down on? (more…)

January 17th, 2013

Well, probably not in Georgia.  If someone is behind the scenes pulling the strings to “initiate” legal proceedings, then that person – who didn’t actually file a caveat him or herself – may have violated the in terrorem clause.

In the first appearance of Norman v. Gober before the Georgia Supreme Court in 2011, the Court decided that eleven-year-old William Howard Norman, the grandson of Margaret Susan Scheer, lacked standing to challenge Scheer’s will because Norman was not an heir-at-law when the caveat was filed.  Norman was a contingent residuary beneficiary under Scheer’s will.  In other words, even if Norman’s caveat was successful, he would still take nothing.  As the Georgia Supreme Court put it, Norman was not “a person who will be injured by the probate of [the] [W]ill, or who will benefit by its not being probated.”  Actually, Norman would have benefited by the probate of the will because it’s the only way he could possibly have had any chance to take a part of Scheer’s estate.

Norman’s mother, however, stood to benefit if the caveat was successful.  At the time, the Georgia Supreme Court actually stated that it appeared that the caveat was undertaken for the benefit of Norman’s mother, not him. But, why didn’t Norman’s mother, Lyncia Aynes Norman, file the caveat herself? (more…)

December 14th, 2012

The drafting lawyer.

The attesting witnesses.

The notary.

Time and again the case law suggests to us that these are three of your most important witnesses in defending (or pursuing) a lack of testamentary capacity or undue influence case.  Yet, we sometimes don’t put a lot of thought into who will be our attesting witnesses or notary and how they might come across as witnesses at trial.

In Amerson v. Pahl, decided by the Georgia Supreme Court, we get to see again how a case turns on the testimony of these three witnesses. (more…)

December 6th, 2012

When someone dies, creditors may often come out of the woodwork.  That doesn’t mean they should be ignored.  That’s true even if you don’t think they have a good claim as a creditor and even if the estate doesn’t have any assets. (more…)

October 19th, 2012

There aren’t a lot of cases out there dealing with reformation of trusts.  Many jurisdictions allow for reformation to conform with the settlor’s intent.  But settlors are usually understood to have meant what they said in the text of the trust instrument.  So what qualifies as an event worthy of trust reformation?

In Rockland Trust Company v. Attorney General, the Appeals Court of Massachusetts showed us one circumstance under Massachusetts law that would allow reformation of a trust:  avoiding adverse tax consequences, but with a caveat . . . . (more…)