Fiduciary Litigation
Estate & Trust Litigation is a catch-all designation for civil lawsuits related to estates and trusts, powers of attorney, account designations, and guardianships.
The predominant theme running through all fiduciary litigation is the right we all enjoy to manage our assets and to transfer those assets by gift or at our death as we wish. Part of that important property right is that we are not pressured into making dispositions of assets by someone taking advantage of us.
Estate and trust litigation may be arguments over a Will or trust where undue influence by a trusted family member or someone in a confidential relationship is alleged.
Other fiduciary litigation relates to alleged abuse by an agent acting under a power of attorney or when account designations are changed benefitting a person who may have pressured the account holder to act.
Elder financial abuse is one aspect of fiduciary litigation. It may require establishing a guardianship to prevent, and perhaps rectify, transactions injuring a person who has diminished ability to protect himself/herself.
Will Contests in Maryland
Will contests in Maryland, also known as Will caveat proceedings, are unlike (and procedurally more complex than) most other civil litigation. In Maryland, a Will contest must originate in the Orphans’ Court, the probate court with limited jurisdiction. Almost all other civil litigation of significance begins in the Circuit Court which is the court of general jurisdiction. Although it begins in the Orphans Court, the trial often will be, and you may want it to be, before a Circuit Court judge or tried to a jury. Also, the petition challenging a Will in Maryland generally must be filed within 6 months of the first appointment of a personal representative under the Will. This is a short statute of limitations with serious consequences. Unlike other civil cases, the petition to caveat a Will that is originally filed cannot be amended if new grounds for the Will contest emerge during pre-trial discovery.
This article is written by trial lawyers at our firm who are Maryland fiduciary litigation lawyers routinely handling Will contests, either challenging or defending Wills. The discussion of the procedural aspects of a Will contest are unique to Maryland law. Other parts of these materials, however, deal with the substantive aspects of a challenge to a Will – such as testamentary capacity, undue influence in precuring a Will, and the enforceability of no contest clauses in Will contests. Although these aspects of Will contests are written from a Maryland perspective, many of these concepts apply more generally in other American jurisdictions.
Will Contests and Testamentary Freedom
Testamentary freedom is a predominant theme of Maryland law (and, indeed, of American law as a rule). We generally can leave our property at our death as we wish. The Maryland common law provides a person great latitude to make a Will leaving his or her wealth to whomever he or she chooses and for whatever reason. One of the few exceptions to the right of testamentary disposition is the elective share statute that is designed to protect a surviving spouse from disinheritance. Otherwise there are cases that uphold Wills even if that Will seems odd or peculiar. A person largely has an unfettered right to leave his or her estate as they may deem appropriate. Essentially a Will contest challenges someone’s Will not because it is unfair or even strange but because it was a product of an unstable mind, or due to the undue influence of someone else, or for other reasons showing that it is not a product of that person’s volition.
A Will, of course, takes effect when the person making it is dead. Accordingly, the testator is not available to explain what he or she was trying to accomplish with the Will. Over hundreds of years, rules and safeguards were developed in order to give some assurance that the Will is, in fact, properly reflecting the true desires of the testator. These rules set out strict formalities that had to be adhered to in order that the Will was valid. These Will formalities were designed to supposedly safeguard that the Will was the act of the testator and not someone else imposing their desires on the testator. Violating one of these formalities can also set aside a Will even in the absence of evidence of fraud, delusionary thinking of the testator, or other factors that would mean that the Will did not reflect his or her true testamentary intent.
Will Contests Based on a Failure to Follow Basic Will Formalities
Under the statutory and common law of Maryland, the core formality or requirement to create a Will is that the Will must be in writing signed by the testator and witnessed by two individuals. The two witnesses must sign in the presence of the testator. This requirement was meant to assure that the Will was in fact signed by the decedent. Although seemingly simple, there are numerous cases where this prerequisite was not followed and therefore the Will was ineffective. Because whether Will formalities were followed may not be certain until pretrial discovery has occurred, most Will contest petitions will allege that the formalities were not followed.
The rule requiring that the witnesses be “present” with the testator when they sign as witnessing the Will was developed hundreds of years before anyone conceived of the digital age. Recently, a few states have adopted Will requirements that permit electronic Wills. The Maryland statute governing Will formalities states that if a Will was executed outside the State of Maryland it will be honored if it meets the requirements in the jurisdiction where it was executed. This presents a potential issue because at least one of the jurisdictions adopting a digital Will statute purports to have the person executing the electronic Will being deemed a resident of the state regardless of where he/she actually resides. The Maryland law has recently been changed to require that the witnesses physically be in the same location as the testator. It remains to be seen whether Maryland will honor a Will deeming a testator not physically present in such a state somehow present there anyway as valid.
“Wholly digital legal documents are a fact of modern life. Real estate contracts, for example, generally are executed by the buyer and seller affixing electronic signatures on a digital document sent to the parties by a realtor or other person facilitating the sale. Unless Maryland adopts legislation to permit digital/electronic Wills and establish rules meant to safeguard its integrity, an electronic Will is problematic. If someone types out a “Will” on a tablet and electronically “signs” it and has 2 witnesses sign it in his/her presence, is that a valid Will? Unless and until Maryland adopts an electronic Will statute, its validity would need to be adjudicated,” says Fred Franke, a principal of the Maryland estates and trusts law firm of Franke, Sessions & Beckett, LLC.
Will Contests Based on the Lack of Capacity and Undue Influence
Will contests often allege a lack of testamentary capacity, the exercise of undue influence on the testator, or both. A Will is not valid in Maryland if the person signing the Will lacked testamentary capacity. This is a very low bar, defined as the fundamental ability to understand the nature of his/her property in general, the identity of the natural objects of his/her bounty, and what the Will is accomplishing in relation to the assets and the beneficiaries.
Although it is relatively rare for a Will to be set aside based solely on the lack of capacity, diminished capacity and lowered cognitive ability are often elements of undue influence cases. Under the common law of Maryland, a Will is not valid if it is a product of undue influence. Undue influence is when some other person has forced himself or herself on the testator and had the testator make a will or other property transfer for that person rather than what the testator would have wanted. Most cases involve a mix of capacity and undue influence. A person who has cognitive disabilities and is failing in his or her health is highly susceptible to undue influence. Also, vulnerable adults often rely on people to assist them in their financial affairs and most people can use the influence that they have to gain favorable treatment in a Will. Although the absolute lack of capacity is not the most common basis for setting aside a Will, the issue of capacity almost always is involved in cases involving undue influence.
Proving Undue Influence in Will Challenges
“Usually there is not going to be direct testimony of undue influence, so the case will have to be proved by circumstantial evidence. Generally, you want to establish the presence of a confidential relationship, that the person perpetuating the undue influence received a substantial or disproportionate benefit, that there was an opportunity to exercise undue influence, and there was a high susceptibly to undue influence. The high susceptibility element often relies on medical records and the testimony of those who can attest to the physical and/or mental state of the testator,” says Jack Beckett, a principal of the Maryland estates and trusts law firm of Franke, Sessions & Beckett, LLC..
If the case involves setting aside a lifetime gift by someone, the presence of an confidential relationship shifts the initial burden of proof to the person receiving the gift. Unlike the situation of lifetime gifts, however, the fact that there is a confidential relationship does not shift the burden to the person receiving the gift under a Will. A confidential relationship, however, is a factor in determining whether there was undue influence exercised in receiving a gift under a Will. Other factors involve the cognitive ability of the decedent. After death, of course, the decedent cannot be examined (although an autopsy may produce good results or no useful results) but medical records should be obtained and examined by an expert who may be used at the trial.
Other Grounds for Setting Aside Wills
Under the common law of Maryland, a Will can be invalidated if it was the product of an insane delusion of the testator. This type of case is rare because it can be difficult to show that the will was the product of the insane delusion. Under Maryland law, Wills also can be set aside if it was a product of a fraud perpetrated on the testator. A classic example of this sort of case is where someone puts a document in front of the testator and leads the testator to believe that the document is not a Will but some other instrument.
The Procedure for a Will Challenge in Maryland
A Will challenge in Maryland must be filed prior to the expiration of six months after the first appointment of a personal representative under a Will. Because the deadline for filing the petition is so short, often as discovery proceeds other elements not apparent when the petition was filed may be unearthed. Regardless of what is discovered after the petition is filed, the petition may not be amended after the six month period. A few states permit an extended statute of limitations for filing a petition of caveat and provide for certain pre-petition discovery in order to flesh out the facts. Maryland does not have such a statute. Therefore, it is the practice to allege in the initial petition all conceivable bases for the Will challenge: (1) it fails to follow the Will formalities, (2) the testator lacked of testamentary capacity, (3) the Will was a product of undue influence, (4) the Will was a product of an insane delusion, and (5) the Will was a product of fraud.
During the litigation of a Will contest, the parties will engage in discovery. The discovery is usually wide-ranging: securing medical records to unearth potential diagnoses of dementia; interviewing or deposing witnesses, including the witnesses to the Will to discover whether the Will formalities were followed; deposing other witnesses including the person alleged to have exercised undue influence, and the like.
The Impact Of No Contest Clauses
Some Wills contain no-contest or in terrorem clauses. No-contest or an in terrorem clause is a provision that disinherits an individual if that individual challenges the Will. These clauses can be effective ways to tamp down the potential for Will challenges. To be effective, however, a sizeable bequest must be left to the person that the testator may believe would challenge the Will. Often this is counter to the testator’s wishes. In Maryland, an in terrorem clause will not be enforced if there was probable cause to file the challenge at the time it was filed.
As noted, when filing a petition to caveat one should claim all the bases for invalidating a Will. The reason for this is that as a case unfolds and discovery takes place other bases for a challenge may appear through usual discovery methods. As Maryland estates and trusts litigators, we have found cases where we began with the strongest case on undue influence yet after discovery found that the testamentary formalities were blown and that became the major theory of the lawsuit. This highlights the dilemma of filing a suit if there’s a no-contest clause and balancing the desire to challenge against proceeding before knowing all of the facts. If there is not a no-contest clause in a Will, of course, this is not a consideration. One should never, however, file a frivolous lawsuit so there must be a solid basis for bringing a lawsuit.
Moving a Will Contest to the Circuit Court
Will contests are brought initially in the Orphans’ Court but often end up being transmitted “on issues” to the circuit court for a trial by the circuit court or by a jury making determinations of fact in the circuit court. When someone files a Will contest, there may be additional lawsuits that the individual could file, like a cause of action to reverse transfers during lifetime and/or to reverse pay on death or jointly held property designations that were created by the same wrongdoer. That is the most common reason to transmit on issues. Another reason for a decision to transmit issues is to avoid giving the opposing party a “sneak preview” of your trial strategy. There is a right to a “de novo” appeal to the Circuit Court from an Orphans’ Court decision. Thus, the losing party in the Orphans’ Court can secure a complete “do-over” after losing and start afresh in the Circuit Court. This right of appeal may drive a decision to transmit issues.
We Can Help You With a Will Contest
The Maryland fiduciary litigation attorneys at Franke, Sessions and Beckett LLC understand the process involved in Will contests in Maryland and we are prepared to handle your case in bringing or defending a Will contest. Some firms have a broad focus – ranging from divorce, auto accidents, negligence cases, DWIs and other criminal defense cases. We do not. For over 35 years, the law firm of Franke, Sessions & Beckett, LLC has concentrated on the law of fiduciaries and the law of estates and trusts. We have experience in a wide variety of fiduciary litigation. We handle will contests and challenges to trusts, cases involving life-time transfers or changes to beneficiary designations based on a lack of capacity, undue influence, or abuse of a powers of attorney. We try cases involving personal representatives and trustees abusing their fiduciary duty to beneficiaries. As fiduciary litigators, we also handle the suits against directors or general partners abusing their fiduciary duty in family, closely held businesses.
On a regular basis, we try cases before the Orphans’ Courts and the Circuit Courts of various Maryland counties in Central Maryland and on the Eastern Shore. We also take appeals to the Court of Special Appeals and the Maryland Court of Appeals. We have deep experience in, and knowledge of, the Maryland law fiduciaries and the law of estates and trusts. Firm-wide, we concentrate on all aspects of estates and trusts: fiduciary litigation, planning and administration. In order to schedule a consultation with an experienced Maryland fiduciary litigation attorney, or for any other matter within our practice area, call 410-263-4876 to get in touch with our Annapolis office.
Irrevocable Trust Modification in Maryland
Many beneficiaries or trustees wonder if they can change the terms of a trust. Sometimes a trust is not working well for the benefit of the beneficiary or circumstances have changed so significantly, that the trust is no longer helpful. If a trust is revocable, it means that the settlor can change the terms of the trust so long as the settlor is competent and wants to make a change. If a trust is irrevocable, it may be a different story.
Why Would Trusts Need Modification?
An irrevocable trust may have been created years ago when circumstances were very different. Perhaps the trustee picked by the settlor, who seemed to be a perfect choice at the time, and the beneficiary cannot get along. If the trust provisions did not provide an appropriate mechanism for trustee removal and replacement, the trust may require modification. Perhaps the settlor established the trust with a definite tax objective and because of changes in the tax law, the trust no longer meets that objective. Perhaps the trust is out old and outmoded and would benefit from improvements such as providing for a trust protector to add flexibility, relax investment restrictions that cripple appropriate modern portfolio investing, or add powers of appointment to permit the trust to continue instead of pay out to an ill prepared beneficiary or to someone otherwise qualified for public benefits. Perhaps the distribution standard is ambiguous and poorly drafted, and needs added clarity.
Irrevocable Trusts May Be Changed
The governing principle of the law of trusts is to carry out the settlor’s intent. Thus, when a trust is irrevocable, it generally means that the settlor’s intent is contained in the terms of the trust and therefore, cannot be changed. But, this may not be completely accurate either. Settlor intent is not just the written words in the trust document but may be established by any other evidence admissible in a court proceeding. Generally, irrevocable trusts may be modified as long as the modification does not violate a material purpose of the trust. Material purpose, in turn, depends largely on what the settlor saw as the core purposes of the trust. Prior to the Maryland Trust Act, changes to an irrevocable trust required judicial action by the equity court and a case needed to be made that no material purpose of the trust would be violated by the proposed change.
Trust Modification By Non-Judicial Settlement Agreements
Maryland trust law is governed by the Maryland Trust Act and by the common law of trusts. The common law of trusts permits an equity court to modify a trust under certain circumstances. The Maryland Trust Act, following the lead of the Uniform Trust Code, permits the modification of a trust by non-judicial settlement agreements instead of going to court. Such an agreement “is valid only to the extent the settlement does not violate a material purpose of the trust and includes terms and conditions that could be property approved” by the equity court. The Maryland Trust Act provision, however, enumerates specific examples of the things that can be implemented through a non-judicial trust agreement rather than having to go to court and obtain a court order.
A non-judicial trust agreement requires consent of all interested persons. Such settlement agreements are only effective, however, if it does not violate a material purpose of the trust and if such settlement agreement would be properly approved by a court. Because the validity of such agreements depend on a nuanced legal analysis, it is recommended that a Maryland trust lawyer well versed in irrevocable trust modifications be consulted.
The Maryland Trust Act sets out common uses for non-judicial settlement agreements, such as changing trustees, approving accountings, and other administrative acts. Use of a non-judicial settlement agreement to effectuate something beyond a primarily administrative act, however, can be more difficult.
The pivotal concept for both non-judicial settlement agreements and judicial settlements is that neither modification can violate a “material purpose” of the trust. This requirement creates an ambiguity to the trust modification process that may make court-approved modification a more prudent and enticing. The court order provides clarity and safety for the trustee and beneficiaries. The material purpose doctrine finds its roots in an early Massachusetts case, Claflin v. Claflin, which held that a trust could be terminated early if it did not violate a material purpose of the trust. The development of this principle became known as the Claflin Doctrine and it has been applied to trust termination cases as well as to trust modification cases.
“Non-judicial settlement agreements are useful for the narrow band of changes to a trust enumerated by the statute, like trustee changes. Broader changes to the terms of the trust, however, move into the more ambiguous realm of whether the change violates a “material purpose” which is a slippery concept. An agreement could be collaterally attacked by future beneficiaries or others not a direct party to the agreement. If it is later determined that the agreement violated a material purpose, the agreement was never “valid” in the first place. A court determination upon proper service to interested persons, on the other hand locks in the changes,” says Jack Beckett, a principal of the Maryland estates and trusts law firm of Franke, Sessions & Beckett, LLC.
Modifying An Irrevocable Trust By Court Proceeding
A material purpose of a trust is determined from the terms of the trust. But the terms of a trust are more than just the written language embodied in the document. The terms of a trust can be supplemented by other evidence that might be admissible in a court proceeding that more fully explains the intent of the trust settlor. In other words, a court can cast a fairly wide net in order to determine what a material purpose is of the trust rather than just looking at the words on the page.
When seeking the approval of a court for a trust modification, it is important the trust lawyer demonstrate to the court that the modification does not violate a material purpose of the trust and, perhaps if the case can be made, show that the modification even furthers such purpose. This is particularly important, of course, if the proposed modification is contested by a beneficiary or trustee.
Additional Considerations When Modifying an Irrevocable Trust in Maryland
The Maryland Trust Act establishes categories of types of circumstances that may require modification. A court may modify, for example, the administrative or dispositive terms of a trust or terminate a trust if, circumstances not anticipated by the settlor arise or the modification or termination of the trust will further the purpose of the trust. This basis for modification or termination is grounded in the common law principle of the equitable deviation doctrine. This doctrine is different than the Claflin Doctrine because it permits a change to the irrevocable trust based on an event or circumstance not foreseeable by the settlor.
The Maryland Trust Act also allows for the termination of a trust is if the fair market value of the trust is $100,000 or less. The Maryland trust Code permits the termination under these circumstances even without a court order.
Interestingly, a court may modify the express terms of the trust even if the terms are unambiguous so that the trust conforms to the intention of the settlor. When making a modification under this section, the settlor’s intention for the trust must be proven by clear and convincing evidence. Once again, this demonstrates that under the Maryland Trust Act, and the Uniform Trust Code, the terms of the trust are not limited to the language used in the trust document.
The Maryland Trust Act also explicitly permits trust modification to achieve the tax objectives of the settlor as long as the modification is not contrary to the probable intention of the settlor.
Other than the $100,000 early termination of a trust, the statutory authority for modification or termination of an irrevocable trust depends on demonstrating the factual basis for the modification or termination and a showing that it would not violate a material purpose of the trust or, if it does, demonstrate that such a modification or termination is based on events unforeseeable by the settlor. A non-judicial settlement agreement is useful in cases where administrative acts require a modification of the trust. In other circumstances, however, court authorized modification or termination should be sought.
“When seeking a court modification of an irrevocable trust, it is best to file what amounts to a brief setting out the factual and legal basis supporting the modification. Modification of irrevocable trusts are not run-of-the-mill actions routinely seen by the Circuit Court. The judge will want to fully understand that you are entitled to the modification,” says David Sessions, a principal of the Maryland law firm of Franke, Sessions & Beckett, LLC.
Contact A Maryland Trust Lawyer If You Want To Seek A Trust Modification
The attorneys at Franke, Sessions and Beckett LLC understand the process involved in irrevocable trust modification and are prepared to handle your case. For over 35 years, the law firm of Franke, Sessions & Beckett, LLC has concentrated on the law of estates and trusts – including a wide variety of fiduciary litigation. We handle disputes over the meaning of estate planning documents, arguments involving personal representatives or trustees, challenges to documents based on a lack of capacity or undue influence. On a regular basis, we try cases before the Orphans’ Courts and the Circuit Courts of various Maryland counties. We also take appeals to the Court of Special Appeals and the Maryland Court of Appeals. We are not, however, a general litigation firm. We focus on Will, Trust, and other fiduciary litigation. We have deep experience in and knowledge of the Maryland law of estates and trusts, concentrating as a firm on fiduciary litigation, planning and administration. In order to schedule a consultation with an experienced estates and trusts trial lawyer, call 410-263-4876 to get in touch with our Annapolis office.
Court-Ordered Estates & Trusts Mediation In Maryland
Modern litigation is characterized by court ordered mediation. For skilled trial lawyers, court ordered mediation is a litigation tool that can be helpful in reaching a successful result.
What Is Court-Ordered Mediation?
Mediation, of course, is a voluntary, non-binding process of conflict resolution. Once a law suit is filed, Maryland courts may order the parties to attend and participate in mediation to try to resolve the dispute before setting the matter in for trial. Although the parties are ordered to attend mediation so their participation is no longer voluntary, agreeing to a resolution of the dispute at mediation remains voluntary. This is different than arbitration which is sometimes mandated by a commercial contract (commonly in brokerage agreements for example) where an arbitrator acts like a judge and orders the resolution. In mediation, a mediator does not have judge-like powers to compel a resolution of the dispute.
Maryland Circuit And Orphans’ Court Mediation
As with other litigation, estate and trust litigants in Maryland Circuit Court cases have been ordered to mediation, often as a “last-ditch” effort to resolve all or part of a case before it is tried. Cases before a Maryland Orphans’ Court, however, usually did not get sent to court ordered mediation. As of July 2018, the Maryland Rules authorized the Orphans’ Court to order parties to mediation in order to try settle disputes.
Expanding the Maryland Rules to authorize the Orphans’ Courts to compel mediation cures an unfortunate procedural mismatch between Circuit Court and Orphans Court practice. Although expanding the Orphans’ Court authority is a relatively new development, mediation is an old concept in Maryland Circuit Court cases and accordingly is a familiar process for Maryland estate and trust trial lawyers. Because the Maryland Circuit Courts have broad, general jurisdiction and the Orphans’ Courts have narrow, but specific original jurisdiction, fiduciary litigation often straddles both courts. The Orphans ‘Court, for example, does not have jurisdiction over trusts, even trusts created by a will, so all litigation concerning trusts begins in the Circuit Court.
Multi-Court Proceeding In Maryland Estate/Trust Litigation
Many Will contests, which originate in the Orphans’ Court, are often related to disputes over joint accounts or pay on death beneficiary designations favoring the same person who was benefitting from the challenged Will. Disputes over joint or pay on death accounts or other non-probate property are litigated in the Circuit Courts, not the Orphans’ Courts. Therefore, Maryland estate and trust litigation often features proceedings before the Maryland Orphan’s Court (where mediation was not historically used) with parallel proceedings in the Maryland Circuit Court where mediation has been court-ordered for decades. Any seasoned Maryland estate and Trust litigation attorney should have been involved in mediation at the Circuit Court level.
“The new Orphans’ Court mediation rules probably will not greatly impact trial practice where a case is proceeding in both the Circuit Court and the Orphans’ Court. Because the Circuit Court would routinely order mediation for its part of the dispute, in reality all issues would be addressed in mediation and, if resolved, would result in a global settlement. Where the new rules will alter trial practice is where there is only an Orphans’ Court proceeding,” says Jack Beckett, a principal of the Maryland estates and trusts law firm of Franke, Sessions & Beckett, LLC.
Mediation Had Its Roots In Divorce Law & It Shows
Court ordered mediation originated as an element of divorce or family law practice. Its popularity was a product of the “no-fault” divorce legislation. The no-fault rules shifted the focus from determining who was at fault for the breakup of the marriage to a forward-looking focus on property division. For this reason, mediation is quite successful as an alternative method of settling family law issues. It encourages the parties to draft a solution rather than to roll the dice in a court proceeding where there will not the bright line of causation tipping the scale.
Probate & Trust Disputes Are Different
Some probate disputes may arguably be similar to the no-fault divorce pattern in that the past event is not determinative of the outcome. Such issues as the fairness or reasonableness of commissions and/or attorney’s fees could be analogized to that of no-fault divorce given that the right to some commission/fees are by statute and the argument generally resolves around the amount only. Occasionally an estate administration goes off track, not because of something legally actionable, but merely due to long-standing intra-family distrust. This situation calls for a forward-looking focus like that in family law cases.
Most estates and trusts issues, however, are “backward-looking”—for example, establishing the facts and circumstances surrounding the execution of a Will or retitling of property. These cases are inextricably connected with the concept of “fault.” Will contests often involve whether undue influence has been imposed upon the testator, whether the testator is legally incompetent or whether fraud was perpetrated on him or her. Judicial resolution of these disputes dictate a backward looking inquiry to apply established rules to a set pattern of facts. This is very different than the no-fault divorce law where mediation originated.
Two Types of Mediation: Which Is Right for Maryland Estate Litigation?
The basic type of mediation used in the divorce setting is facilitative mediation. That is a process of negotiation where the mediator is a neutral third-party who focuses on and controls the process but not the outcome. This approach to mediation generally pushes toward total reconciliation of the disputed parties in order to repair relationships. This approach to mediation, of course, is critical in divorces where children are involved. It is possible only if a determination of fault is not an element of the mediation process.
The other approach to mediation is evaluative mediation. The evaluative mediation is conducted by a mediator who is an expert in the field and who evaluates the respective parties’ likelihood of success in litigation. This type of mediation is geared towards getting the parties to realize the strengths and weaknesses of their case if it went to trial. This is the type of mediation that is more likely to be successful in estate and trust disputes.
“Even with court-ordered mediation, often the lawyers have wide latitude in picking the mediator. While many estate litigators focus on identifying the person who they want as mediator, the first consideration ought to be which type of mediation would best facilitate a resolution, then pick a person with the requisite skills. I have heard lawyers say they don’t like a retired judge to mediate because they always come at it by evaluating the strengths and weakness of the case, Sometimes that is exactly what is needed so the mediation is not a waste of everyone’s time,” says Fred Franke, a principal of the Maryland estates and trusts law firm of Franke, Sessions & Beckett, LLC.
The Role Of The Maryland Estate Litigation Attorney
The estates and trusts litigator has the role of communicating the client’s legal position and the weaknesses of the opponent’s position at the mediation. This generally means that some discovery would be needed before mediation is likely to be successful. It also means that if the case does not settle in mediation, one must be careful not to give the other party too much of a tactical insight into how the case will be tried. This involves a balancing act: trying to be candid on the one hand, yet holding back information on the other hand, in the event the matter goes to trial.
Often mediators will permit each lawyer to present a truncated “opening statement” at the outset of the mediation. The purpose of this is twofold: (1) to set a framework for the mediator to reach a favorable evaluation, and (2) to present to the other litigants, unfiltered through their counsel, the strengths of a client’s case.
Establishing the opening position, however, is only the beginning step in the estates and trusts lawyer’s role at mediation. Once the lawyer establishes the strengths of the legal case, the lawyer needs to work to facilitate an agreed upon resolution. Especially with some clients, the lawyer must explain why he/she will pivot from that of an advocate to a negotiator mid-stream in the process.
Because the use of mediation in an estates and trusts dispute is quite different than how mediation is used in family law or other types of litigation, a Maryland estate litigation attorney who is well-versed in the substantive law of estates and trusts as opposed to a generalist may have a leg up in the process.
The attorneys at Franke, Sessions and Beckett LLC understand the process involved in estate and trust litigation and are prepared to handle your case. For over 35 years, the law firm of Franke, Sessions & Beckett, LLC has concentrated on the law of estates and trusts – including a wide variety of fiduciary litigation. We handle disputes over the meaning of estate planning documents, arguments involving personal representatives or trustees, challenges to documents based on a lack of capacity or undue influence. On a regular basis, we try cases before the Orphans’ Courts and the Circuit Courts of various Maryland counties. We also take appeals to the Court of Special Appeals and the Maryland Court of Appeals. We are not, however, a general litigation firm. We focus on Will, Trust, and other fiduciary litigation. We have deep experience in and knowledge of the Maryland law of estates and trusts, concentrating as a firm on fiduciary litigation, planning and administration. In order to schedule a consultation with an experienced estates and trusts trial lawyer, call 410-263-4876 to get in touch with our Annapolis office.
Litigation to Stop and Reverse Elder Financial Exploitation in Maryland
As parents and other family members age, they may become more vulnerable to elder financial abuse and exploration due to their health problems, declining cognitive ability, or other age-related factors. Indeed, elder financial abuse and exploitation is a major and growing national problem – some estimates put annual losses at $36.5 billion. Some elder financial abuse is perpetrated by strangers. The AARP Fraud Resource Center, for example, lists over 50 different scams, ranging from fake sweepstake scams to Medicare frauds scams.
Sadly, much elder financial abuse and exploitation is perpetrated by caregivers and family members. The exploitation can take different forms: convincing the vulnerable senior to make outright transfers or “loans” based on a made-up hard luck story; taking the vulnerable person to a bank and getting them to create joint or pay-on-death accounts, and; engineering on-line beneficiary changes on investment or retirement accounts. Often the transfers are made by an agent misusing and abusing a power of attorney, effectively stealing the money.
Sometimes these transactions are discovered during the older person’s life and sometimes they come to light after his or her death. Depending on the circumstances, the legal process to challenge the transfer involved will differ.
Often the person engaged in the financial exploitation trades off their trusted relationship with the vulnerable, older individual. Other times, the vulnerable adult acquiesces to transactions out of fear that care will stop, and that they will be left alone. Sometimes self-serving transactions will be made by an agent abusing a power of attorney or made by the successor trustee of a revocable trust breaching a fiduciary duty and taking money from the vulnerable parent or other family member.
Not all lifetime gifts to family members or caregivers, of course, are elder financial abuse but, instead, may be transfers motivated by gratitude and done without pressure or duress. Analogous to Will contests, however, transfers that were caused by undue influence, fraud, or abuses of trust can, and should, be set aside and the property returned.
Although this is a national problem and civil litigation addressing it is similar across jurisdictions, lawsuits to reverse these transactions and return the assets involve state-specific procedural and substantive law. This article is written by trial lawyers at our firm who are Maryland estates and trusts litigators and who routinely handle these types of cases – both seeking to overturn transfers and, when appropriate, defending transactions. This discussion is from a Maryland litigation perspective and necessarily involves Maryland statutory and common law.
The Role of Confidential Relationship
Generally, the hallmark of cases where a caretaker or family member has manipulated a vulnerable adult is the existence of a confidential relationship. Under Maryland law, some confidential relationships are per se: between a lawyer and client; between a trustee and beneficiary; and between an agent acting under a power of attorney and the principal. Otherwise a confidential must be proved as a matter of fact — was there a relationship of reliance by a subservient person to a dominant person for care, or for protection, or for guidance in financial and business affairs.
For lifetime transfers, such as an outright gift, the existence of a confidential relationship shifts the burden to the dominant recipient of the transfer to prove by clear and convincing evidence that it was the free and uninfluenced act of the transferor. In Will contests, on the other hand, the existence of a confidential relationship does not shift the burden of proof but is merely a factor, among others, tending to prove that a Will favoring the dominant party was a product of undue influence.
Guardianship Proceedings
One possible remedy is to bring a guardianship proceeding to have someone “step in the shoes” of the vulnerable adult to make decisions. In elder financial abuse settings, however, this remedy may not be as useful as it appears. Under Maryland law, a guardianship is a comparatively drastic, invasive remedy. A guardianship of the person strips the alleged disabled person of many fundamental rights – deciding where to live, handling finances, and other basic, every-day rights. Accordingly, protecting the alleged disabled person’s liberty interest is the primary focus of a guardianship proceeding, not protecting that person from ill-conceived decision-making.
By its nature, a guardianship creates an adversarial dynamic between the person filing the petition for guardianship and the alleged disabled person. Thus, seeking a guardianship is something to consider but by no means an automatic decision.
A complicating factor, for example, stems from a dynamic often present with undue influence cases. Such cases may involve a “trusted advisor” who has gained the vulnerable adult’s confidence. The person exerting the undue influence may have poisoned the relationship of the parent or other family member with those trying to intervene. In the vulnerable adult’s mind, bringing a guardianship proceeding could be “proof” those seeking to help are really seeking to injure him or her. As with any intra-family litigation, complex emotional relationships need to be considered along with strictly legal factors.
Nevertheless, a guardianship is often advisable. A guardianship will help prevent future financial abuse. It gives constructive notice of the disabled person’s inability to enter binding contracts. The guardian also assumes the control of an agent under a power of attorney. It does not, in and of itself, remedy losses from financial abuse that has already taken place. It does not set aside changes to assert titling or restore assets to the guardianship estate. The guardian does have the right, however, to bring legal and equitable causes of action on behalf of the disabled person to seek those remedies.
Abuse of a Power of Attorney
A Power of attorney is an important tool for disability planning. Obviously, only trustworthy individuals or corporate fiduciaries should serve as agents. There are techniques that the estate planning lawyers of our firm recommend to protect against, or at least minimizing, misuse by an agent – for example naming two agents who must act together thus building in checks and balances.
Under Maryland statute, an agent acting under a power of attorney must act with care, competence, and diligence for the benefit of the principal and only within the scope of the authority granted. Unless the power of attorney states otherwise, the agent has a duty of loyalty, meaning he/she essentially has the same fiduciary duty as a trustee. Also, the agent should attempt to preserve the principal’s estate plan.
The Maryland General and Limited Power of Attorney Act give a large group of people the ability to challenge an agent’s acts in court in order to protect the principal. This group includes the principal’s spouse, parents, descendants, presumptive heirs, and any person named as a beneficiary to receive property at the principal’s death. These interested persons may petition the Circuit Court to enjoin the agent to force specific conduct and to petition review the agent’s conduct.
Abuse by a Trustee of a Maryland Trust
Revocable trusts are popular planning devices used as a hedge against disability. As with a power of attorney, only trustworthy individuals or corporate fiduciaries should serve as the successor trustee to the settlor in the event of the settlor’s disability.
Once the settlor becomes disabled, the successor become the trustee and is obligated to administer the trust for the benefit of the settlor or any other person who is a current income beneficiary (often the settlor’s spouse). The revocable trust, however, does not become irrevocable upon the settlor’s incapacity. This is designed to keep the duty of the trustee solely owed to the settlor and not permit the remainder beneficiaries have standing to interfere with that exclusive obligation.
The only persons with a specific statutory standing to sue a revocable trust after the settlor’s disability but before his death is a guardian, an agent under a power of attorney assuming that authority is granted to the agent in the power of attorney, and any other current income beneficiary. If no guardian has been appointed, a parent or grandparent or more remote ancestor has standing.
The Maryland Rules, on the other hand, also permit other interested persons, including heirs at law, to ask the Circuit Court to assume jurisdiction over the trust in which case the broad equitable powers of that court apply. Additionally, the Maryland Declaratory Judgment Act seems to authorize a broad group to intervene. During the settlor’s life, the extent to which this broader group may trigger court intervention may be controversial. After the settlor’s death, all qualified beneficiaries may bring court cases to question a trustee’s behavior as it may impact their rights.
Causes of Action After the Death of the Vulnerable Adult
The ability of heirs or others to intervene to set aside and reverse transactions are very broad after the death of the vulnerable adult. These cases often present logistical considerations. While the Orphans’ Court has exclusive original jurisdiction in Will contests, it has no jurisdiction on any of the other causes of action to rectify the financial exploitation of vulnerable adults.
Many cases involve Will contests and litigation to cure wrongful account designations (for example joint tenancies and pay-on-death accounts) and to force return of improperly received gifts. Thus, there are cases based on the same set of facts in both the Maryland Orphans’ Court and the Maryland Circuit Court. Occasionally another related case is before the federal District Court. Managing the potential multi-jurisdictional issues, by consolidation or otherwise, in a manner that is both cost effective and keeping with a well thought out trial strategy is a high priority.
We Can Help You With Elder Financial Abuse and Exploitation
The Maryland fiduciary litigation attorneys at Franke, Sessions and Beckett LLC understand the private causes of action involved in elder financial abuse and exploitation in Maryland and we are prepared to handle your case in bringing or defending a such a case. Some firms have a broad focus – ranging from divorce, auto accidents, negligence cases, DWIs and other criminal defense cases. We do not. For over 35 years, the law firm of Franke, Sessions & Beckett, LLC has concentrated on the law of fiduciaries and the law of estates and trusts. We have experience in a wide variety of fiduciary litigation. We handle will contests and challenges to trusts, cases involving life-time transfers or changes to beneficiary designations based on a lack of capacity, undue influence, or abuse of a powers of attorney. We try cases involving personal representatives and trustees abusing their fiduciary duty to beneficiaries. As fiduciary litigators, we also handle the suits against directors or general partners abusing their fiduciary duty in family, closely held businesses.
On a regular basis, we try cases before the Orphans’ Courts and the Circuit Courts of various Maryland counties in Central Maryland and on the Eastern Shore. We also take appeals to the Court of Special Appeals and the Maryland Court of Appeals. We have deep experience in, and knowledge of, the Maryland law fiduciaries and the law of estates and trusts. Firm-wide, we concentrate on all aspects of estates and trusts: fiduciary litigation, planning and administration. In order to schedule a consultation with an experienced Maryland fiduciary litigation attorney, or for any other matter within our practice area, call 410-263-4876 to get in touch with our Annapolis office.
What are the grounds for contesting a Will in Maryland?
The Will must meet certain basic “formalities” to be valid. If it fails to meet one or more of the basic requirements the Will fails. It must be in writing, signed by the testator and witnessed by two individuals. The witnesses must sign in the presence of the testator.
The testator must have testamentary capacity. This is a low bar: the testator must know the nature and scope of his assets, must know the “natural objects of his bounty” and must know how the Will connects those possessions with those he wants to benefit.
If the Will is a product of undue influence it fails. This is when someone forces the testator to make a Will in a certain way rather than the testator deciding of his own volition what to provide in the Will.
The Will cannot be the product of an insane delusion. The ancient case establishing this ground to set aside a Will was when the testator failed to leave any property to his ward because he was convinced that she was the spawn of Satan.
A Will that was created because of a fraud perpetrated on the testator will fail. For example, if a document is handed to the testator by someone who tricks the testator to believe it is not a Will but another document, the Will is invalid.
How Important is Undue Influence in Will Contests or Caveat Cases in Maryland?
What is undue influence?
Maryland developed a common law definition of undue influence. Undue influence is when someone takes advantage of another person and gets that person to make a will or trust in a way that they otherwise would not do. Usually the end result is to benefit the influencer.
What are examples of undue influence?
Perhaps the “classic” example is when a caregiver hired by an elderly person ingratiates himself or herself into the senior’s life with the result that the caregiver ends up with a sizable bequest in a will. Unfortunately, however, it often is one child manipulating a parent to benefit him or her instead of leaving the estate to all the children equally.
What 7 facts tend to show undue influence according to Maryland courts?
The Maryland Court of Appeals has recognized at least 7 elements that might show undue influence: (1) a “confidential relationship”, (2) a substantial benefit to the alleged influencer, (3) the alleged influencer assisted in effectuating the will execution, (4) the opportunity to exert influence, (5) the will contains an “unnatural” disposition, (6) the will is different than earlier wills, and (7) the person making the will was highly susceptible to undue influence.
Are all 7 facts to prove undue influence equally important?
No. Although every fact tending to prove undue influence adds to a case, the two most important facts in Maryland will contests to show undue influence are (i) whether the testator and alleged influencer are involved in a confidential relationship and (ii) whether the testator was highly susceptible to undue influence.
What is a “confidential relationship” and how does one prove it in undue influence cases?
A confidential relationship often is either where one party is under the dominion and control of another, or where, under the circumstances, such party is justified in assuming that the other will not act inconsistent with his or her welfare. The hallmarks of the first kind of relationship is a degree of coercion. One key to the second kind of relationship is reliance and trust. Some relationships are deemed confidential: attorney/client, trustee/beneficiary or anent acting under a power of attorney/principal but otherwise the existence of the relationship must be proven by (often circumstantial) evidence.
How do you prove a person is highly susceptible to undue influence?
Susceptibility to undue influence is a question of fact. Diminished capacity is one marker. The analysis of medical records by geriatric psychiatrists or others who can give expert testimony on capacity generally useful. Also lay witnesses to other indicators can be helpful – such as whether the alleged influencer isolated the testator, what such witnesses observed as to how the alleged influencer treated the testator and the degree that the testator relied on the alleged influencer. Although the Maryland courts have largely distilled the important factors to only 2 of the 7 factors, the remaining 5 factors give a roadmap to the type of collateral evidence that is useful in undue influence cases.
