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.
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.
Two of the Most Common Estate Litigation Questions Our Attorneys Face
1) 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.
2) 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.
