Probate, Trust, Will, Fiduciary & Estate Litigation
Based on experience, probate litigation is often some of the most emotional, time-consuming and difficult disputes. Substantively, the law is rather niche because there are special, complex statutes dealing with different types of claims that set varying standards and time-limitations. Procedurally and practically, emotions often run high because the disputes often involve family members and family assets. Not many attorneys or law firms in the Saint Louis area handle these types of disputes. It is not really tested on the Bar Examination, nor is it a core class in law school. At the same time, these disputes are becoming more and more common given that many estates and estate plans created by baby boomers and older generations are being administered to where assets are being conveyed to the next generation and other beneficiaries. We have litigated, evaluated, advised and/or counseled on at least the following types of probate disputes and litigation —
Once a Will is admitted to Probate, there is a certain amount of time to challenge it. Wills have certain procedural requirements that needs to be met in order to be valid. In addition, the testator/testratrix (i.e. the person who executed the Will) must have capacity at the time Will is signed. To have this testamentary capacity, the testator/testatrix must have enough mind and memory to understand the ordinary affairs of life, know the nature and extent of his/her property and who are the natural objects of his/her bounty, his/her natural obligation to those persons, and that he/she is giving his/her property to the person mentioned in the Will. There are several instances in which a Will may be challenged and set aside. These situations include, without limitation:
- Failure to follow execution requirements (e.g., missing one or two witnesses);
- Lack of capacity;
- Mistake, and
- Undue Influence
It is important to remember that you cannot successfully challenge a Will simply because you disagree with it. There must be specific legal grounds which render it invalid, not mere dissatisfaction.
Basic Trust Definitions and Terminology
- Settlor/Grantor = the individual who creates the trust
- Trustee = the individual charged with managing and administering the assets subject to the trust
- Beneficiary = the individual for whose benefit the trust is administered
As with Wills, Trusts may also be challenged in Court. The time for challenging a trust will largely depend on whether the trust is revocable or irrevocable. The capacity to create, amend, revoke or add property to a revocable trust, or to direct actions of the trustee of a revocable trust, is the same capacity require to make a Will. Section 456.6-601, RSMo. Similarly, a trust is void to the extent its creation was induced by fraud, duress or undue influence. Section 456.4-406, RSMo. Trusts which are revocable during the trust-creator’s lifetime generally cannot be challenged until after he/she passes away, though there can be a challenge with a declaratory judgment if certain conditions are met.
Personal Representative Litigation
The Personal Representative is the individual charged with administering a probate estate. The Personal Representative is usually appointed by the probate court via letters of administration or letters testamentary. The Personal Representative owes a fiduciary duty to the individuals interested in the estate. In light of that fiduciary duty, the Personal Representative has several responsibilities, including, without limitation, to render an accurate accounting of the estate and to diligently evaluate all claims made against the estate. A Personal Representative can be removed from office when, among other things, he/she fails to discharge his/her official duties or wastes or mismanages the estate.
In recent years, the number of trustee-beneficiary lawsuits has seemingly increased. This is due in large part to the fact that more revocable living trusts have been created and are coming under scrutiny. Another factor that has led to the increase in litigation is that the law has become much more developed statutorily. A trustee of a trust owes several fiduciary duties to beneficiaries, including but not limited to:
- A Duty to Act Impartially when there are two or more beneficiaries;
- A Duty to Administer the trust according to its terms;
- A Duty of Loyalty to work solely in the beneficiaries’ interests;
- A Duty to Administer the Trust prudently and diligently;
- A Duty to Inform & Report beneficiaries about the status of the trust, as well as keeping accurate records; and
- A Duty to Control and Protect trust property.
These fiduciary duties seem straightforward, but their application in certain circumstances are not always clear depending on the nature of the trust instrument, the assets in the trust, and the relative needs and interests of the beneficiaries.
When a trustee breaches a fiduciary duty, this can sometimes merit to a suit seeking to remove the trustee or a suit against the trustee for money damages. Section 456.7-707, RSMo sets the situations in which a trustee may be removed:
(1) the trustee has committed a serious breach of trust;
(2) lack of cooperation among cotrustees substantially impairs the administration of the trust;
(3) because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; or
(4) the trustee has substantially and materially reduced the level of services provided to that trust and has failed to reinstate a substantially equivalent level of services within ninety days after receipt of notice by the settlor, a cotrustee, or a qualified beneficiary or removal is requested by all of the qualified beneficiaries and in either such case the party seeking removal establishes to the court that:
(a) removal of the trustee best serves the interests of all of the beneficiaries;
(b) removal of the trustee is not inconsistent with a material purpose of the trust; and
(c) a suitable cotrustee or successor trustee is available and willing to serve.
More often than not, trustee removal suits allege a “serious breach of trust” as the basis for removal. Not every breach of trust warrants removal. The breach must be serious. A serious breach of trust may consist of a single act that causes significant harm or involves flagrant misconduct. Several Missouri cases have held, furthermore, that a trustee may only be removed only if the trust property is in danger.
Trustee Counseling with Trust Administration
For the same reasons that trustee-beneficiary litigation has increased, guidance and counsel with trust administration has become increasingly necessary, particularly depending on the nature of the assets a given trust holds and/or how it is structured. A fundamental duty of a trustee is to administer a trust consistent with its terms and in the beneficiaries’ best interests. The way to properly do this is not always necessarily clear. For example, there may be serious judgments and decisions that need to be made with respect to the purchase, sale, disposition, use, and maintenance of trust assets. Things can become much more complicated if the trust assets include or consist of ownership in private businesses, real estate or complex financial securities. In some circumstances, it may even be necessary to petition a pertinent court for instructions on how to best administer a trust so that claims of wrongdoing are avoided. When it comes to litigation — and the trustee is not an attorney — then hiring an attorney is likely legally required to defend/prosecute claims on behalf of the trust.
Assistance with Cotrusteeships
There are certain provisions that come into play when a trust has cotrustees (Cotrustees: Liability and Administration). It is important for all cotrustees to know of their rights and responsibilities, as well as to be aware of potential pitfalls and liability.
Trust Protectors, Advisers
As a relatively new development, the law has created the position of a “Trust Protector.” Trust litigation is expensive and a trust protector is an office designed to prevent litigation and assist in the administration of a trust. A trust protector is someone other than the trustee who may hold a variety of powers with respect to the trust, including, without limitation, the power to terminate the trust in favor of the beneficiaries, modify/amend the trust and/or remove trustee. A trust protector is a fiduciary to the beneficiaries and settlor of the trust, but the office’s responsibilities are generally not as broad as that of the trustee.
Resulting, Implied, Constructive Trusts
A trust does not always have to be expressly created to come into existence. An implied trust may be imposed by a court to create a redress for injuries. These are a little more rare and do not often come up, but they do exist and are at times appropriate. In a similar vein — and perhaps even more rare — are oral trusts. These can come into existence if certain conditions are met and the elements of a trust are otherwise present.
Representation for Guardians & Conservatorship Administration
A guardian is a person appointed by the Court to be in charge of a minor or legally incapacitated individual’s person and welfare. A conservator, on the other hand, is a person appointed by the Court to be in charge of a minor or legally incapacitated individual’s property and assets.
Missouri law requires that a duly appointed guardian and conservator be an attorney or be represented by an attorney. The reason for this is that the guardian-conservator will have to make several decisions on a periodic/unexpected basis to where a Judge will not be able to immediately approve/disapprove of any actions. A conservator is generally required by law to account for all receipts and expenditures of a protectee; and with the expenditures, the conservator is charged with ensuring that they are all in the protectee’s best interests and approved by the Court or are otherwise permitted by law. Failure of a guardian-conservator to properly discharges his/her duties by law and in the protectee’s best interests can result in removal or personal liability.
Discovery of Assets
Discovery of Assets is a procedure and claim that exists exclusively in the Probate Division of the Circuit Court. Section 473.340, RSMo specifically authorizes a claim for discovery of assets:
Any personal representative, administrator, creditor, beneficiary or other person who claims an interest in property which is claimed to be an asset of an estate or which is claimed should be an asset of an estate may file a verified petition in the probate division of the circuit court in which said estate is pending seeking determination of the title, or right of possession thereto, or both. The petition shall describe the property, if known, shall allege the nature of the interest of the petitioner and that title or possession of the property, or both, are being adversely withheld or claimed. The court may order the joinder, as a party, of any person who may claim an interest in or who may have possession of any such property.
As the name suggests, it is designed to determine what assets are owned by a probate estate. It often arises when there is a contested or uncontested dispute as to the legal ownership of specific property. The discovery of assets procedure will allow a probate court to entertain competing claims of ownership to determine whether the pertinent estate is the lawful owner. Sometimes it is applicable in a friendly dispute, but it can also arise when someone is wrongfully withholding assets that belong to an estate. With the latter scenario, a Court’s order as to ownership should solve the dispute. The discovery of assets procedure, however, is not typically a proper forum to pursue breach of fiduciary duty claims against an estate fiduciary.
Fraud Under the Probate Code
Missouri law sets forth a separate, actionable basis for fraud when perpetrated in connection with a probate proceeding. Statutorily, Section 472.013, RSMo provides:
Whenever fraud has been perpetrated in connection with any proceeding or in any statement filed under this code, or if fraud is used to avoid or circumvent the provisions or purposes of this code, any person injured thereby may obtain appropriate relief against the perpetrator of the fraud or restitution from any person, other than a bona fide purchaser, benefitting from the fraud, whether innocent or not. Any proceeding must be commenced within two years after the discovery of the fraud, but no proceeding may be brought against one not a perpetrator of the fraud later than ten years after the time of commission of the fraud. This section has no bearing on remedies relating to fraud practiced on a decedent during his lifetime which affects the succession of his estate.
While it may seem obvious on its face, it is important to realize that the fraud must be “in connection with” a probate proceeding. Accordingly, it does not apply to fraud committed against a decedent during the decedent’s lifetime. Cases interpreting this Section have also found that all of the requisite elements of common law fraud (e.g., falsity, reliance, injury, etc.) must be pleaded and proven at trial. Moreover, the section applies to “any person” harmed by the alleged fraud; it need not necessarily be an heir, legatee or beneficiary of an estate. In practice, fraud under the probate code claims are often included with breach of fiduciary duty claims against estate fiduciaries and serve as an additional or alternate basis for relief.
Claims Against an Attorney-in-Fact appointed under a Power of Attorney
A power of attorney is when one individual (a principal) appoints another individual or set of individual (attorney(s)-in-fact) to act on the principal’s behalf. The power of attorney document itself will spell out what the attorney-in-fact’s responsibilities are. The attorney-in-fact is a fiduciary of the principal and is obligated to act in the principal’s best interests consistent with the terms and conditions set forth in the power of attorney document. In practice, power of attorney documents typically grant healthcare authority and financial authority.
Nonprobate Transfers: Use and Disputes
A “nonprobate transfer” is when a transfer of property takes effect upon the death of the owner pursuant to a beneficiary designation. Section 461.005(7), RSMo. As a means of avoiding probate, individual will create TOD/POD (i.e., transfer on death/payable on death) designations in which an asset is transferring outright to someone else upon death. This is frequently utilized for bank accounts and real estate via a beneficiary deed. “Nonprobate transfer” is also used to describe a situation in which there is more than one (1) owner of an asset and the surviving owner takes full ownership upon the death of another owner. Nonprobate transfers are invalid to the extent they are the result of fraud, duress or undue influence.
Gifts/Transfers in Fraud of Marital Rights
A gift/transfer in fraud of martial rights is when one spouse makes a property conveyance for the purpose of defeating another spouse’s inheritance rights. In certain circumstances, the surviving spouse can defeat and set aside the property conveyances to recover some/all of what would have been his/her inheritance. Some factors the court considers with this claim are whether a particular transfer is of disproportionately high value and whether there was open an frank disclosure by the transferor-spouse to the surviving spouse about the transfer.
Tortious Interference with Inheritance
This is a relatively newer claim and is generally reserved when there are no other “adequate probate remedies” which can afford relief when someone substantially interferes with one’s inheritance rights. It may be brought when, among other things, a third-party substantially interferes with your inheritance right without justification and causes cognizable damages.
When someone is a fiduciary, he/she/it owes a higher standard of care with respect to another individual. The standard of care varies depending on the type of fiduciary relationship (e.g., trustee, personal representative, attorney-in-fact, etc.). Fiduciaries generally owe at least the following three fundamental duties: (1) a duty of loyalty to act in another’s best interests, (2) a duty to report and inform on material facts and (3) a duty to complete and maintain accurate records/accounting. We have represented both the fiduciary and the person owed the fiduciary duty in litigation.