by Robert Simpson, ESQ
Consult any lawyer, financial planner or accountant familiar with trust and estate work and they are likely to agree: estate plans are under increasing attack. I am an experienced estate planner and trust and estate litigator and see more will and trust challenges now than at any time in the past. When considering your own estate plan (or that of a loved one), you should know some of the reasons why the tide of trust and estate litigation is rising so you can work with your estate planning attorney and other professionals to minimize the risk of costly fights in the future.
Many blended families navigate trust and estate issues without difficulty. However, blended families are one of the most common factors I see in heated probate and trust contests. If you have a step-relative, such as a step-parent, a step or half-sibling, or a step-child, you are in a blended family. Blended families are increasingly common. Four-in-ten American adults have at least one step-relative in their family. Although having a step-family is often a tremendous blessing, it is not something most people anticipate or plan for. A majority of people with at least one step-relative say their family turned out differently than originally expected. Studies also show that people typically feel a stronger sense of obligation to their biological family members than to their step-relatives.
When a person in a blended family dies, the lack of careful planning, mixed with the inclination of some to favor their own bloodline, often leads to trouble. Disputes are likely to occur if desire for the assets of a family member outweighs the familial bond between surviving step-relatives. I frequently litigate cases where children from a previous marriage challenge the rights of the surviving spouse of a subsequent marriage for control of the deceased spouse’s assets. Litigants in these cases are extremely emotional, with each side sincerely believing their position is what the deceased intended. These conflicts carry high emotional and financial costs and can cause loving relationships to vanish. Although no estate plan is “bullet proof,” wills and trusts for blended families ought to be drafted with family dynamics in mind to substantially minimize the chances of an attack.
Wayward siblings are potential trouble in a parent’s estate. Sometimes a deviating child takes the lead at the end of their parent’s life in caring for their personal needs and exerts undue influence over the parent. In other cases, the child managing the parent’s financial affairs transfers the parent’s assets to himself or herself without anyone’s knowledge or consent.
These problems are more likely to occur if the wayward sibling is living in the parent’s home, a situation that has become more frequent. Today nearly 1 in 5 Americans live in multi-generational family households, double the number who lived in such households in 1980. Older children living at home with their parents typically have greater financial needs than their siblings who live in their own homes. In is particularly difficult for a child who lives far away or does not regularly communicate with their parents to prevent wrongdoing by a sibling who lives with the parents. Often the child caring for a parent rationalizes the unauthorized transfer of their parents’ assets to them as “payment” for their services in providing care for the elderly parent. Although children may deserve some form of compensation for taking care of mom or dad in their old age, the parent must make that determination free from undue influence and with the input of professionals. If there is any doubt about the capacity of a person to make financial decisions, you should consult an attorney to explore what options are available to protect their assets before it is too late.
Experienced litigators have seen the situation where a child causes the parents to rearrange their estate plans to benefit the child, to the exclusion of the child’s siblings. I litigated a case where the seven children of a father gathered for a family meeting in their father’s house to discuss what the children thought was the last version of his trust. Six of the children expected the father’s assets to be distributed in equal shares for each child. However, at the meeting the youngest child (who was living with the father at his death) disclosed a new trust. She secretly caused the father (who had questionable capacity) to execute the new trust shortly before his death, leaving everything to her. While her siblings sat in shock, she ordered them to leave dad’s house because it now belonged to her! After costly litigation, we obtained a favorable verdict for the six children, but it could have been avoided if the siblings had paid closer attention to the warning signs before his passing.
While naming a non-relative as a beneficiary can give any seasoned estate planner pause, caregivers are especially problematic. Health care workers are in a unique position to take unfair advantage of the elderly they care for. Many patients are lonely, subject to influence and spend more time with their caregivers than with friends or family members. People are willing to transfer assets to caregivers because they interpret the care being received as an act of kindness, rather than a service they already paid for. With life expectancy rates at an all-time high, and the number of Americans aged 65 and older projected to double over the next 40 years, caregivers have increasing opportunity to work their way into the financial affairs of the elderly. Even caregivers with the purest intentions can find it difficult to refuse a gift or inheritance from a person receiving their care. In short, the circumstance in which a caregiver properly receives assets from a person under their care is rare.
The problem is so severe that California has strict requirements governing transfers to certain non-relatives who provide “health and social services” to “dependent adults.” If the stringent statutory requirements are not met, transfers to caregivers are presumed to be the product of fraud or undue influence, and it is up to the caregiver to prove otherwise. In addition, it is common for health care providers to implement policies banning employees from receiving gifts or inheritances from patients. Although California law and company policies provide important safeguards and remedies in protecting elders from predatory caregivers, they cannot replace an estate planning attorney familiar with your specific situation. Consulting an attorney to ensure protection is in place before any transfer is made is the best way to avoid the expense of unwinding a transfer to a caregiver after the fact. In some cases undoing a fraudulent transfer costs more than the amount of the transfer itself.
Blended families, wayward siblings and caregivers are just three of many factors to consider in protecting your estate plan from challenges. Consulting an attorney about these factors, and other warning signs, will give your attorney the information he or she needs to custom fit an estate plan for your circumstances so you can be sure your desires will be carried out in the way you intend.
This article is intended to address topics of general interest and should not be construed as legal advice.
© 2014 Noland, Hamerly, Etienne & Hoss
 See Probate Code Sections 21360-21392.
 See Probate Code Sections 21380.