Estate planning attorneys don’t always just help people who want to create an estate plan. Sometimes they help people with grievances begin the litigation process, or help others defend against litigation filed against them.
Estate litigation can arise for any number of reasons, but some causes are more common than others. Let’s take a look at some of the more common reasons why people begin the litigation process in estate planning.
Litigation and Loss of Capacity
One of the more important underlying assumptions in the creation of any estate planning device is the assumption that the person creating that device has the mental capacity to do so. In other words, you have to be mentally sound to create an estate plan.
The specter of not being mentally sound is something that is often enough to give rise to litigation. For example, if an elderly person chooses to modify his or her last will and testament, the beneficiaries of the will, or those who were left out, may try to challenge the will on the basis of a lack of capacity. It can be a serious problem if an elderly person is suffering from a mental condition that robs him or her of the ability to make knowing choices. It can also result in litigation.
Litigation and Undue Influence
Loss of capacity is closely related to the issue of undue influence. Undue influence occurs when someone exerts excessive control over a person making an estate planning device or decision.
For example, an elderly person who lives with his grandson may choose to make a last will and testament. If that grandson is abusive or tries to unduly influence the grandfather as he writes his will, other beneficiaries may initiate litigation based on undue influence.
This type of issue may also arise when, for example, a person rewrites his or her will to name an assistant or caretaker as the primary beneficiary instead of his or her children or grandchildren.
Litigation and Fiduciary Responsibility
Many estate planning documents create a fiduciary relationship between two or more people, known as a principal-agent relationship. For example, when you create an irrevocable trust, the trustee has a fiduciary relationship to do what is in the best interests of the trust beneficiaries.
In some situations people have a problem with how the fiduciary carries out his or her responsibilities. If, for example, a trustee mismanages trust property, the beneficiaries could be financially harmed. Because of this, the beneficiaries might allege that the trustee negligently performed his or her actions and violated the fiduciary duty.
Of course, there are many other situations in which estate litigation can arise.
Preventing litigation is a goal of good estate planning. The better the planning documents, the less the chance of a legal challenge. Also, the better the trustee or executor does his or her job, the less the chance of a challenge of their performance. The best way to assure that litigation problems will be minimized is to work with an experienced and qualified estate planning attorney both during the drafting and administration of the estate plan.
The chances of litigation increase when: 1. there is no estate plan, 2 the legal documents are inadequate, such as do it yourself or internet documents, and 3. or the executor or trustee attempts to perform his or her duties without obtaining competent, professional tax and legal advice.
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020
- Best Places to Retire: State Taxation - March 25, 2020