Four Great Paragraphs about Lawsuits Involving Trusts and Estates

Thinking about suing to get your fair share from your dad or mom’s estate? Think again.

From a post on the Colorado Construction Law Blog about a piece in the Utah Bar Journal:

One of the most important points set forth by Mr. Adams [in the Utah Bar Journal] is to remind the parties that the assets everyone is fighting about actually belong to someone else. The person who sets up the will or the trust gets to decide who gets the assets, and that decision doesn’t have to be logical or even what others might consider “fair.” It may also contravene what the decedent has previously stated orally to a family member or members. But the court is placed in the position of doing its very best to see that the decedent’s estate plan, whatever it may be, is carried out.

The Utah judges were asked about the success rate of claims of undue influence, which is routinely alleged in contested cases. Their answers revealed that while undue influence is often alleged, it is rarely found to exist at the time the decedent executed the document in question. The same goes for claims of lack of testamentary capacity. In Utah, and most other states, a testator is presumed competent to make a will or a trust and the contestants must prove by the preponderance of the evidence that the decedent was not competent. The standard for such capacity is quite low and therefore it is difficult to establish that the decedent was incompetent at the moment he or she signed the will or trust. In fact, the success rate extrapolated from the survey for contestants bringing such claims was only 5-6 %.

While observing that technical breaches of fiduciary duty don’t often prevail, the author concludes that what does catch a judge’s attention “and raises their ire is when persons who have fiduciary obligations knowingly and repeatedly refuse to comply with their responsibilities.” The judges cited self-dealing, blatant violation of ethical or fiduciary duties, and failure to keep beneficiaries informed as examples of such conduct that would justify removal of a personal representative or trustee.

In discussing no-contest provisions, a small minority of the judges reported having enforced them, but one judge observed that a custom-drafted no-contest clause that includes details and mentions specific concerns would be much more likely to be enforced than one that is plain boiler-plate. That judge also suggested that if the testator or trustor is concerned about a specific heir or beneficiary, they might consider identifying them by name in the document if they want in increase the likelihood of enforcement of the no-contest clause.

From a drafting perspective, that last paragraph makes a lot of sense.  Lots of sense.

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