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Saturday, July 21, 2012

Seven Questions I Ask Clients When Mediating Estate And Family Property Conflicts



I have noticed an increase in the number of estates, trusts, and probate-related disputes over the last few years. Part of the increase may be our aging baby boomer population and part of it may be due to the economic downturn. In some of our cases, we use mediation to resolve these disputes -- entire cases or isolated issues. 

For example, in cases in which a residence is the sole or primary asset, mediation with regard to a possible expedited sale of the house with the proceeds to be put in escrow pending resolution of the lawsuit can benefit the parties since empty houses deteriorate rapidly and are difficult to insure. Such a sale can also serve as a reality check for the parties who may be improperly estimating the fair market value of the house. 

Why is mediation used even when each side is sure that he or she is absolutely right or the opposing party seems impossible? Here are 5 reasons: First, it can help save litigation expenses and prevent the estate from being dissipated by legal fees. Due to court cutbacks, it takes longer to obtain hearings and cases can last for years. Second, it maintains our clients' confidentiality and keeps fights out of the public eye. In litigation, court filings are public where mediation can allow the records to be confidential. Third, it can preserve family relationships or prevent family relationships from deteriorating further.Mediation can address underlying family conflicts and take into account emotions and family dynamics in considering legal obligations and rights. 

Fourth, it allows us to obtain certainty and ensure tax savings which may not happen in litigation when a judge is deciding the case. Fifth, it allows us to use creative solutions that may not be typical legal remedies that a court can apply. In mediation we can air and acknowledge complicated emotional issues that were preventing early settlement and we can develop flexible solutions to accommodate different interests. 

Here are some questions I ask clients when we are considering mediation. This is based on cases where we have agreed to mediate conflicts in order to preserve family wealth and promote family relationships. 

  • Is the conflict ripe for mediation and are the parties motivated? Mediation should occur when planning and decision making cannot continue because of unresolved conflict and the parties understand that opportunities are being lost or extra expenses and legal fees are being incurred. Mediation usually happens after we have hit a wall in the settlement process where having an experienced third party mediator can make a difference. Mediation can occur before, during, or after court proceedings.
  • What are the goals for mediation? I help clients identify the goals in specific terms. Do you want the best possible monetary outcome, family peace, specific property, preservation of assets or other goals? 
  • Who should participate in the mediation?  Probate cases usually involve a high degree of emotionality and numerous parties. There may be multiple decision makers (spouses, children, advisors, and significant others). If someone can veto the agreement or is necessary for it to work, consider whether that person should be at the mediation.
  • Are you and the lawyers prepared?  Thorough preparation is often the key to success. It is important to have researched the underlying facts and the law with respect to the outstanding issues before going to mediation. Sometimes the key to successful resolution may lie in creative use of the tax laws. I also spend time identifying the strengths and weaknesses of both sides' positions. I usually prepare a confidential Settlement Brief providing the mediator with necessary information and background information. I will also highlight my clients' strengths and give the mediator the other sides' weaknesses. I summarize the history of prior settlement attempts and offers. I often provide the mediator with copies of relevant cases and/or statutes. Sometimes I will present expert or financial reports to help the mediator understand the issues. 
  • Who should be the mediator? Mediators have different styles and approaches. Will the parties respect a former probate judge? Do the personalities and situation require an authoritative mediator to evaluates alternatives and suggests outcomes? Or would the parties respond better to a more facilitative mediator who helps the parties work out their own agreement?
  • Do we have a negotiation plan? In order to be assured of getting what my client wants most, I help prioritize my client's interests, prepare a general strategy and consider which concessions might help achieve the identified goals. It sometimes takes more than 1 session to reach agreements and my client needs to be prepared to be patient and keep emotions in check and not simply issue ultimatums. Some mediations are marathons and not sprints. 
  • Can we bring our proposed settlement agreement to the mediation? If I have cases where clients know what specific wording or stipulations are needed, I will bring a draft agreement, release or settlement on a memory device or laptop to the mediation to be revised as needed. Careful drafting is required for a mediated agreement to be enforceable and it is best to obtain the signatures the day of the mediation to avoid future disputes or someone changing their mind. 
Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221. The firm website is www.moravecslaw.com

The firm has two offices and consultations and meetings can be held at either office. There is ample free parking adjacent to the firm's offices.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.
The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

Monday, July 16, 2012

FAQ: What Is A Conservatorship And When Is It Necessary?



What are conservatorships? In California and other states, all adults are considered capable of handling their own affairs unless a Judge determines otherwise. In California, this legal arrangement is called a conservatorship.  Conservatorships are established for impaired adults, mot often older people. Adults who are developmentally disabled or the victims of a catastrophic illness or accident may also have a conservatorship. We work with families in filing for conservatorship, opposing meritless petitions and other litigation surrounding conservatorships. We also work on the planning stage to address these issues in advance.

Conservatorship of the Person

A conservatorship of the person is a court case in which a Judge appoints a responsible person or organization (known as a conservator) to care for another adult who cannot care for him or herself (known as a conservatee). Anyone - a parent, spouse, child, other relative, or friend of the adult - can apply for a conservatorship. The two most common type of probate conservatorships are general and limited. LPS conservatorships are used to care for adults with serious mental health illnesses and they must be started by a local government agency. 
Once you are appointed conservator, it becomes your legal responsibility to provide care for the conservatee's daily needs. Therefore, it is important to consider less demanding alternatives to conservatorship. The convservatorships must be filed in the county in which the person resides.  

When Conservatorship is Necessary

Establishing a conservatorship is a formal legal proceeding and involves several steps. Some adults who are concerned about possible future mental and physical incapacity decide to establish a power of attorney or a trust, in part so they can avoid the court action. They choose an individual or an institution to make decisions for them if they become impaired. These are private arrangements and must be made while the person has full mental capacity. 
In California, courts do not routinely monitor powers of attorney or trusts. Most people do not make these arrangements probably because it is difficult to think about becoming incapacitated mentally or physically. For those who have not made prior arrangements, or if the person handling the power of attorney or trust is incapable, or a controversy arises as to their services, a conservatorship may become necessary.

After a Conservatorship is Established

Management of Wealth and Property

When a conservatorship is established, the Judge will require that a bond be obtained equal to the combined value of the liquid assets and annual income in the person's estate. Liquid assets include bank accounts and stocks. A bond is like an insurance policy. If the conservator mishandles the money or takes it, the person in conservatorship can be reimbursed.
The Judge also schedules the case for Court monitoring of the finances and property of the person in conservatorship as well as his or her welfare. The law requires that an Inventory and Appraisal of all assets be filed within 90 days of the appointment of the conservator. The conservator must also file a General Plan for the conservatorship. If the conservatee has any real property, the conservator must record evidence of the conservatorship with The Recorder of the City and County of San Francisco.

One Year Review

One year after the appointment of the conservator and every two years thereafter, an accounting of the assets, including the income and the expenditures must be filed with the Court. The accounting is reviewed in detail by a probate examiner. An investigator personally interviews the individual in conservatorship periodically and determines if the conservator is acting properly.

Non-Family Conservators

There are times when family members are unavailable or incapable of serving as conservators. Occasionally, the person who is thought to need a conservator does not want a family member to be the conservator. In those situations, there are agencies and individuals that can serve. The Public Guardian is an agency of the City and County of San Francisco and is the conservator in the largest number of non-family cases. There are also non-profit agencies that have complied with the law and can be appointed to serve as conservators. In addition there are individuals who are available to serve. They are called private professional conservators. As of July 1, 2008, they must be licensed by the State of California and meet ongoing educational requirements. All professional conservators are expected to keep a case and provide services even if the money runs out, especially if they have been appointed to serve as conservator of the person.
All conservators and attorneys in a conservatorship case are entitled to request the Court for fees for their work. The fees are carefully reviewed and granted by the Probate Court only if they have been properly justified. Conservators and attorneys cannot take money without a formal court order.

Those Most in Need of Conservatorship

Conservatorships affect mainly older people, especially those over 85 years of age. Coincidentally, the fastest growing age group in the United States is the one over 85 years of age. In California, that age group will increase by 143 percent between 1990 and 2020. Some counties will experience even higher rates, up to 400 percent. The influence of the 85 and older age group will emerge most strongly between 2030 and 2040 as the first of the baby boomers reaches 85 years of age (http://www.aging.ca.gov).
With the right genes, healthy living, and luck, most people will escape being incapacitated. However, many Californians will have impairments and will need help with daily living. Most likely the number of conservatorships will increase over time. Fortunately, the California legislature has mandated many court safeguards for those who need conservatorships.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.
The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office. There is ample free parking adjacent to the firm's offices.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.




Saturday, June 23, 2012

Owners Of Businesses Should Consider Creating A Succession Plan: Don't Let Your Business Become An Orphan


The New York Times recently had a guest article entitled "Is My Family Business Going To Be An Orphan?" written by an entrepreneur who owns five businesses. It is insightful  since the writer held a meeting with his family to discuss succession and shares his experience.


The general school of thought is that  small business owners and professional businesses should start succession planning 5 to 10 years before the anticipated transition. We also want clients to consider what happens if if they become disabled or pass away before that time. Does anyone want their business to be passed through a will (not recommended) or without one?


Why does this important business plan get delayed? Many business owners are so focused on day-to-day business operations that they fail to invest the time to develop a succession strategy. Each company is different but we like to ask some basic questions to help clients focus on their goals: Is most of the client's estate tied up in the business? Is there a spouse or children to support after the owner's death or disability? Are there any family members working in the business? Does the business require special licensure to own and operate the business (medical practice for example)?


When we meet with business owners, we combine estate planning with corporate and financial considerations so that the client can consider all options. Options can include selling, transitioning to a family member or business partner, or dissolving the business. Many complex issues should be evaluated during succession planning before coming to a decision because each business is different.


Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney. For a complimentary 30 minute consultation (telephonic or in person), you can email Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is http://www.moravecslaw.com





Wednesday, May 16, 2012

Trust Administrator Charged With Grand Theft, Perjury and Forgery In Ventura County California

We see numerous cases where there are allegations of wrongdoing in the administration of estates, however, a recent case turned criminal. On February 13, 2012, the Ventura County District Attorney's Office arrested Geoffrey Charles Sjostrom (DOB 09-25-1954), of Simi Valley, and charged him with nine felony charges, including grand theft, perjury, forgery, and the aggravated white collar crime enhancement. His bail was initially set at $200,000.

The criminal complaint alleges that Mr. Sjostrom was a friend of Francis J. Copland, who died in 2005. Before Mr. Copland died, he prepared a trust and a will, naming Mr. Sjostrom to administer both. In his estate documents, Mr. Copland left all of his property to family members. After Mr. Copland's death, Mr. Sjostrom failed to probate Mr. Copland's will and failed to properly account for Mr. Copland's trust property.

The probate court removed Mr. Sjostrom as trustee and ordered him to account for Mr. Copland's property. At that point, Mr. Sjostrom allegedly filed a sworn declaration claiming Mr. Copland had exhausted his bank accounts when he died. A successor trustee was appointed and discovered this information was false. The successor trustee found that Mr. Copland had money in various accounts when he died and that then trustee Mr. Sjostrom methodically took more than $250,000 from those accounts by means of check and ATM withdrawals. If convicted of all charges Sjostrom faces up to 11 years in state prison.

Thus, apart from the fiduciary duties that administrators have to beneficiaries and the estate, it is critical to remember that basic criminal law can come in play if there is misappropriation of funds or pleadings filed under the penalty of perjury.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The San Fernando Valley office is located at 4605 Lankershim Boulevard, Suite 718, North Hollywood, California 91602-1878.

Saturday, February 25, 2012

In Estate Planning, Making Plans For Prized Collections

The New York Times has an article "Making Plans For Collections, Heartstrings Included" about what happens to collections (art, comic books, marbles, Christmas villages, antiques, etc.) when someone dies.

Money is relatively easy to divide up but how does a collector decide what to do his or her prized collection that it has taken years to amass and reflects a passion that may not be shared by the heirs? The collection may also be hard to value.

The article shares the options available to collectors:

(1) Selling the collection before one's passing;

(2) Passing on the collection and keeping it in the family by using methods such as the annual gift exclusion of $13,000 or creating a trust to protect the collection from creditors;

(3) Giving it away to museums or charities depending on the collection; or

(4) Creating a charitable remainder trust which is especially useful for collectibles that are taxed at a 28% rate.

The real point of the article though is that it is not simply the value of these collections but the emotions that are involved in them that create the issues in deciding what to do with them in estate planning. This is why planning is key even though it is something that is simple to put off. It is typical to put estate planning off but a good way to get around the emotions is to hire an estate planner, schedule meetings and create an outside structure that requires one to address the issues -- emotional or not -- that typically arise during estate planning.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney. For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

Wednesday, February 15, 2012

Five Tips for Trustees


We represent trustees and being a trustee is a job with tremendous responsibility. Since trusts have become popular estate planning tools, we have seen numerous instances where they are traps for the uninformed trustee. The trust has specific wishes and demands and expects that they will closely followed, and it is the trustee's duty to make sure that happens.

Being a trustee can be a thankless job. It can subject even the most honest person with good intentions to litigation. If you are asked to serve as trustee, weigh your decision carefully since a trustee's duties may become complicated and mired in disputes.

Here are tips that we give our trustee clients:

1. Read the trust with the aid of a trust attorney. Since the trustee is required to administer the trust according to its terms, reading all the terms of the trust and understanding the terms is important. Not all trusts are the same and in many cases it is important that the trustee read the document carefully and be assisted by an attorney familiar with trust administrations.

2. Provide annual accountings. Certain trusts are specific as to what the trustee may receive as compensation (for example, a fixed fee or a percentage of the value of the assets). But some trusts only provide for "reasonable compensation" to be paid to the trustee which can mean different things to different people. To avoid problems, keep track of the hours you spend on trust-related duties. If there is a dispute regarding compensation, be prepared to show the actual amount of time devoted to trust matters.

California Probate Code Section 16062 requires a trustee to provide the beneficiaries with annual accountings that explain the trust's income and expenses. Once the accounting is finished, serve it on the beneficiaries immediately since service triggers the three-year statute of limitations. For example, if a trustee does not serve the accounting, the statute of limitations for filing a challenge will not begin to run.

3. Track inventory. Do not assume the trust is in effect because the documents have been signed. Make sure the assets in questions were actually transferred into the trust and vested in the name of the trustee. If this has not been done, exercise best efforts to bring the trust's assets in to the trust as soon as possible. Locate all potential trust assets, and determine whether any that have not yet been transferred to the trust can still be included.

4. Get good legal advice and insurance. The best protection against a potential lawsuit is to get good legal advice and to purchase an insurance policy covering errors and omissions. Without insurance coverage, a trustee's personal assets could be at risk if an unhappy beneficiary files a lawsuit.

5. Remain neutral. Lawyers such as myself who are asked to serve as trustees are often caught in the middle. On the one hand, I will serve the trustee's interest as set forth in the trust instrument. On the other hand, I must pay attention to the interests of the beneficiaries who probably include close family and friends of the trustee. The same applies to laypersons who serve in this capacity.

The trustee's actions will be watched and possibly challenged by any beneficiary who feels he or she was treated unfairly.

There is an exception to the need to remain neutral and that is when the trust is revocable (such as while the settlor is still alive). In that situation, the trustee's duty is to the settlor and not the remainder beneficiaries; the trustee should act only in the settlor's best interest. Estateof Giraldin, 199 Cal.App.4th 577 (2011).

If you are the trustee, it may not be possible to avoid litigation but if you follow these tips it will help you avoid litigation traps. If you are a trustee and need legal advice on how to fulfill your duties, feel free to contact us.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership.
For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.
The firm website is http://www.moravecslaw.com/.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

Monday, January 30, 2012

What Is Undue Influence In California Probate Courts?


As a law firm that focuses on probate and estate and trust litigation, we are seeing an increase in the number of allegations of undue influence in our cases. What do you do if you think a loved one is the victim of undue influence? Or what do you do if you are accused of exercising undue influence? Or what can you do to help prevent allegations of undue influence in the future?

Claims of undue influence can be difficult to understand and prove, both because of the lack of a definition in the Probate Code and because it occurs behind closed doors without witnesses. Increasingly, though, probate courts have staff such as investigators or visitors who go out and interview proposed conservatees and determine their circumstances, including the presence of apparent undue influence. Probate courts are also receiving more information from community practitioners such as Adult Protective Services social workers, physicians, and hospital discharge planners.

In California, the definition of undue influence is contained in California Civil Code §1575. This statute was enacted in 1872, a date which calls into question its application in the 21st century. Thus, probate judges in California lack probate statutory support when they must consider imposing a conservatorship on an elder who is allegedly being victimized by someone using undue influence. Additionally, we see that cases are not always handled consistently.

Complicating the picture is traditional thinking that mental capacity and undue influence are intrinsically linked. In other words, undue influence occurs only if there are deficits in mental functioning. Even though California law is clear that soundness of mind and body does not imply immunity from undue influence, the perception that undue influence cannot exist without mental deficits persists. Thus, if your loved one does not have mental deficits it may be more difficult to prove undue influence.

The first and most commonly invoked statute regarding undue influence is California Civil Code §1575, which was enacted in 1872 and is commonly cited as a definition of undue influence. The elements are:

1. The use, by one in whom a confidence is reposed by another, or who holds real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

2. In taking an unfair advantage of another’s weakness of mind; and

3. In taking a grossly oppressive and unfair advantage of another’s necessities or distress.

Pressure of some type is always a part of undue influence situations. In a seminal California case, Odorizzi v Bloomfield, undue influence was used against a person who was not an elder and had mental capacity. The court cited factors that indicated excessive pressure:

1. Discussion of the transaction at an unusual or inappropriate time;
2. Consummation of the transaction in an unusual place;
3. Insistent demand that the business be finished at once;
4. Extreme emphasis on the untoward consequences of the delay;
5. Use of multiple persuaders by the dominant side against a servient party; and
6. Absence of third-party advisors

More recent law is contained in California Welfare and Institutions Code §15610.30 et seq., which address financial abuse of an elder or dependent adult. In 2009, that section and others in the Welfare and Institutions Code were amended. The term u"ndue influence" was added. Section 15610.30(3) of the California Welfare and Institutions Code now states that financial abuse of an elder or dependent adult occurs when a person or entity does any of the
following:

“Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriate, obtaining, or retaining, real, or personal property of an elder or dependent adult when the elder or dependent adult lacks capacity pursuant to Probate Code §812, or by undue influence, as defined in Civil Code §1575, or both.”

Thus, undue influence is legally related to financial abuse. Section 15657.6 of the Welfare and Institutions Code—which references an elder lacking capacity (pursuant to California Probate Code §812) or being of unsound mind, but not entirely without understanding—states that a person or entity must return real or personal property if the elder or the elder’s representative demands it. Failure to do so in a timely fashion subjects the perpetrator to the same remedies available for financial abuse, namely, damages, attorney’s fees, and costs.

Although the California Probate Code does not contain a definition of undue influence, it does contain specific information as to determining deficits in mental functions in §811 and the capacity to make decisions in §812.

What do you do with this information regarding undue influence? If you or your loved one are in the planning stage, it may be wise to take steps to avoid such allegations in the future by involving an experienced attorney to guide you through the process. If you suspect undue influence, before you jump to allegations consult an attorney so you can make an objective assessment of whether you can prove your case. Probation litigation can be costly and a case should be evaluated by an objective attorney before you decide on a course of action. As our population ages, we can expect to see an increase in undue influence allegations in probate court.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm has two offices and consultations and meetings can be held at either office.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.