Litigation in the Probate Courts, Part I - What Will Happen If Someone Files A Lawsuit In Probate Court?

What Will Happen If Someone Files A Lawsuit In Probate Court?

One common question that arises in the area of our practice which focuses on resolving disputes among executors, trustees, and beneficiaries is: "what will happen if someone files a lawsuit in Probate Court?" It's the client's  "nickle" if legal fees mount up, so its not only a fair question, but a critical one.

The answer to that question is something everyone who is focusing on their own estate planning ought to know, and something a person who is involved in an estate administration should absolutely know. Not knowing can lead to bad decisions which are difficult and expensive to fix at a later date. I will explore this topic over a series of posts.

The "normal functions" of the Probate Court are simply:
-- to figure out who is entitled to the property of someone who died, and
-- to also administer the estates of people who can no longer legally take care of themselves (guardianships and conservatorships).

This series of posts will focus on the estate and trust litigation process, but the possibilities for disputes in guardianships and conservatorships are just as frequent and can be even more frustrating.

Difference Between Civil Litigation and Probate Litigation

What I often tell clients is that there is a big difference between general civil litigation and probate litigation.  In general civil litigation: the vast, vast majority of disputes (which are not a matter of divorce proceedings) involve an insurance company as the ultimate paying party. General civil matters end up essentially boiling down to a war of attrition, where the insurance company who is defending the matter finally decides what the case is worth to go away. There are also a large contingent of employment related disputes, where you substitute an employer (usually a large one, since small employers do not have large amounts of money)  for the insurance company.

In a probate or trust dispute litigation, however, there is rarely, if ever, an insurance company involved, the matters tend to be highly emotional (more on that below). The first "stage," if you will, is sorting out the dispute from the actual amount in dispute.

For example, in a $100,000 estate, the maximum amount in dispute is a maximum of $100,000. In a $1,000,000 estate, the maximum amount in dispute is $1,000,000 and so on.

Emotional Losses Can Exceed The Monetary Loss (Case Study)

The most common emotion we see is a client who has an "emotional loss" which far exceeds the monetary loss. Here is a case study in this which is common in our practice.

A brother was certain his sister had been taking advantage of their father prior to and after their father's death. In the first few hours of investigating, we found $40,000 had been improperly transferred. We wrote a demand letter and the sister agreed to reimburse the estate. Since the sister and the brother were splitting the estate --  that $40,000 improper transfer was worth $20,000 to the brother (the sister was entitled to the other half).  At this point, the brother had spent only a few thousand dollars in attorneys' fees.

Then, a very familiar emotion kicked in.  The brother was upset that his sister had taken $20,000 that should have gone to him. Brother also became upset that he had to hire an attorney to protect his rights. Based on this emotion, he embarked on a hunt to see what other improper transfers or expenses his sister "might" have made in the estate.  After many more thousands of dollars in legal fees -- and at least a hundred hours of his own time -- he found a trip to the Home Depot  for $325 that the sister charged to her father that she should have paid herself.

In the end, the case settled because both brother and sister realized that there was only so much involved  and that a search, involving lawyers, for total certainty, was simply too expensive.  They would both (especially our client) have to be satisfied with what I would call "partial certainty"  - they did not know for certain that every nickel had been accounted for, but they did know that the overall result was relatively fair, and that more litigation was not worth it.

One reason that the case settled with a relatively small attorney cost was that opposing counsel was an experienced probate attorney who knew, from the beginning, how to advise his client about her duties and moreover, that the case should settle.  In future installments, I will tell a horror story or two about what can happen if a general civil litigator is involved in a probate litigation.

Probate Litigation Lesson 

We all have parents. Many of us have siblings. In any case no one has a perfect relationship with all members of their family. Thus, the lesson to be learned from the above story is that the death of a parent and an inheritance can fray almost any family bond.  Before you make a decision based on those very understandable emotions, call us or any experienced probate lawyer. Although it may not seem like it, it could save you quite a bit of money down the road.

As a trustee or executor, you can be sure not to make an inadvertent mistake that riles up beneficiaries for no reason. As a beneficiary, you can be sure not to throw allegations at a trustee who may actually be doing their best.  Either way you can replace emotions with knowledge, which is always a good deal.

An experienced and honest probate lawyer will help you create a strategy from the outside and not simply capitalize on the normal emotions that are inherent in these cases. When you need to be aggressive - they will also know how to be efficiently aggressive to help you win or obtain the best possible result.


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's office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108 and there is ample free parking.

7 Strategies To Reduce Potential For Probate Litigation

The increase in probate litigation in our practice continues.  We had speculated last year that this might be due to the economy and shrinking real estate values in California. Even when litigation is necessary, and we have had to aggressively defend our clients or trustees -- we know that litigation can be costly, time-consuming and destructive to family relationships.

Accordingly, I wrote a post a couple of years ago addressing the question of how to reduce the risk of litigation in the estate and trust context during the planning stage. Although these methods are not guaranteed ways of avoiding litigation and every estate plan is different -- the ideas here are useful starting points to consider in the estate planning stage.

We had previously listed six strategies to reduce the potential for litigation, but please take note of the new number 7, which recent experience has shown may be the most effective:

1. Advise Inheritors of Inheritance Plans. 
Especially when children of the decedent are treated unequally, will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. One could enter into a contract (for consideration or something of value) with such a person that he or she will not object to the validity of the document. Be careful however, that advising a child that he or she will not receive an equal share may have adverse effects even if it prevents litigation after death. Thus, informing inheritors of the plans could cause family problems in the present. This will vary from family to family.

2. Use a Revocable Trust in Lieu of a Will. 
 Since a revocable trust can be funded and operate during lifetime, it is difficult to contest on the grounds that the individual was unaware of its terms. When the Settlor of the trust dies, there is no need to begin a court proceeding to "prove" the validity of the trust, such as there is for a will.

3. Use an Irrevocable Trust in Lieu of a Will or Revocable Trust. 
 An irrevocable trust is even less likely, in my experience, to be challenged than a revocable trust. Irrevocable trusts can be drafted in such a way so that transfers of property to them are not completed gifts. However, there are other risks and issues with irrevocable trusts that must be considered.

Alternatively, making a transfer that is a completed gift, paying gift tax, and filing a gift tax return disclosing details may be additional evidence that the transfer was truly intended. Again, I believe that a lifetime trust that is significantly funded is less likely to be challenged.

4. Use a Disinheritance Or No Contest Clause. 
If the testator lives in a state such as California that will enforce it under certain circumstances, a disinheritance clause (also called an in terrorem clause for the Latin word "in fear") could be used. The goal here is to prevent beneficiaries from causing a legal ruckus after the testator is gone. A lot of trust and estate litigation is not about the validity of the document, it is about its interpretation or about actions taken by the fiduciary. In order to reduce this type of litigation, a disinheritance clause can cause a forfeiture of a beneficiary's interest if such a challenge is made. The entire estate plan must be consistent with this clause.

With the advent of passage of Senate Bill 1264 which enacts Probate Code Sections 21310-21315 effective January 1, 2010, California's "no contest" law has been significantly weakened. This weakening affects wills and trusts that became irrevocable after January 1, 2001 and later. "No contest" clauses traditionally penalize parties who attempt to attack a will or a trust. Now, it will be significantly easier to attack a will or a trust in California.

To review Senate Bill 1264, go to: http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1251-1300/sb_1264_bill_20080707_enrolled.pdf

5. Use Mediation or Arbitration Provisions. 
Arbitration or mediation cannot be used with respect to the challenge of a document's validity unless the parties agree to it. Using a disinheritance clause to cause forfeiture if the parties will not participate can be used. This could stop claims that are filed only to harass other beneficiaries or to delay distributions to others. Another approach would be having the parties enter into a contract agreeing to arbitration before the transfer.

6. Use a Condition Precedent to a Bequest as an Alternative Method of Causing Participation in Mediation or Arbitration. 
Since a person cannot be forced to participate in arbitration or mediation unless the law provides for enforcement, consideration must be given to how to get parties to use these methods. One can use the carrot instead of the stick. Parties can be given a benefit if they consent to use arbitration or mediation instead of resorting to court.

7.  If a particular beneficiary shows signs of being difficult, make the gift to that beneficiary a specific gift.  
The wisdom of this particular method has been illustrated by a current matter in our office.   Consider the difference between  giving a beneficiary 20% of the estate, or $1,000,000. If the former, that beneficiary may object to the valuation of all of the estate assets, i.e. "I don't think that property is worth $1,000,000, I think it is worth $1,500,000.  You are trying to under value it!"   If the latter, the specific gift may be paid in cash or currently valued securities, thus vastly reducing the area of dispute.  If the assets are of a sufficient value to draft the plan this way, much argument may be avoided.

When creating estate plans or trust documents it is important to consider the potential for litigation and whether it should be addressed prior to the death or after the death of the people creating it. While much can be done prior to death to resolve potential disputes and keep communications open, often issues only arise after the death of the trustees. During the estate planning stage, this is the time for you to consider what can be done to reduce the likelihood of estate and trust litigation.

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.

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) 769-4221 to request a consultation.

The firm website is http://www.moravecslaw.com/. 

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.

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.

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

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.

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.