Trust Litigation

Financial elder abuse is not always as simple as merely stealing money from elders. In some cases, it involves more complex schemes involving estate planning instruments like trusts. Unfortunately, the elderly are particularly common targets for trust-related fraud and abuse. A California financial elder abuse attorney can assist friends and family members get to the bottom of potential trust-related elder abuse, including by pursuing legal action.  

The Basics of Trusts 

Trusts are versatile legal tools that allow one person (the settlor) to transfer money, property, and other assets to another person (the trustee) to be held for the benefit of someone else (the beneficiary — who can also be the settlor). There are many different kinds of trusts, but some of the most common are: 

• Inter vivos trusts: Created during the settlor’s lifetime
• Testamentary trusts: Created upon the settlor’s death
• Revocable trusts: Trusts that can be modified or revoked by the settlor
• Irrevocable trusts: Trusts that cannot be modified or revoked by the settlor
• Charitable trusts: Trusts established for the purpose of donating to charity
• Special needs trusts: Trusts established to preserve eligibility for government benefits

Trusts offer many benefits to seniors, including avoidance of probate and continuity in the management of assets in the event that the settlor becomes incapacitated. 

Grounds for Challenging Trusts 

Like most legal arrangements, trusts are subject to legal challenges. There are many reasons why a person might want to challenge a trust, but in the elder law context, one of the most common reasons is allegations of undue influence (to create or change a trust), breach of fiduciary duty, forgery, fraud, waste, or mismanagement. 

Undue Influence 

Undue influence is one of the most common bases for challenging trusts in which the settlor and/or beneficiary is an elderly person who is the suspected victim of financial elder abuse. Generally, undue influence is “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” Cal. Welf. & Inst. Code § 15610.70. The person alleging undue influence (i.e., the person challenging the trust) must prove the following four elements: 

1. The victim was vulnerable
2. The alleged influencer exercised authority over the victim 
3. The alleged influencer took actions that influenced the victim 
4. The result was inequitable 

Allegations of undue influence often arise where the alleged influencer is also a beneficiary of the trust, particularly when that person would not ordinarily be considered a natural object of the settlor’s bounty. This could include caregivers who are not close friends or family members. In fact, California law presumes that certain transfers are the result of undue influence, including transfers to the following people: 

• The person who drafted the instrument
• A person who transcribed the instrument and who was in a fiduciary relationship with the transferor when the instrument was transcribed
• A care custodian of a transferor who is a dependent adult, but only if the instrument was executed while the care custodian provided services to the dependent adult
• A care custodian who commenced a marriage, cohabitation, or domestic partnership with a transferor who is a dependent adult while providing services to that dependent adult

Cal. Prob. Code § 21380.

Readers should note, however, that undue influence is an intensely fact-based allegation and can be difficult to prove. The best way to do so is with the help of a California financial elder abuse attorney. 

Breach of Fiduciary Duty 

A fiduciary is a person who manages money, property, or other affairs for another person and who is bound to act only in the other person’s best interests. Because trustees often manage considerable sums and property on behalf of beneficiaries, they are considered fiduciaries by law. In California, that means a trustee must “administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character.” Cal. Prob. Code § 16040. 

However, not all trustees adhere to a high standard of care. Trustees can breach their fiduciary duties by engaging in the following actions: 

• Failing to follow the trust’s terms
• Failing to follow instructions given by a person who has the power to revoke the trust
• Misappropriating the trust’s funds 
• Self-dealing or other conflicts of interest 
• Impermissibly favoring one beneficiary over others 
• Failing to prudently administer the trusts and preserve their assets

Of course, a breach of fiduciary duty can look different in different circumstances. If you suspect that a trustee has breached their fiduciary duty, please contact a California financial elder abuse attorney.  

Forgery

Forgery occurs when the perpetrator signs the name of another person without authority, forges the signature or handwriting of another person, or makes unauthorized changes to a legal document. In the trust context, forgery could occur, for example, where a beneficiary inserts provisions into the trust instrument that are more beneficial to him or her than the settlor intended. Another example is where one potential beneficiary falsely informs the settlor that another potential beneficiary is deceased in order to obtain that beneficiary’s share of the trust assets. 

Watch Out for Trust Scams 

One of the most common forms of trust fraud is “trust kits,” wherein “trust specialists” use high-pressure sales tactics to scam seniors into creating living trusts that may or may not fit their financial needs — if they are legally valid at all. Such individuals may charge exorbitant fees and impose strict withdrawal penalties. In some cases, the scammer may only want access to the victim’s financial information so that they can try to sell them other inappropriate financial products, like annuities or reverse mortgages. 

Fight Trust-Related Abuse With Help From a California Financial Elder Abuse Attorney 

Many elders place significant sums in trusts, making them attractive targets for potential wrongdoers. If you suspect that a loved one is being defrauded or unduly influenced or that a trustee is breaching their fiduciary duty, you should act quickly to prevent losses. For more information about trust litigation, please contact a California financial elder abuse attorney at the Evans Law Firm, Inc., by using our online contact form or calling 415-441-8669 or toll-free at 1-888-50EVANS (888-503-8267).