Issues in Estate Planning – Agents, Promises and Trustees

Overview

When one thinks of estate planning, visions of wills and/or trusts come to mind and maybe even a power of attorney for financial and health care decisions.  Those are the standard documents.  If a spouse is also involved in the process, then the coordination of the language in the documents for each spouse is also critical to ensure that the couple’s property passes as desired after the last of them dies.

But, beyond the basic documents and coordinated planning, there are numerous legal issues that can arise.  Those can include issues associated with someone else acting on one’s behalf; promises to pass property at death; and the process for replacing a trustee of a trust.  Some recent court cases dive into each of these issues.

Legal issues arising during the estate planning process – it’s the topic of today’s post.

Signing Documents On Behalf Of Someone Else

In In re Estate of Moore, No. 115,628, 2019 Kan. LEXIS 321 (Kan. Sup. Ct. Sept. 6, 2019), the decedent appointed the defendant (her ex-daughter in law) as her power of attorney. The plaintiff (the decedent’s son) had a long history of poor financial decisions, including losing 440 acres that the decedent pledged as security for him. More than $100,000 of the decedent’s money was lent or just straight up taken out of her accounts by the plaintiff. An attorney was hired to keep the plaintiff from obtaining the decedent’s “homeplace.” A transfer on death deed was created to move the property to the defendant so that it could later be transferred to the decedent’s grandsons (the children of both parties).

In May of 2004 the deed was read to the decedent, and the legal description was double checked. One of the grandsons asked if that decedent wanted them to have the property, which she answered “yes.”  In the presence of five witnesses the decedent asked the defendant to sign for her. The deed was notarized and filed. The decedent died on September 15, 2009. On November 7, 2012, the defendant executed a warranty deed conveying the homeplace to the grandsons. In 2014 the plaintiff filed petition for determination of descent asserting that the homeplace should have been in the estate. The grandsons countered that the property passed to them by transfer on death deed and was not in the estate.

The trial court initially found for the plaintiff based on the fact that the defendant could not benefit herself with that right. The defendant filed a motion to reconsider and claimed that the she did not sign the deed with her power of attorney but as an amanuensis – at the direction or dictation of someone else. The trial court agreed as did the appellate court. On further review, the state Supreme Court also agreed. The plaintiff challenged the validity of the signature by amanuensis noting that the defendant signed the transfer on death for the decedent and the added "by Maureen Miles, Power of Atty." The Supreme Court noted that state (KS) common law recognizes as valid a signature made by a person at the direction of someone else. The Court noted that the evidence was clear that the deed was properly signed by amanuensis. There were six witnesses that testified that the decedent asked the defendant to sign the deed for her. The plaintiff failed to present evidence to the contrary. The Court also rejected the plaintiff’s claim that the signature was not properly acknowledged. The deed was notarized after the defendant signed it for the decedent. The notary attached a notation indicating this intricacy. The deed was filed 3 days later. The deed conformed to state law by being signed; designating a beneficiary; acknowledged by a notary; and recorded in the office of the register of deeds prior to the decedent’s death. The Court found the deed signed by amanuensis to be proper even though the notary acknowledged the defendant’s power of attorney. The Court also rejected the plaintiff’s undue influence claim by concluding that the plaintiff failed to rebut the presumption that the decedent was competent in accordance with the general competency test for testamentary capacity. The decedent had strong motivations to ensure that the plaintiff did not receive her property, and the defendant transferred the property to the decedent’s grandsons before the litigation and did not benefit from the transaction. 

Promises, Promises...

In a recent Idaho Supreme Court decision, Turcott v. Estate of Bates, 443 P.3d 197 (Idaho 2019), the Court dealt with the legal force of an apparent promise not to change a will before death.  Under the facts of the case, in the late 1990’s the decedent executed a will devising the decedent’s farm to the decedent’s daughter and son equally. From 2007 until 2014 the daughter and her husband moved to the farm. They built a home on the farm and spent a lot of time and money maintaining the farm. In 2014, the decedent remarried and revoked the will. The decedent then placed the farm in a trust listing his new wife and himself as beneficiaries. The new will stated, "I purposefully have excluded my daughter as a devisee of my estate and my daughter shall take nothing from my estate." In 2016, the daughter sought to enforce the validity of the first will based on a promise that the will would not be changed or revoked before death. The trial court dismissed the plaintiff’s claim for the alleged promise to maintain the will. The plaintiff then filed an amended petitioner seeking quantum meruit damages for the work the plaintiff performed on the farm. The trial court awarded the plaintiff $136,402.50 in damages for unjust enrichment, but the plaintiff appealed on the basis that the amount was too low. On further review, the appellate court affirmed and did not award attorney fees because the appeal was not frivolous. 

How Long Does a Trustee Serve?

In Waldron v. Suasan R. Winking Trust, No. 12-18-00026-CV, 2019 Tex. App. LEXIS 5867 (Tex. Ct. App. Jul. 10, 2019), the plaintiff was the beneficiary of a trust that her parents created. The appointed trustee of the trust resigned and the appointed successor trustee (a bank) refused to serve as trustee. The trust instrument specified that if the successor trustee failed to serve that any bank or trust company could be appointed trustee by the serving of written notice signed by the grantor. However, the plaintiff could not find a bank or trust company willing to serve as trustee, so the plaintiff filed an action seeking to have an individual appointed as trustee. The trial court made such an appointment.

The plaintiff later filed an action to be appointed trustee due to improper conduct of the individual that had been appointed as trustee. That individual did not object to being removed as trustee upon appointment of another qualified trustee. The plaintiff subsequently sought to have another person appointed as trustee. This eventually happened, but the plaintiff asserted that the trial court ignored the trust language allowing for immediate termination of the trustee without cause by written letter if both grantors were legally disabled or deceased. Immediate termination would have saved the plaintiff from paying additional expenses for professional serviced.  The appellate court noted that the trust language did not provide a procedure for appointing a successor trustee when a bank or trust company could not be found to serve. Thus state (TX) law applied and left the decision of a successor trustee up to the court. State law also specified that an existing trustee’s fiduciary duties were not discharged until the trustee had been replaced by a successor trustee. As a result, the appellate court affirmed the trial court’s decision. 

Conclusion

Estate planning is a complex process in many situations.  Precision of drafting language is critical, but it depends on client clarity as to goals and objectives and attention to changes in applicable law.  Even then, however, landmines may still exist.  This is why “boilerplate” language and “boilerplate” forms printed off the web can be dangerous to use.  Get and keep good estate planning counsel.