Fiduciary Litigation
Jack Lawter wrote an article for Texas Advanced Estate Planning Course for will contests. Many of the ideas here are his that I have tried to adapt to guardianship. My compliments to him.
- Two approaches:
Fiduciary as a defendant
Fiduciary as a plaintiff
- Defendant
Situations that increase chance of litigation:
- Multiple marriages
- Children from prior marriages
- Marital problems
- One spouse has substantially more property than another
- Substantial gifts to boyfriend or girlfriend
- Any gift or bequest to a homosexual partner
- litigious family
- A child or other family member involved to the exclusion of others.
- Extrememly ill or extremely elderly client.
- Any unusual gift or bequest involving a great deal of money.
- Any family member who hires a lawyer
- Any family member who hires a trial lawyer.
Any of these situations demand extra care.
What do you do?
Guardians and probate lawyers talk too much.
- Disclosure problems
Much information is privileged. Do not divulge it. Guardian has right to claim attorney client privlege on behalf of ward.
No privilege for furthurance of crime or fraud (if guardian is stealing money) - Don't talk down to people--leads to anger and frustration
- The more difficult someone is, the more information they should receive as long as you are not violating confidentiality rules.
- Be careful with joint clients-treat them equally.
If they begin to disagree, best approach is to withdraw - Assets-no reason for guardian of the estate to have possession of the ward's will. Baumann v. Willis 721 SW 2d 535 (1986).
- File maintenance-keep all documents
organize them.
never destroy them--limitations begins to run on competency date - If litigation is likely, be careful with the information in your
bills. Don't reveal confidential info. Make sure bill coordinates with
other file info.
Use care on bills when describing confidential matters - Consider Potential conflicts of Interest-if you have a personal interest, get a written waiver from all parties but ward cannot waive.
- Consider relationships with other family members
- Be careful about who gives you instructions
- Remember who your client is.
- Think like a trial lawyer
- Tortious Interference with Inheritance rights
- Latest hot type of lawsuit in will contests and in some guardianships.
- Definition-Restatement One who by fraud duress or other tortious
means intentionally prevents another from receiving from a third person
an inheritance or gift that he would otherwise have received is subject
to liability to the other for loss of the inheritance or gift.
- Will drafted for ward
- Guardian spends down estate particularly if done without court approval.
- Possible cause of action developing for interference with
inheritance expectancy Neill v. Yett 746 SW 2d 32 (1988)
- If you are a witness in a proceeding you should have two goals:
- Assist the judicial process
- Avoid becoming a defendant (don't take sides)
- Representing a fidiciary
- Duty of disclosure-most difficult to give full disclosure to one who is suing or threatening to sue.
- Allocation of fees-Are attorney's fees being charged to the guardian's individual interests or to the estate's interest? Court orders are important here as well as care in the billing process.
- Urge your fidiciary to show restraint.
- Sometimes the fiduciary simply has to make a decision--some are paralyized by fear. They may want declaratory judgments, hearing on every matter. Make sure the issue involved justifies the expense and delay.
- Resignation is always an option
- Be careful what you write. A successor guardian may decide to reveal it.
- Correct mistakes
- Use common sense-sometimes the technically correct decision will not make economic sense. Try to get everyone to agree on the more reasonable course of action. (example-detail of an accounting)
