Texas Probate Litigation

Who gets the life insurance?

J. Michael Young — Sun, 08 Nov 2009 21:16:08 -0600

I've evaluated, and handled, several cases in the past year involving disputes over who gets life insurance proceeds. Most of the time the answer is easy: whoever is listed as the beneficiary gets the policy proceeds. Such designation will override the terms of a will.

However, in some circumstances the answer is not so simple. Claims to life insurance proceeds often must be evaluated under both Texas and federal law. Some factors to consider:

Was the policy owner married when the policy was purchased?
Did the policy owner get divorced after the policy was purchased?
Did the policy owner remarry?
Was the policy bought directly or through an employer?
What was the source of the premium payments?

I have found that many attorneys have difficulty evaluating these claims. That is likely because they can involve a mixture of Texas community property laws and federal ERISA regulations. In some cases, designating someone other than a spouse as the beneficiary creates a fraud on the community claim. But such claims can sometimes be preempted by ERISA.

It is very important to contact an appropriate attorney to evaluate life insurance claims. The advice you get from friends and relatives will very often be incomplete or simply wrong.

Undue influence is typically more subtle than overt duress

J. Michael Young — Fri, 23 Oct 2009 21:57:53 -0500

Michael:"So my father went to see this bandleader and offered him $10,000 to let Johnny go, but the bandleader said no. So the next day, my father went back, only this time with Luca Brasi. Within an hour, he had a signed release for a certified check of $1000.

Kay: How did he do that?

Michael: My father made him an offer he couldn't refuse.

Kay: What was that?

Michael: Luca Brasi held a gun to his head, and my father assured him that either his brains or his signature would be on the contract."

The above passage from The Godfather is not typical of the type of undue influence alleged in most will contests. The bandleader had a choice between signing the paper or losing his life. Naturally he chose the former option.

In real life, undue influence is rarely so obvious. It typically involves a pattern of interaction between the influencer and the testator, sometimes stretching over a period of years. Typically the influencer isolates the testator and exerts overt, yet sometimes subtle, influence to coerce the making of a will benefiting the influencer. The key in evaluating a potential undue influence claim is distinguishing the encouragements of a relative or a friend for a testator to remember her in his will, from deceptive, manipulative and coercive actions.

Obtaining the testator's medical records in a Texas will contest

J. Michael Young — Fri, 07 Aug 2009 21:45:06 -0500

Many will contests are based upon an allegation the testator lacked capacity when executing the will at issue. In such cases, it is important to obtain the testator's medical records. Records indicating any form of dementia, including alzheimer's, are powerful evidence that a will should not be probated.

However, medical records are protected from disclosure in this age of HIPAA restrictions. Typically, the patient must sign a HIPAA compliant release. Of course, that isn't possible in a will contest. Fortunately, Texas law provides a mechanism to obtain a deceased person's medical records. Texas Probate Code 10B provides:

Notwithstanding the Medical Practice Act, a person who is a party to a will contest or a proceeding in which a party relies on the mental or testamentary capacity of a decedent before the decedent's death as part of the party's claim or defense is entitled to production of all communications or records relevant to the decedent's condition before the decedent's death. On receipt of a subpoena of communications or records under this section and proof of filing of the will contest or proceeding, by file-stamped copy, the appropriate physician, hospital, medical facility, custodian of records, or other person in possession of the communications or records shall release the communications or records to the party requesting the records without further authorization.

When requesting a testator's medical records from a physician or hospital, I include a copy of that statute along with my petition contesting the will.

Contesting a will in Texas.

Retailer pleads no contest to elder fraud

J. Michael Young — Tue, 21 Jul 2009 20:23:57 -0500

Interesting story out of San Antonio. A retailer, Arrow Upholstery & Drapery, was ordered to pay a $102,000 fine after pleading no contest to felony elder fraud. This San Antonio Express news story has the details:

Bertha Briggs, who lived in the Towers retirement community, contacted Arrow Upholstery in April 2006 to install five window drapes. The business initially charged her $62,000 but later agreed to reduce the amount to $11,300 after her daughter complained, according to court documents.

Despite the steep reduction, Briggs was still overcharged, her daughter, Sharon Morey, said in court documents.

Morey traveled from California to meet with the Bexar County district attorney's office in June 2006, after getting a call from her mother's bank attempting to verify a $35,000 down payment check to Arrow Upholstery.

The daughter said Briggs, who died this year, was 90 years old and her eyesight, hearing and memory were failing at the time the purchase was made.

“She had never been good with numbers or finances, and now whatever skill she once had is virtually gone,” Morey previously said in court documents. “She frequently says to anyone, including strangers, ‘I can't see, I can't hear, but otherwise I'm all right.'”

As the story notes, the line between unethical and criminal was Briggs' lack of mental capacity.

New Texas Law Regarding Forfeiture Clauses

J. Michael Young — Wed, 01 Jul 2009 09:47:00 -0500

Many testators try to discourage potential will contestants by leaving them a modest amount in the will, while providing that bequest will forfeit if the beneficiary files a will contest. These in terrorem or "no contest" clauses are construed narrowly by Texas courts, but they do sometimes discourage even well founded contests.

Such clauses will now be more difficult to enforce. On June 19, 2009, Governor Perry signed HB 1969, which became effectively immediately. It amends the Texas Probate and Trust Codes to provide that no-contest clauses will not be enforced to forfeit a devise if the contest to the will or trust is brought:

1) with probable cause; and
2) in good faith

Some Texas appellate decisions had at least hinted that forfeiture would not apply if the contest was brought with probable clause and in good faith, but the Texas Supreme Court has never directly addressed the issue. While probate litigators will no doubt wrangle over what constitutes probable cause and good faith, this codification provides needed clarity.

Some estate planners will argue that this is not a good change to the law because it will encourage more will contests and frustrate the intent of testators. However, those of us who litigate in this area see far too many cases of new wills being executed just after the testator has suffered a stroke or is in the grip of Alzheimers or other dementia.

Will contests in Texas.

Texas Supreme Court: It is much easier to disqualify than remove an independent executor

J. Michael Young — Sat, 13 Jun 2009 20:20:58 -0500

In a recent opinion, the Texas Supreme Court considered an effort to remove an independent executor. The decedent's brother was appointed the independent executor of decedent's estate. The decedent's former wife attempted to remove the brother as executor after a dispute arose regarding the distribution of certain property and she claimed the executor had a conflict of interest since he had an ownership interest in the disputed property. The trial court rejected the effort to remove the executor.

The Supreme Court affirmed the trial court's decision. The Court noted that Section 78 of the Texas Probate Code sets out five different bases for disqualification of a would-be executor, including “[a] person whom the court finds unsuitable.” By contrast, Section 149c lists six specific grounds for removal of an executor, with no broad "unsuitability" standard giving a court broad discretion for removal.

The Supreme Court rejected the former wife's claim that the executor committed gross mismanagement or misapplied estate property. The Court noted the dispute arose from a simple good-faith disagreement and rejected the notion that an executor with a potential conflict of interest should be removed.

Increase in dementia expected to lead to more will contests

J. Michael Young — Wed, 29 Apr 2009 22:03:41 -0500

According to this article from the UK:

Experts believe the number of dementia sufferers will increase sharply in coming decades, mainly because of an ageing population, with one in three over-65s dying with the condition.

Law practitioners are now concerned this could mean more wills will be contested by family members who may argue that the sufferer did not know what they were doing when making changes.

It should surprise nobody that the aging population and increase in the diagnosis of dementia will lead to more will contests, in Texas and elsewhere. A testator suffering from alzheimers or other forms of dementia doesn't necessarily lack testamentary capacity. But it certainly provides good ammunition to a contestant. (photo credit)

North Texas Will Contest Attorneys

The trustee's duty to keep beneficiaries informed

J. Michael Young — Fri, 24 Apr 2009 20:36:24 -0500

Texas common law has long imposed a “duty of full disclosure” on trustees. However, until recently, the Trust Code contained no specific provision requiring this general duty.

In 2005, the Texas Legislature added new Section113.06, taken from the Uniform Trust Code, providing that a trustee has a duty to keep beneficiaries reasonably informed concerning the administration of the trust and the material facts necessary for the beneficiaries to protect their interests. This is a mandatory (non-waivable) duty for trustees with respect to beneficiaries 25 years of age and over who are either

(a) entitled or permitted to receive current distributions or

(b) “first tier” remaindermen.

In a legislative compromise with Texas Bankers Association, the settlor is permitted to waive this duty with respect to beneficiaries under age 25. However, an income beneficiary or “first tier” remainderman under age 25 still can demand an accounting under Section 113.151, assuming he or she finds out about the existence of the trust. Credit to Dallas trust attorney Bill Elliott for his expertise on this topic.

North Texas and Dallas-Fort Worth trust litigation attorneys

Time limit for challenging a will in Texas?

J. Michael Young — Tue, 21 Apr 2009 11:46:00 -0500

Will contests in Texas must be filed within two year's of the challenged will's admission to probate. From Section 93 of the Texas Probate Code:

Period for Contesting Probate

"After a will has been admitted to probate, any interested person may institute suit in the proper court to contest the validity thereof, within two years after such will shall have been admitted to probate, and not afterward, except that any interested person may institute suit in the proper court to cancel a will for forgery or other fraud within two years after the discovery of such forgery or fraud, and not afterward. Provided, however, that incapacitated persons shall have two years after the removal of their disabilities within which to institute such contest."

Note that the statute does provide a discovery rule exception for forgery or fraud.

Texas Will Contest Law Firm

County Courts at Law do not have jurisdiction to consider trust disputes

J. Michael Young — Fri, 17 Apr 2009 22:54:51 -0500

Subject matter jurisdiction in Texas contested probate and trust cases is a patchwork, often confusing, system. The fear of all parties is litigating a case for years, only to find out on appeal that the lower court had no jurisdiction to consider key issues. Subject matter jurisdiction can not be conferred on a particular court by agreement, estoppel, or judicial admissions. Furthermore, lack of subject matter jurisdiction is an issue a party may raise for the first time on appeal.

These concepts are highlighted in a recent opinion by the Fort Worth Court of Appeals. In Wood v. Boldt, the court vacated various rulings made by the County Court at Law No.1 of Parker County. The problem? Only statutory probate courts and district courts have jurisdiction over trusts, even testamentary trusts:

When reviewing proceedings in the county court at law, the phrases “appertaining to estates” and “incident to an estate” are not defined as including the interpretation and administration of testamentary trusts. See id. Under section 5A(b), however, that task-“the interpretation and administration of testamentary trusts”-is a matter “appertaining to” or “incident to an estate” for probate proceedings in the statutory probate courts and district courts. See Act of May 22, 1997, 75th Leg., R.S., ch. 1302, § 1, 1997 Tex. Gen. Laws 4954, 4954-55 (amended 1999 and 2003) (current version at Tex. Prob.Code Ann. § 5A(b) (Vernon Supp.2008)). Thus, under probate code section 5A, county courts at law do not have jurisdiction over matters involving a testamentary trust, but statutory probate courts and district courts do.

The county court at law should have transferred the disputes regarding the testamentary trusts to a district court in Parker County.