Texas Probate Litigation

Court may construe a will before it is admitted to probate

J. Michael Young — Tue, 17 Jan 2017 15:14:13 -0600

Many will contests involve a challenge to the validity of a will, such as claims it did not meet formality requirements or that the testator lacked capacity or was subjected to undue influence. However, sometimes the primary dispute is how to interpret one or more provisions of a will. I find this to be most often the case when the will is not prepared by an experienced estate planing lawyer. Unfortunately, homemade wills often contain confusing, unclear, or outright contradictory provisions. Or a testator may have an excellent will drafted by a lawyer, only to make a homemade codicil that offers more confusion than clarity.

The procedure for having a court determine meaning of a legal document, such as a will, is through a declaratory judgment action. The court examines the document and makes a ruling as to the meaning of one or more provisions. Sometimes, the court will review evidence outside of the document if it finds the words used are unclear.

In some cases, there might be both a battle to determine if a will can be admitted to probate and a battle over what it means if it is admitted. Does a will have to be admitted to probate before a court can interpret a will's provisions? No, according to the Fort Worth Court of Appeals in Estate of Rhoades. The court conceded that there was little detailed authority discussing whether a will must be admitted to probate before it becomes ripe for construction under the Uniform Declaratory Judgments Act (UDJA). But the court found that Texas courts have construed wills under the UDJA before, during, and after admitting the will to probate.

The UDJA itself states that a person interested under a will “may have determined any question of construction or validity arising under the instrument . . . and obtain a declaration of rights, status, or other legal relations thereunder.” The UDJA is a statute designed to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations. In some cases a fight over the underlying validity of a will might be effectively rendered of less importance, depending on how the will is interpreted.

Logically, it makes sense to determine if a will is valid before fighting over what it means. But in the trenches of litigation, it would often be an inefficient use of resources to litigate over factually intensive issues of capacity and undue influence before determining what the will actually means.

I will devote a later post, or three, to the legal principles Texas courts rely upon to interpret wills and trusts.

Challenging non-testamentary designations

J. Michael Young — Wed, 21 Dec 2016 11:44:47 -0600

Much of the "action" in probate litigation these days does not involve challenges to testamentary dispositions. Instead, I see more of a trend in my practice of challenges to beneficiary designations. Those include designations for:

life insurance
accidental death insurance
bank accounts
investment accounts
401k accounts
IRA accounts
certificates of deposit
ERISA accounts

Typically, a letter to an institution asserting a challenge will be sufficient to put payment in suspense. That will lead to a period of opportunity for negotiation and, failing that, an interpleader suit. I have encountered a few situations where a financial institution, usually a brokerage, will demand a court order freezing an account. That typically means suing the institution and obtaining a TRO. That is not my preferred route, but sometimes necessary. The institution will respond with an interpleader, seeking to deposit the funds and be discharged from liability. That will allow the competing claimants to battle over the funds.

Common claims in a beneficiary dispute:

Claim of a lack of mental capacity to execute a designation
Claim that a designation was the product of undue influence
Claim that a designation was the product of fraud
Claim that the owner of the policy or account expressed a clear intent to change the beneficiary
Claim that the owner of a policy or account did or did not substantially comply with designation rules
Claim that a spouse is entitled to the proceeds
Claim that a designation in favor of an ex-spouse is overruled by a divorce
Claim that a divorce decree provides an ex-spouse with rights in the account or life insurance benefits
Claim that a power of attorney was wrongly used to designate a beneficiary
Claim that the beneficiary killed the account or policy owner

Beneficiary dispute lawyers

Estate of Koontz: Another summary judgment overturned

J. Michael Young — Thu, 17 Nov 2016 14:10:40 -0600

Estate of Koontz is a very recent decision from the San Antonio Court of Appeals. The trial court in Bandera County had granted summary judgment against a will contestant's claims of lack of testamentary capacity and undue influence. The trial court also ordered the contestant to pay the executor $18,029.49 in attorney's fees, finding the contest was not brought in good faith or with just cause. The court of appeals reversed the summary judgment ruling and the award of attorney's fees.

The primary evidence in response to the motion for summary judgment was the affidavit of the contestant. Because he brought the contest after the will was admitted to probate, he had the burden to prove lack of testamentary capacity. In overturning the summary judgment ruling, the court of appeals noted the following from the contestant's affidavit:

the decedent suffered from severe bi-polar depression for decades;
the decedent had several prolonged episodes of paranoid and delusional behavior that lasted for weeks in the months surrounding the will execution;
the decedent began to accuse his devoted wife of over 50 years of having an affair; and
the decedent tried to lease out property he no longer owned.

The court of appeals found the affidavit contained "more than a scintilla" of evidence to raise a genuine issue of fact with regard to the decedent's testamentary capacity. The testator's attempt to lease out property he no longer owned implied that he did not understand the nature of his property, an element of testamentary capacity. The issues regarding his mental stability in the months surrounding the will also provided evidence of a lack of capacity at the time of the will execution:

The pivotal issue is whether the testator had testamentary capacity on the day the will was executed. However, evidence of the testator’s state of mind at other times can be used to prove his state of mind on the day the will was executed provided the evidence demonstrates a condition affecting his testamentary capacity was persistent and likely was present at the time the will was executed.

The proponent of the will cited deposition testimony by the lawyer who drafted the will and was present at the execution. As would be expected, the lawyer testified she believed the testator had capacity. However, she conceded that she would have likely inquired further had she known the testator suffered from bipolar disorder and had experienced delusional episodes. Thus, the lawyer's opinion was at least partially hedged.

The court of appeals concluded that the contestant had presented enough evidence of lack of capacity to survive summary judgment and proceed to a jury trial. While it is certainly helpful to have more than the sworn testimony of the will contestant, even interested testimony that is specific enough can support a successful contest. At t he summary judgment stage, a trial court is to presume the credibility of witnesses supporting the contest, and all doubts must be resolved in favor of the contestant. At trial, the jury will make its evaluations of the credibility of the witnesses and make a decision based on the preponderance of the evidence. Since will contests can be inherently unpredictable, the odds are the case will now settle prior to trial.

Estate of Matthews: Successful challenge to marriage

J. Michael Young — Tue, 18 Oct 2016 10:50:08 -0500

A fairly common scenario in estate litigation involves a claim from a widow to a share of an estate. Often there is a claim of a common law marriage. Texas recognizes common law marriage under some circumstances. Once established, a common law marriage is effectively the same as a formal marriage.

Even a formal marriage can be challenged, under limited circumstances. After a person's death, an interested person may petition a court to annual a marriage entered into less than three years before death, by proving that:

on the date the marriage occurred, the decedent did not have the mental capacity to: (1) consent to the marriage; and (2) understand the nature of the marriage ceremony, if a ceremony occurred.

Texas Estates Code, Section 123.103

In Estate of Matthews III, the San Antonio Court of Appeals upheld a jury verdict that a decedent did not have sufficient mental capacity to marry. He was a disabled veteran who married his caregiver only ten weeks before he committed suicide. The court of appeals noted that the burden is on the party challenging the marriage to show lack of capacity, which may be shown by circumstantial evidence which includes:

(1) the person's outward conduct, “manifesting an inward and causing condition;” (2) any pre-existing external circumstances tending to produce a special mental condition; and (3) the prior or subsequent existence of a mental condition from which a person's mental capacity (or incapacity) at the time in question may be inferred.

In this case there was conflicting evidence regarding the decedent's capacity. The alleged spouse pointed to medical records containing descriptions of his mental status as “average,” “stable,” “normal,” “fair,” and “good.” On the other hand, an expert testified that decedent suffered from major depression, PTSD, ADD, alcohol abuse, marijuana use, and progressive multiple sclerosis. The medical expert opined that the MS had atrophied decedent's brain and his cognitive function tests indicated prominent deficits, including in executive function.

The court of appeals found that the evidence was sufficient to support the jury's finding that the decedent lacked the capacity to consent to marriage and understand the nature of the marriage ceremony. This is often the result when the evidence is conflicting. And while there is nothing inherently wrong with a person marrying their caregiver, such a marriage is naturally going to arouse some suspicion.

Given the factually intensive nature of these disputes, it is important to consult with an attorney experienced in evaluating estate litigation matters involving disputed claims of marriage in Texas, whether formal or common law.

Estoppel does not prevent beneficiary from pre-suit discovery

J. Michael Young — Tue, 05 Jul 2016 15:09:12 -0500

The Fort Worth Court of Appeals decision in In Re Meeker involves two important issues for probate litigators: entitlement to pre-suit discovery and estoppel based on acceptance of benefits. Both issues arise fairly regularly in will contests.

Texas Rule of Civil Procedure 202 provides a limited method to obtain discovery of facts before actually filing a suit. It is a useful tool when a litigant suspects they have a valid claim, but wish to investigate further before actually filing suit. There are some exacting requirements of the rule and the discovery tools are more limited than would be allowed in an actual lawsuit. But it can be a useful mechanism at times, particularly when a potential will contestant is unable to obtain much information through informal investigation.

In Meeker, a son of the decedent filed a Rule 202 petition for pre-suit discovery in aid of a potential will contest. He sought to investigate whether his father had sufficient capacity to execute the will at issue. The Tarrant County Probate Court No. 2 granted the request.

The executor challenged that ruling through a mandamus appeal. Among other arguments, the executor contended that the son had already accepted benefits under the will and therefore had no standing to contest the will. Without standing to contest the will, a pre-suit investigation would be pointless.

There is at least one Texas appellate decision holding that a person is estopped (barred) from a contesting a will if they have accepted benefits under that same will. The theory is designed to prevent one from embracing a beneficial interest devised to him under a will, and then later asserting a challenge of the will inconsistent with the acceptance of benefits.

However, there are other decisions holding that estoppel does not bar a beneficiary from contesting a will if they stand to gain even more from a successful contest and they were going to obtain the already received benefits anyway. The son made that very argument, that the filing of a will contest does not mean that he was taking a position inconsistent with the benefits he had already received. He noted that if he succeeded in the will contest, he would keep whatever he already received, plus an additional portion of his father's estate.

The majority of the court of appeals agreed with the son. It found that the exception to the estoppel rule applied, as there was no inherent inconsistency in obtaining benefits from the estate and then contesting the will to obtain a larger share.

A dissenting opinion disagreed and argued that the son could not almost simultaneously accept money via a will provision, then turn around and seek to investigate whether the will was invalid. This reasoning is in line with a Texarkana Court of Appeals decision from 1996. Perhaps the Texas Supreme Court will reexamine the estoppel issue in the next few years.

Garrett v. First State Bank of Central Texas: No informal fiduciary relationship

J. Michael Young — Mon, 20 Jun 2016 17:37:06 -0500

In Garrett v. First State Bank of Central Texas, the Waco Court of Appeals considered a dispute over the ownership of a decedent's account. The bank filed an interpleader when faced with competing claims to the account proceeds, between the decedent's estate and his caregiver.

The decedent added the caregiver as a signatory to his money market account. After decedent's passing, the caregiver claimed he wanted the account to pass to her after his death. But the trial court ruled the account documents the decedent signed did not make her the survivorship beneficiary. There was a dispute as to whether the decedent had actually instructed the bank that he wanted the caregiver to be the beneficiary of the account or just a signatory to pay bills.

The caregiver sought to recover from the bank, allegedly because the bank representative did not follow the decedent's instructions regarding the account paperwork. One of the claims the caregiver made was that the bank breached an informal fiduciary duty it owed to act in the caregiver's best interest. The jury decided that there was no relationship of trust and confidence between the caregiver and the bank.

The court of appeals affirmed the jury's finding. I suspect that the court of appeals might have overruled that finding even if the jury had gone the other way. Texas courts are reluctant to find informal fiduciary relationships in business and banking situations. There would have to be substantial evidence of personal trust and reliance over an extended period of time.

Mind your QDRO

J. Michael Young — Wed, 11 May 2016 15:24:14 -0500

I routinely handle life insurance beneficiary disputes. As I mentioned in a previous post, the first issue I analyze is whether the life insurance policy is governed by state law or by a federal law known as ERISA.

Many ERISA policy disputes involve claims by former spouses to life insurance benefits. Many states bar former spouses from receiving life insurance benefits if the designation was made prior to the divorce. But such state laws are generally superseded by ERISA. Often there is a claim that the former spouse waived their beneficiary status in the divorce decree. A state divorce decree judgment can supersede ERISA if the decree is a Qualified Domestic Relations Order (QDRO). To qualify as a QDRO, the decree generally should provide:

1) the name and the last known mailing address, if any, of the participant and the name and mailing address of each alternate payee covered by the order;

2) the amount of percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined;

3) the number of payments or period to which such order applies, and

4) each plan to which such order applies.

Courts tend to interpret these requirements with varying degrees of strictness. Some take a strict view, while others take a more liberal view and look at whether the decree substantially complies with the ERISA QDRO requirements.

It is always important to consult with an attorney experienced in handling ERISA life insurance beneficiary disputes.

In re Estate of Parrimore: Court of appeals upholds factual findings regarding capacity and undue influence

J. Michael Young — Sat, 27 Feb 2016 21:07:58 -0600

Texas appellate courts are generally reluctant to overturn trial court factual findings regarding testamentary capacity and undue influence. In re Estate of Parrimore, from the Houston 14th Court of Appeals, is an example.

Parrimore involved a trial to the judge (bench trial) of a will contest. The contest involved the usual issues regarding testamentary capacity and undue influence. The evidence at trial was that the testator signed the will only 11 days after being released from the hospital for treatment after a stroke. However, there was also evidence that the testator had begun work on his will long before the stroke and it was consistent with wishes long expressed to friends.

The court of appeals noted that there was certainly evidence to suggest the testator may have lacked capacity to execute the will. There was also evidence to support the undue influence claim. However, there was also compelling evidence to the contrary, and the court of appeals noted:

When presented with conflicting evidence, the trial court, as the trier of fact, is the sole judge of the credibility of the witnesses and the weight to be given to their testimony. The trial court may believe one witness, disbelieve others, and resolve any inconsistencies in the evidence.

The result is not surprising, given the great weight put on the factual circumstances and credibility of witnesses in will contests. However, the particular facts of this case are interesting.

The will was not prepared by a lawyer and the execution was not overseen by a lawyer. Instead, it was prepared by the testator and his wife via a computer program. That isn't particularly unusual these days, although it is not wise. What sounds unusual is that the testator and his wife organized a party at their home for the signing of the will. Family and friends were invited to the party. The testator played pool and circulated around the house talking to guests at the party. He then signed the will in front of witnesses and a notary.

Having the will executed after mingling with a group of friends provides a ready group of witnesses familiar with the testator who could testify to his capacity and that he signed voluntarily. On the other hand, the wife's involvement in the drafting and "party" planning provide cause for suspicion, along with the timing of the execution. My guess is that had the judge or a jury decided the will was the product of undue influence or lack of capacity, the court of appeals would have upheld that result as well.

Determining if a life insurance policy is governed by ERISA

J. Michael Young — Thu, 10 Dec 2015 15:24:34 -0600

One of the first questions I ask a potential client with a life insurance dispute is whether or not the insured obtained the policy through their employer. This helps me determine whether state or federal law applies to the dispute. This is crucial because the particular federal law that governs employee benefits, ERISA, preempts most state law rights and remedies. It also generally determines the forum where the dispute will be heard and if a jury will be involved in deciding the case.

ERISA typically applies when an employee obtains life insurance through an employer, even when the employer may have only a limited role in administering the coverage and claims. In a typical arrangement, a group insurance policy is issued to an employer who determines that it will provide coverage to certain eligible employees. The employer also may contribute at least part of the cost of the employee's coverage or performs other functions or actions indicating that the employer endorses the program or has adopted the policies as part of its overall employee benefit program.

This is a complex area of the law. Anyone confronting a potential life insurance beneficiary dispute should consult an attorney experienced in evaluating whether state or federal law applies.

ERISA Life Insurance Lawyers

When offering a will can lead to criminal charges

J. Michael Young — Thu, 19 Nov 2015 14:55:13 -0600

The Mary Ellen Bendtsen estate has been the subject of much media coverage in the Dallas area. The short version of events is that she owned a historic mansion on Swiss Avenue in Dallas. Several years before her 2005 death, she was befriended by two much young antique dealers, including Mark McCay. Eight days before she died, she executed a will in a hospital leaving the house to McCay and the other dealer. The entire saga is the subject a series of stories in the Dallas Morning News and became something of a rallying point against financial abuse of the elderly and infirm.

Mccay offered that 2005 will for probate the day after Bendtsen died. Bendtsen's daughter successfully contested that will.

McCay was subsequently indicted and convicted of attempted theft of property valued at more than $200,000. The trial court assessed his punishment at ten years in prison, probated for four years, and a $1000 fine.

He appealed the conviction, arguing that causing a person to execute a will and filing that will for probate are not illegal acts. In its decision, the Dallas Court of Appeals agreed that causing and offering a will are not criminal acts. But the decision noted that McCay's conduct went beyond, including acting with specific intent to deprive someone of property who could not give effective consent.

McCay contended the prosecution improperly attempted to criminalize a will contest. The court replied that a will contest determines the validity of a will, whereas a prosecution for theft determines whether a person has the specific criminal intent to deprive the owner of her property:

"The only will contests that can be 'criminalized are those in which a will proponent knowingly submits a will for probate with the specific intention of stealing an estate from others with the legal right to inherit. A good faith contest between two wills does not amount to a theft and would not be prosecuted as one."

The court of appeals then detailed extensive evidence that MCCay had been trying for years to have Bendtsen leave him the house. Those efforts had been unsuccessful for years, until Bendtsen was on her death bed and incapacitated.

I have a number of thoughts on the issues raised in this case that I can discuss in a later post. Ordinarily, these matters should be handled in civil proceedings. Threats of criminal prosecution should not be used as leverage in a civil case. But too often civil remedies are cost prohibitive to pursue. Wrongdoers are aware of this and the only effective deterrent may be a series of high profile criminal prosecutions.