Estate planning is an area of law that requires legal representatives to work closely with the people who have been designated to serve as the representatives of a deceased person’s estate.
Prior to passing away, many people prepare a will. Typically in the will a person is named who should serve as the executor or administrator of the estate of the deceased person. An executor is responsible for carrying out the duties that are associated with probating a will and then distributing an estate.
Given the number of people, types of property, and laws that apply to the probate process, there are numerous ways in which an estate planning lawsuit can arise.
Some examples of the types of disputes that can arise during the probate process include the following:
- Fraudulent Transfers: When a person transfers an asset to another person or entity without receiving something of adequate value in return, it takes that asset out of reach of creditors. This means that creditors cannot seek to use these items to pay off the deceased’s debts. Or the creditor would have to resort to actions that are not in compliance with the guidelines of the Uniform Fraudulent Transfer Act (“UFTA”).
- For example, if a person who transfers property that should belong to their estate is left bankrupt by the transfer, then this transfer may constitute constructive fraud. Acts such as insider transfers and concealment of assets, may be considered as actual fraud.
- If a transfer is fraudulent, a creditor or the estate may file a lawsuit against the person to whom the asset was transferred. The goal would be to set aside the transfer so as to use the asset to satisfy a creditor’s claim, and or distribute the property to a beneficiary as provided in the will.
- Suing an Executor: The executor of an estate can be sued if there is evidence of improper or illegal distribution of an asset of the estate or a share of the inheritance. Or, the executor may be guilty of some other kind of malfeasance. For example, an executor might transfer the title to property without authorization, use estate funds to invest in their own properties or companies, use estate funds to pay their own expenses or give themselves unreasonable compensation. Conduct of this type on the part of the executor may necessitate legal action;
- Undue Influence: If family members or other beneficiaries who have an interest in a will, suspect that the person who created the will (i.e., the testator) was subject to coercion or duress from another person (usually one with an interest in the will), then they may have a claim for undue influence.
- For example, when the person writing a will is sick or weak because of either physical or mental conditions, it can lead them to make unsound decisions about the will when it is prepared, especially if someone with an interest in the estate of the person tries to influence the person’s choices..
- Additionally, undue influence claims may arise if a professional has a relationship with the person preparing a will that is confidential, e.g., an attorney, doctor, or the like, and causes the person to make decisions about the distribution of their assets that are illegal or unfair. Such matters are generally litigated in probate court.
- Breach of Fiduciary Duty: As previously mentioned, the executor or administrator of an estate has a fiduciary duty. This means that they must fulfill their responsibilities as mandated by law and in a manner that is completely ethical. They must ensure that the process of managing and distributing the deceased person’s estate is done in a manner that is fair, legal and in accordance with the provisions of the will.
- In addition to making sure that debts are paid off and inheritances are properly provided to the beneficiaries entitled to them, executors are also responsible for communicating with beneficiaries and keeping track of the market value of assets. If an executor neglects any of their mandated duties, then it could lead to a claim for breach of fiduciary duty, especially, if their conduct results in the loss of assets.
- Lack of Capacity: Under the law, a person preparing their will is required to have the necessary mental competency to do that and to understand the nature of their assets and the people to whom these assets are going to be distributed. A will can be declared void if it can be proven that the person who made the will lacked the necessary capacity. Usually, incompetence is established through a prior medical diagnosis of some kind of mental illness.
- Forged Documents: If someone suspects that estate planning documents such as a will or a trust are forged, or that signatures have been forged, there will definitely be a legal challenge to the plan.