Articles Posted in Wills and Estates

When an estate document has been created and executed, courts look at the document itself to determine the will of its creator. The great preference in case law is to stay within the “four corners” of the document, but there are occasions when extra evidence is allowed to be considered to show the writer did not intend a certain result to occur in the execution. A family member or another party with legal standing can file suit, alleging that someone exerted undue influence over the creator of the will or the estate holder. Typically, the party alleging this bears the burden of proof, but the law provides exceptions to this general rule. However, there’s a separate burden of proof if one of the parties involved had a fiduciary relationship with the estate holder. In Teves vs. Costa (15-P-1094), the Appeals Court reviewed a Summary Judgment in favor of the defendants, who argued there was no proof they exerted undue influence over the estate holder.

The original action stemmed from a man who lived with his long-time companion, unmarried, for 25 years until she died in 2008.  During the last six years, he and she lived together in a Massachusetts home that is the subject of the litigation. In 1998, he appointed his partner as his attorney-in-fact and her daughter as successor. After his partner died in 2008, her daughter was added as a signatory to his bank accounts, and he lived with the daughter and her husband until a hospitalization in 2009. During this 11-year period, he was isolated from his children and extended family. When his daughter took over his care after the hospitalization in 2009, she discovered he was destitute, even though he had a pension and half a million in common stock after his retirement.

The daughter, as the trustee of his estate, filed suit against the partner’s daughter and her husband for exercising undue influence and exerting control over his bank accounts and property. The primary concern was the $500,000 from the father toward the purchase of a home worth $695,000, for which he received nothing in return. The house was in the name of his partner and the defendants. The estate holder’s daughter and trustee asserted that there was a verbal agreement between her father and the partner’s daughter and son-in-law to repay the estate for the monies provided for the home purchase. Summary judgment was granted in the defendants’ favor, with the probate judge finding there was no evidence that the defendants stood in as fiduciaries or formed a verbal agreement. The trustee appealed, stating there were triable issues.

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Many people avoid thinking about what will happen to their property and assets after their death, and ultimately die without a will to determine how their estate will be disbursed. Family members of an individual who dies intestate may not see the necessity in determining how the estate should be divided and may delay in taking any action to raise an estate and appoint a personal representative. The failure to take prompt action when a person passes away can have a damaging effect on your ability to control the estate’s assets, however. A recent Massachusetts estate planning decision held that you waive certain rights if you do not act in a timely manner.

In Bennett v. R.J. Reynolds Tobacco Company, the Superior Court of Massachusetts defined what rights a limited personal representative has with regards to a decedent’s estate.  Specifically, the court addressed whether a personal representative who is granted limited authority under the Uniform Probate Code (UPC) has standing to pursue tort actions that are an asset of the decedent’s estate. In Bennet, the Plaintiff’s father died on March 7, 2014. Section 3-108 of the UPC provides that no testacy or appointment proceeding may take place more than three years after a decedent’s death. If no personal representative has been appointed within three years of a decedent’s death, section 3-108(4) of the UPC allows for a personal representative to be named, but only for the limited purpose of determining successors to the estate. Section 3-108(4) specifically states, however, the representative does not have the right to possess any estate assets. Plaintiff was appointed the limited representative of the estate, pursuant to section 3-108(4), on July 26, 2017.

Plaintiff subsequently brought claims of wrongful death and civil conspiracy against the Defendant, as the limited personal representative of the estate of her deceased father.  The Defendant filed a motion to dismiss the Complaint, arguing the Plaintiff’s appointment as a personal representative of the estate under section 3-108(4) of the UPC did not grant her the authority to pursue a wrongful death claim or any tort claim that belonged to the decedent and became a part of the decedent’s estate upon his death.

The Massachusetts Appeals Court affirmed a verdict holding the son and power of attorney of the decedent accountable for a million dollars after he removed his father’s girlfriend as the beneficiary of several accounts.  The long-time girlfriend of 38 years and the defendant son were to both benefit from the division of his estate.  The father had named his girlfriend and his son as the beneficiaries and joint tenants on several bank accounts and executed a will in 2013 dividing the estate nearly evenly between the girlfriend and the son. 

Prior to the execution of the will, the girlfriend provided care for the estate owner from 2005 to 2013 after a stroke.  His health was in a general state of decline until 2013, when it became significantly worse following a diagnosis of Stage IV pancreatic cancer.  The girlfriend sought help from the son, since she was unable to care for the father.  She provided the son several financial records, and the father named his son as power of attorney.

After this occurred, the son began transferring several of the bank accounts to his name and his father’s name only.  Some of these transactions included his father, but others did not.  Evidence presented during the trial supported the girlfriend’s claim that the owner of the estate did not know about some of these transfers.  The son also sought new counsel to help prepare a new will for his father.  A second will was executed, leaving the entire estate to the son, less than a month after the first will was executed.

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Several things must be considered when a personal injury settlement is reached. One of these considerations is whether the injured person is required by law to notify and pay a portion of the settlement to a third party. Some entities, often health care providers, are allowed to place a lien on settlements or benefits so that they can be paid for the services previously rendered. The Appeals Court recently examined an appeal by the estate of a woman injured in a Massachusetts car accident, which was ordered to provide payment to the Massachusetts Executive Office of Health and Human Services (MassHealth).

The estate reached a settlement with the defendant driver who caused the car accident and subsequent injury. This accident aggravated the now-deceased plaintiff’s dementia prior to her death a year after the accident. The estate filed suit within two years after her passing and ultimately reached a settlement of $250,000. Before the injured person died, MassHealth provided over $18,000 worth of medical care and imposed a lien on the claim for reimbursement of expenses paid for the injured person’s care.

The estate and MassHealth conferred about the lien prior to the settlement, discussing the possibility to reduce the lien. However, nothing came of these discussions because the injured person’s attorney did not submit the forms that would reduce the lien. After the settlement was reached with the defendant driver, MassHealth issued demand letters to the estate for payment. Eventually, MassHealth learned it was not named on the settlement check. Initially, MassHealth attempted to discuss the matter with the estate’s attorney, but it eventually moved to intervene on the settlement. The lower court granted the motion for intervention and ordered payment of the medical expenses. The estate appealed.

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Reverse mortgages are becoming a popular source of income for aging Massachusetts residents who have accrued equity in their home. These homeowners borrow against their home equity in exchange for liquid assets to help pay for daily living expenses. A home equity conversion mortgage is one of these loans available to homeowners over the age of 61 under which payments are made to the owner as a line of credit. These are either provided in a lump sum or in monthly payouts. The loan does not become due until the borrower dies or no longer lives in the home, with interest and fees typically paid by the sale of the home. With a reverse mortgage, the borrower is usually not personally liable for the repayment of the debt.  The lender looks solely at the mortgaged property for repayment. This means upon the owner’s death or choice to live elsewhere, the entire loan and fees come due, and it is up to the heirs to repay the loan by selling the home. Failing to do so may mean the lender can foreclose on the mortgage and sell the home.

The Massachusetts Supreme Court recently issued an opinion (SJC-12325) dealing with three Massachusetts foreclosure actions initiated by a lender, which chose to pursue actions in Land Court against each borrower or the executors of their estate, seeking a declaratory judgment to foreclose on the respective homes through the statutory power of sale. The language of the reverse mortgage in this case stated the lender may invoke the power of sale and other remedies allowed by applicable law in the event of a default. The court felt the central question was whether or not Massachusetts G. L.c. 183, § 21 allowed the lender to foreclose in such a manner.

The reverse mortgage form in this lawsuit gave the lender the power to require immediate payment in full if the borrower dies or the property is no longer the borrower’s principal residence. Under this agreement, the borrower held no personal liability for repayment of the debt, and the lender could not pursue a deficiency judgment against them in the event of a foreclosure. The only means of enforcement was through the sale of the property.

Massachusetts statutes guide the responsibilities and expectations of a trustee as well as the parts of the process the trustee must use for distribution. A trustee has broad powers over the administration of an estate. If the trustee mishandles her or his duties, the beneficiaries can be shortchanged. A recent Massachusetts estate planning decision (16-P-1314) deals with a depleted trust account, reviewing when a trustee commits a breach of trust, how much discretion they have, the compensation they are entitled to receive, and how and when they should be removed.

In this case, the father of both the plaintiff and one of the defendants in the lawsuit was the settlor of the trust, executed in February 1999. His estate was divided into four equal shares, with one share distributed through a separate trust to the plaintiff daughter and two of her three children. The rest of the shares were to be distributed to the remaining beneficiaries “free of all trusts.” The trustees administered those assets after the settlor’s death in 2001, leaving the daughter and her designated children as the sole remaining beneficiaries by 2008. However, no distributions were made to the plaintiff or her children until ordered by the judge in 2016. In the interim, the trustees used assets designated to the plaintiffs to pay the storage fees for items belonging to the plaintiff daughter found in the settlor’s home. The plaintiff daughter was made aware that her items were in a storage facility and that it was her responsibility to move them, but the trustee refused to give her the address of the storage facility.

Nothing further was said of the property until 2008, when the same trustee sent a letter advising she could not “cherry pick” and must accept the items altogether. Once more, the trustee refused to give her the location of the storage unit. Two similar letters were sent out after this, but nothing was addressed until the daughter filed the underlying case in 2013. By then, $50,000 of the assets out of the plaintiffs’ trust had been used to pay the storage fee over the 15-year span. Trust assets were also used to pay trustees’ fees, attorneys’ fees, and litigation expenses. The balance of the trust was reduced from $542,042 to $463,719, absent any actual distribution by the time the lawsuit was filed. During the litigation, the defendants continued to use the trust’s assets, reducing the assets to $250,000.

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Wills sometimes include a residuary clause to help cover items in the estate that were not specifically bequeathed. These remaining possessions and property are dealt with after the other gifts have been dispersed. The Massachusetts Appeals Court recently dealt with questions surrounding a residuary clause in a recent case (No. 16-P-715). The residuary clause in this lawsuit left “any monies remaining” in the estate to the testator’s live-in romantic partner. The executor of her estate and the partner both claimed that she meant for her one-half interest in a property shared with her brother to go to the partner. The brother’s estate claimed that since she did not devise her interest in this real property, the property passed through intestate succession to her now-deceased brother, her sole heir.

The central legal question hinged on whether or not “monies” included real property. The testator’s partner drafted her will by using a model provided to him. The testator executed it approximately six weeks before her death. The property in question was the testator’s childhood home. Her brother lived there with their mother until the mother’s death and then resided there the rest of his life. In her will, she chose, for unknown reasons, to exclude any mention of this property. Her will did include funeral arrangements, investments, a cash gift to a creative arts center, a yearly gift of $8,000 to her brother (who was alive at the time of her death) from a trust fund of $150,000, a gift of $150,000 to her partner, and several specific monetary gifts to charities and individuals. Property like her car, books, manuscripts, and personal possessions were also left to her partner. Real property was also mentioned in her will. Her share of the home bought with her partner was left to her partner, and a Cape Cod property owned with her brother was left to a couple who was to take possession after the life estate granted to her brother.

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Estate planning is much more than dividing your belongings and assets after death. Estate planning can include the strategic use of property law to maximize assets for medical care. A recent appellate decision (16-P-282) discusses which type of control a grantor can maintain after executing a deed through a special power of appointment. The grantor in this action decided to protect her home from a lien provision found in the Massachusetts Medicaid program, MassHealth. To do so, she transferred property to her three daughters and son-in-law in equal shares, retaining a life estate. Following this transfer, she decided to remove one of the daughters’ share, redistributing the difference to the others.

When the grantor passed, the executrix presented the will for probate. The excluded daughter objected to the probate and sought a declaratory judgment voiding the reapportionment made through the grantor’s reserved power of appointment. The matter went to trial, at which the court found the reservation of appointment to be valid. The daughter appealed, arguing that the deed was misinterpreted.

In its analysis, the appellate court recognized the tension between two objectives in this document. Both parties agreed that the grantor intended to divest the property, keeping a life estate for herself, to minimize the impact of the MassHealth look-back regulations. They also agreed that she intended to keep the ability to alter the conveyance before her death. The deed reflected this intent. The first grants a present ownership interest, but the second allows the grantor to wipe out those interests. The daughter challenging the deed argued that even though the grantor intended to retain her interest, that reservation of power in the deed was void under the law.

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If you are thinking about changes to your will or trust, it helps to have the assistance of an experienced estate planner to ensure your wishes are fulfilled when the estate is distributed. A recent Massachusetts Appeals Court decision (15-P-99) demonstrates the confusion and litigation that can occur among family members following a death and the transfer of property. In this action, three siblings filed suit against their brother and his wife after they took ownership of one of the properties previously owned by their parents. The plaintiff-siblings alleged that their parents intended the property to be shared by all four siblings.

The patriarch of the family died in 1997, leaving the property to his wife, the mother of the children who are parties to the litigation. The mother requested the siblings contribute to the maintenance of the property, but none of the plaintiffs volunteered. The plaintiffs instead suggested that a part of the property be sold to cover the expenses. The defendant-brother refused this proposal. In 1998, the mother transferred a part of the property to him for $2,000. Following this, the brother created a trust to hold the property, which listed all four children as beneficiaries. All of the siblings signed a schedule of beneficiaries as proof they knew of the trust and its purpose. Unfortunately for the plaintiffs, the mother never transferred the property to the trust, and the trust remained unfunded. The plaintiff-siblings were unaware of this failure to transfer. Since the city was notified of the trust and directed to bill the trust for property taxes, the children assumed the trust was funded. In 2002, the mother transferred the remainder of the property to the brother for $20,000, but the brother did not let the siblings know this exchange occurred. In 2005, suspicious of her brother’s intentions, one of the plaintiff-siblings wrote to the Probate and Family Court regarding the brother’s efforts to become the guardian of their mother.

At the jury trial, the plaintiffs ran into many hurdles during the entirety of the trial. The siblings claimed their brother, through fraud, deceit, or a breach of fiduciary duties, took the income from a property that was to be divided among all of them. The brother moved for a directed verdict at the close of the plaintiff’s case, arguing his siblings missed the statute of limitations. The court granted the motion, concluding the plaintiffs knew or should have known they were harmed three years before the lawsuit was filed. The court also granted the brother’s motion for a directed verdict on the contract claim, ruling that no evidence of an agreement had been admitted. The trial court allowed the claim for promissory estoppel to be submitted to the jury, since it had a six-year statute of limitations. The jury found for the plaintiffs and awarded $200,000 in damages; however, the court then granted the brother’s motion for a judgment notwithstanding the verdict because no evidence of an unambiguous promise was admitted during the trial. The siblings appealed.

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Trusts can provide a way for an owner to enjoy her or his property during life, while ensuring the property held in trust pass to certain parties after her or his death.  In Mond vs. Pitts (15-P-686), the Massachusetts Appeals Court reviewed whether property held in two trusts with the same primary trustee and beneficiaries terminated, allowing the property to pass to the trustee’s heirs, or remained intact, passing to the beneficiaries after the settlor’s death.  At trial, the judge of the Land Court held the trust terminated after one of the trustees resigned and assigned her interest as trustee in both trusts at issue.  The beneficiaries appealed, and the appellate court reversed the prior ruling, agreeing with their argument that the trust remained intact.

As with all trusts, the construction of the document is the first place administrators and courts look at to determine the intent of the trustee. Both trusts in this case were created in the 1980s, for a term of forty hears and thirty years, unless the death of the settlor occurred first.  The 40 years trust named the settlor as the beneficiary, and then the two appellants, or their survivors, as the next beneficiaries if he died.  The trustees named in the document were the settlor and another woman, with a provision that either will become the sole trustee if the other dies or resigns.  The 30 years trust had similar language, with the same trustees and beneficiaries named.  It also had a similar provision assigning the remaining trustee as the sole trustee if one dies or resigns.  The settlor eventually became the sole trustee for both trusts after the other trustee resigned as trustee and assigned her interest.

The heirs of the settlor filed suit after his passing, arguing that the trusts terminated when the settlor became the sole trustee.  The land judge agreed, finding the paragraphs within the trust to be inconsistent with one another – with one paragraph naming the two appellants as beneficiaries and another within the trust document as heirs.  The judge also found that the doctrine of merger applied when the settlor became the sole trustee, becoming the sole lifetime beneficiary and trustee of each trust.  The appellate court disagreed with this analysis, finding that the second paragraph in question dictated the proceeds to be divided among the “beneficiaries if living”.  Both appellants were alive at the time of the settlor’s death.  The appellate court found reading the document as a whole consistently pointed to the appellants as beneficiaries of the trust.  The appellate court also disagreed with the land judge’s view of merger, pointing out that the designation of contingent beneficiaries precluded any merger.  The appellate court reversed the ruling of the land judge and remanded it to the lower court for the trust property to be distributed to the beneficiaries, as intended by the settlor.

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