The “Sugar Daddy” Abuser: Elder Unduly Influenced into Giving Assets to Abuser

This was not your run-of-the-mill trust contest case. Often, a party is contesting a trust because the deceased settlor lacked the mental competence to execute a trust when they did; however, in this case, the decedent had not only been competent but he had been a successful attorney before retiring. Additionally, his estate plan had been drafted by one of the premier estate planning firms in Los Angeles. Another factor that was working against Keystone’s clients was their lack of relational ties to the deceased. While Keystone’s clients had been beneficiaries under the prior version of the decedent’s trust, which gave them standing to contest the new version of the trust, they were no longer related to the decedent. Their only ties to the decedent had been through the decedent’s former husband, and those ties had been severed when the couple divorced. 

Given these circumstances, Keystone’s trust attorneys knew they had their work cut out for them if they were to prove that the trust should be invalidated.

Keystone carried out a far-reaching investigation into the facts surrounding the case. Its trust attorneys were able to gain insight into the broken mental state of the decedent at the time the trust was signed and demonstrate how the abuser had made a practice out of conning wealthy “sugar daddies” out of their fortunes. In the end, Keystone helped invalidate the new version of the trust by arguing that the decedent had been a victim of elder financial abuse. In turn, Keystone’s clients received a favorable settlement that approximated the value of their former shares of the decedent’s trust. 

What is Elder Financial Abuse?

Elder financial abuse is a crime that deprives elderly and dependent adults of their resources and, ultimately, their financial independence. It is common for elders to start to lose competence toward the end of their lives, which leaves them especially vulnerable to financial exploitation through undue influence or fraud. Unfortunately, this type of abuse happens all too often, and it cumulatively costs elders anywhere from $2.6 billion to $36.5 billion annually, although the numbers are probably higher since elder financial abuse is generally underreported, according to the National Council on Aging. 

Our trust and estate attorneys routinely handle cases in which financial abuse perpetrated against an elderly and/or mentally incapacitated person has led the person to surrender some or all of their assets to their abusers or drastically alter their estate plans to favor their abusers.  It is ideal when the victim of financial abuse or one of their loved ones notices the abuse while the victim is alive so a claim can be brought and the matter can be litigated with the help of a probate lawyer. But too often financial abuse remains undetected until after the victim’s death when their assets are being inventoried and their will and/or trust is made available to their beneficiaries and heirs.

Following the death of a financial abuse victim, the executor/administrator of their estate, the trustee of their trust, their estate beneficiaries or trust beneficiaries (depending on which document is the subject of litigation) or heirs can litigate on behalf of the decedent’s estate or trust to try to recover the assets that were lost and possibly even damages.

“Regardless of whether financial abuse is detected before or after a victim’s death, it is crucial for swift legal action to be taken to prevent further financial harm from being perpetrated,” says Joshua D. Taylor, a Partner at Keystone who supervised the case. 

Desperate for companionship, the decedent had started frequenting a dating website that connects wealthy “sugar daddies” with “sugar babies.” Sugar babies refer to men or women who are looking to enter into financial agreements, where intimacy and friendship are traded for money and gifts, with wealthy older men, or sugar daddies. The decedent’s dangerous pastime had led to a string of encounters with men who openly took advantage of him, conning him out of thousands of dollars and robbing him of his dignity. 

The decedent’s most recent sugar baby had wanted even more. Just a few months after meeting the decedent, the young man demanded that the decedent change his trust to make him the sole beneficiary and trustee. The actions would nullify the decedent’s previous trust, which had left the entirety of the decedent’s assets to Keystone’s clients. 

The older man told some of his close personal contacts, including his friend and financial adviser, that if he didn’t create a new trust, he feared his young lover would leave him. Despite the financial adviser raising concerns, the decedent proceeded with creating a trust that named the lover as the sole beneficiary and trustee. Approximately three weeks later, the decedent was found dead in his home. It would be an understatement to call the circumstances surrounding the decedent’s death strange; the evidence suggested possible foul play, even though law enforcement ruled the death as accidental. 

The decedent’s ex-husband, understandably distraught over the decedent’s untimely death, shopped this case around extensively to other attorneys. Given the fact that neither the ex-husband nor Keystone’s clients were directly related to the decedent (and were, in fact, related to the decedent through the ex-husband), and the decedent’s estate plan had been prepared by one of the preeminent estate planning firms in Los Angeles, most of the prospective attorneys passed on the case, believing that Keystone’s clients would not be sympathetic figures to the court. Keystone’s attorneys believed in the clients and decided to take the risk. Keystone ultimately proved to them that their faith was not misplaced, and that the case was worth fighting.

Clear and Convincing Evidence

When deciding whether to take a case like this, attorneys have to determine whether sufficient grounds for contesting the trust exist. 

“Anytime you have a trust instrument that’s executed and notarized, the presumption is that it’s a valid document. The law looks at that and says, ‘OK, this is presumptively valid,’” Roee Kaufman, the Senior Associate at Keystone who handled the day-to-day of the case explains. “To contest it, you have to bear the burden of proof, and it’s a high burden.”

On the surface, the facts appeared weak and it was unclear whether it would be possible for the clients to contest the trust and win. Not only did they no longer have a relational connection with the decedent due to the decedent’s recent divorce from the brother/uncle of Keystone’s clients, but there was no obvious evidence that the decedent was suffering from cognitive impairment at the time the new trust was signed. To make matters worse, the new trust was prepared by a highly reputable law firm. These facts made for an uphill battle.

But when the evidence is clear and convincing, a favorable outcome is possible. 

As Keystone’s elder abuse attorneys began looking into the facts of the case, they gained further insight into how the decedent’s loneliness and depression—and willingness to pay a high price for attention—made him an easy target for elder financial abuse. 

The turning point in mediation came when Keystone’s attorneys were able to show that the abuser’s actions were part of a scheme he had created to defraud wealthy elderly people. They managed to obtain testimony from another sugar daddy off the same dating site the decedent had used who also had been financially abused by the decedent’s sugar baby in much the same fashion as the decedent.

When it came time to mediate the case, the identity of the sugar baby’s prior victim proved to be key. “All I had to do at mediation was mention the guy’s name and the other side folded,” Kaufman says.

Despite the myriad of challenges the case presented, Keystone was able to reach a favorable settlement for its clients that called for the new version of the trust to be invalidated by arguing that the sugar baby’s actions constituted elder financial abuse.

In another twist, local police also reopened the investigation into the decedent’s death based on an independent forensic analysis of the scene of death that had been ordered by Keystone’s clients.

“It was an uphill battle,” Shawn S. Kerendian, Managing Partner of Keystone says. “But we conducted far-ranging discovery, which provided further insight into the decedent’s broken mental state at the time the trust was signed and revealed just how far the abuser was willing to go to get what he wanted.”