Misappropriation of Assets Case Study: Keystone Helps Surviving Spouse Recover Millions From Deceased Husband’s Estate
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Overview: Surviving Spouse Client Discovers Her Husband’s Attempts to Hide Marital Assets
How well do you really know the person you’re with?
Our client thought she knew her spouse well and wholeheartedly trusted him. After all, they had been married for a remarkable 46 years. That made it all the more shocking when she discovered that he and his lawyer were going great lengths to leave a disproportionate amount of their marital estate to his own daughters.
Understandably, she was devastated, so she sought out the advice of an attorney she believed was qualified to navigate her through her newly-discovered legal nightmare. Unfortunately, that attorney counseled her to attempt to divorce her husband, and take several other steps that not only cost the client substantial legal fees, but ultimately compromised her ability to enforce her spousal rights.
Eventually, our client’s husband passed away and after learning that her lawyer had provided her with the wrong advice, she turned to Keystone for help undoing the damage caused by both her former husband and her former lawyer.
Surviving Spouse Continues Legal Battles With Ex-Husband’s Daughters After His Death
The client’s husband had four daughters from a prior marriage who were the primary beneficiaries of his scheming. At the time of his death, the case with our client remained unresolved and the husband’s daughters, who now had control over the husband’s estate and trust, wanted to see their father’s fraudulent vision for the marital estate to come to fruition by ensuring that our client would receive less than what she was entitled to receive under California’s community property laws. However, our client knew what they were trying to do, understood why it was wrong, and enlisted the help of Keystone Law to help her win in court.
By any standard, this case was intricate, particularly because the husband had ensured that his marital property was stored in multiple different trusts. At least seven petitions and cross-petitions were initiated over the course of three separate probate proceedings.
The purpose of all of this was to adjudicate the estate and trust disputes between our client and her deceased husband, who now was being represented in court by his daughters who were serving as the personal representatives of his estate and as trustees of his various trusts.
The Character of Assets: Separate or Community Property
The argument at the core of these disputes was the character of the decedent’s assets. Specifically, the court had to determine whether each of the assets in his estate and trust was the husband’s separate property or community property.
Separate property is any property that was acquired prior to marriage, or through a gift or inheritance. As the name implies, this property is separate from the shared property a couple accumulates during their marriage.
On the other hand, community property is any property that was acquired by either spouse over the course of their marriage (with limited exceptions). Community property is regarded as being owned equally by both spouses.
Unless rights of survivorship are attached to the title of the property in question, a spouse who dies is only entitled to dispose of their 50% of the community property through their will or trust, or through other means, such as non-probate transfers. This process of determining the character of each piece of property was long and complex.
The fact that the husband had compelled our client to execute multiple documents supposedly waiving her community property rights in certain assets made matters even more complicated, as Keystone needed to challenge the validity of those suspect documents as well. Ultimately, however, it went extremely well for our client.
Through aggressive and extensive litigation, Keystone was ultimately able to compile substantial evidence that the assets at issue were the community property of both spouses, and that the “agreements” and other documents fashioned by our client’s husband were procured by undue influence and breach of fiduciary duty in violation of our client’s community property rights.
Ultimately, we were able to help our client negotiate a very favorable settlement. She retained millions of dollars’ worth of property from the decedent’s estate and trust that her husband’s daughters claimed was the husband’s separate property, a life estate in the decedent’s share of their jointly owned condominium, and a substantial settlement payment.
Keystone Brings Legal Malpractice Case Against Client’s Previous Counsel
While our client was grateful for our help and happy with her settlement, we realized that there was still work to be done in the form of a legal malpractice lawsuit against our client’s former counsel, who had provided our client with advice that not only cost her hundreds of thousands in legal fees, but also compromised her ability to enforce her spousal rights.
While clients are smart to seek out legal counsel to help them navigate complex legal disputes, not all attorneys provide sound advice. Unfortunately for our client, her former attorney’s advice caused a major setback for her by preventing her from recovering certain available remedies against her husband’s estate.
Keystone knew that the only way for our client to recover those damages was to seek them from her former attorney by filing a legal malpractice action.
Legal Malpractice: What Does It Mean When an Attorney Acts Beneath the Standard of Care?
Attorneys have a responsibility to act in their client’s best interest at all times. As legal advisers, attorneys are paid a lot of money from their clients to guide them through uncharted territory, handling tasks that they lack the knowledge to perform by themselves.
When a lawyer fails to perform their duties with the care, skill, and diligence generally exercised by their peers, this is called legal malpractice. A person hires a lawyer for their expert legal, so when the advice they provide is unwise, it can have devastating effects on the client and their finances.
Such was the case with our client. By advising her to get a divorce and providing her with other questionable advice, her former attorney significantly delayed her progress and actually prevented her from being able to recover certain damages against her husband’s estate. Keystone argued that the former attorney’s advice fell beneath the standard of care for attorneys practicing in the field of probate, and that as a result of his negligent advice, our client suffered appreciable financial damage.
Keystone Earns Its Client an Additional Settlement Sum
On the grounds that our client’s former counsel exercised negligence that adversely impacted her interests in the trust and estate disputes against her ex-husband, Keystone proceeded to represent her in a legal malpractice suit.
In the end, we obtained an additional six-figure settlement payment for our client. In combination with the millions of dollars in assets we recovered from her previous case, this secondary settlement payment was a welcome bonus.
The Key Takeaway: The Right Attorney Will Fight for You Even in the Most Difficult of Cases.
This case was intricate and chaotic. With multiple cross-petitions, a messy family conflict, and bad actions from an attorney, a lot of firms may have passed on a case like this. But for our team at Keystone, this was the perfect client.
In a vulnerable state after learning that her husband and his daughters conspired against her, many people would have taken their loss and quit. But our client was tenacious and determined to set things right. The fact that we were able to help her obtain not one, but two, very favorable settlements was one of our greatest achievements of 2022.
“Cases like these are the best part about working in probate,” says Roee Kaufman, partner at Keystone Law Group who worked on the case. “We get to fight hard for genuinely good people. In this case, the result speaks for itself.”
Are you dealing with a complicated estate or trust dispute? We are standing by to answer your questions.
Complex cases with many twists and turns, such as this one, can be overwhelming to deal with, but that does not mean that you should delay dealing with them. If you have a lawyer on your team, you can let them take care of the heavy lifting, while you try to move on with your life. Learn how the attorneys at Keystone can help you by scheduling a free consultation today.