Recap of Keystone’s 2021 Successes
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- Attorney-Client Privilege
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- Competency/Undue Influence
- Fiduciary Misconduct/Removal
- Lis Pendens
- Marriage and Community/Separate Property
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- Non-Probate Transfers
- Petition for Instructions
- Powers of Appointment
- Real Estate Disputes
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Keystone Undoes Financial Harm Caused to Trust by Trustee Who Used the Trust to Fund His Lifestyle
Keystone’s client was one of two beneficiaries of his father and late mother’s trust, the provisions of which required a valuable income-producing real property to remain in trust for the lifetimes of the settlors and their children. The client had noticed that this property, along with a few of the trust’s other real properties, had been encumbered with unnecessary loans that destroyed their equity, and he wished to get to the bottom of why.
In an ensuing deposition with the settlor, it became apparent to Keystone that it was not the settlor who had been controlling the trust, but the client’s brother. He had been acting as de facto trustee for years and had managed to manipulate the settlor and use trust assets for himself. Later, Keystone’s client also learned that, due to the brother’s undue influence, he had been disinherited from the trust through a series of amendments executed by his father.
After several years of litigation in the trust proceeding and conservatorship proceeding, involving a settlement at mediation, the subsequent death of two of the parties to the settlement, a breach of the settlement terms by one of the decedent’s successors, and a second mediated settlement, Keystone’s client had the amendments to the trust invalidated, negotiated the buy-out of the other beneficiaries, became the free-and-clear owner of the trust’s most valuable property (even though it was supposed to remain in trust for his lifetime), and became the sole trustee of the trust. On a more touching note, Keystone helped facilitate a reconciliation between its client and his father, who had been at odds ever since the start of this trust matter, as well.
Keystone Helps Keep Minor’s Inheritance From Trust Out of the Hands of Opportunistic Family Members
In this case involving a family trust, Keystone represented co-trustee clients who were seeking to protect the inheritance their deceased sibling had left in trust for his minor daughter, from the maternal side of the minor’s family, who was pushing for the minor’s inheritance from the trust to be released so they could control it.
The problem was that the minor’s inheritance from the trust consisted primarily of fractional interests in private business holdings, which would be devalued if they were to be withdrawn, to the detriment of both the minor and the Trust. Also, the assets were generational and only allowed to be controlled by the paternal bloodline to which the minor belonged but not the maternal family. Still, the maternal family was unwilling to compromise its position.
After several years of contentious litigation, multiple mediations and settlement communications, and countless hearings, ultimately, Keystone resolved the case at mediation with the minor’s guardian ad litem, the minor’s guardian of the estate, Keystone’s clients, and all the parties’ attorneys. The settlement agreement, which was approved by the court, provided for the minor to receive both a lump sum payment that exceeded her share of the trust and monthly payments from the trust until she turned 19. It also preserved Keystone’s clients’ right to continue to act as co-trustees and they were released of all claims.
Keystone Recoups Clients’ Inheritance After Controlling Girlfriend Convinces Decedent to Disinherit Clients and Redirect Wealth to Her
In this trust litigation matter, Keystone represented a deceased settlor’s nieces and nephews in an action to contest the validity of three separate trust amendments executed over the last two years of the decedent’s life that effectively had disinherited Keystone’s clients. Although the decedent never had children of her own, she had an extremely close lifelong bond to Keystone’s clients that resembled a parent-child relationship. As a result, she had named them as beneficiaries to roughly 80% of her multimillion-dollar trust. The decedent’s story, however, would take a tragic turn.
An on-again, off-again girlfriend who harbored disdain for the decedent’s family (including Keystone’s clients) had reemerged in the decedent’s life the decade prior to her death. After the decedent was in a debilitating accident that caused her to suffer a progressive cognitive decline, she was rendered almost entirely dependent on her girlfriend to care for her.
Using the decedent’s plight to her advantage, the girlfriend proceeded to isolate the decedent from her family and friends for upwards of a year and convinced her to sign three separate trust amendments over the span of almost 9 months that disinherited Keystone’s clients and the other trust beneficiaries, and designated almost the entirety of the trust estate to pass to the girlfriend. Sadly, the decedent passed away while still under her girlfriend’s control without Keystone’s clients ever having been informed of her death.
Upon being retained, the Keystone team immediately filed a petition with the probate court to set aside the three disputed trust amendments and conducted far-ranging discovery by subpoenaing records from various third parties, conducting intensive witness interviews, and retaining a medical expert to review the decedent’s medical records to get to the bottom of the elder financial exploitation allegedly perpetrated by the girlfriend against the decedent.
Ultimately, without the need for trial, Keystone was able to secure for its clients an extremely favorable settlement that approximated the inheritance they would have received under the original trust, despite having been disinherited.
Keystone Recovers Clients’ Inheritances After Surviving Spouse Wrongfully Transfers Trust Assets to New Trust out of Clients’ Reach
In this trust litigation matter, Keystone represented the daughters of a deceased settlor in an action to recover property wrongfully transferred out of a trust from which they were supposed to inherit. The trust had been created jointly by the husband-and-wife settlors and provided for 50% of the trust estate to fund a “bypass trust,” which was irrevocable and to be distributed to Keystone’s clients upon the death of the surviving spouse, the decedent’s husband.
The surviving spouse did not create or fund the bypass trust as he was required to do following his wife’s death; instead, there was evidence suggesting that he treated the entire trust as if it were his own property (even though 50% of it was eventually supposed to pass to Keystone’s clients). He had purchased and sold trust properties, spent trust assets, and later, after getting remarried, relocated all of the trust’s assets into an entirely new trust. The new trust failed to provide Keystone’s clients with the same inheritance they were entitled to under the previous trust.
It was after the surviving spouse died a few years later that the clients came to Keystone for help recouping their inheritances. Keystone expeditiously filed a petition seeking the return of all the assets the husband had removed from the bypass trust. Ultimately, as a result of pressure brought by litigation and the validity of the claims raised, Keystone secured a favorable settlement for its clients that provided each with a substantial inheritance and mitigated the potential tax impact to the mother’s trust.
Keystone Successfully Transfers Real Property Back Into Trust After Trustee Distributes Entirety of Property to Only 1 of 4 of Its Intended Beneficiaries
In this trust litigation matter, Keystone represented two grandchildren of the settlors of the trust. The trust had named the settlor’s daughter (the clients’ mother) and her three children (two of which were Keystone’s clients) as equal beneficiaries of a real property held by the trust. After the settlors died in 2015, the clients’ mother took over as successor trustee of the trust and transferred the real property Keystone’s clients were supposed to jointly inherit with their mother and sibling, first to herself and then entirely to the other sibling, which effectively disinherited Keystone’s clients.
The successor trustee justified her failure to make trust distributions to Keystone’s clients by referring to language within the trust that required beneficiaries to have a premarital agreement in place to receive their inheritance. In turn, Keystone’s probate attorneys filed a petition pursuant to Probate Code section 850 seeking to recover the real property for the trust as well as damages against the trustee.
The petition argued that the language of the trust requiring a premarital agreement did not apply to its clients because both had been married prior to the time in which their interests in the trust vested. Additionally, at the time they married, they had no notice of the trust or its marital provision; therefore, they never had an opportunity to satisfy it in order to ensure they would receive their rightful inheritances. After requesting a briefing schedule on this issue, the court ruled in favor of Keystone’s clients, ordering for the property to be transferred back into the trust and confirming Keystone’s clients as beneficiaries.
Keystone Has Ill-Advised QPRT Rescinded on Account of, Among Other Things, Settlor Not Understanding Its Negative Tax Implications
In this trust litigation matter, Keystone represented the settlor of a Qualified Personal Residence Trust (QPRT) that she had established after getting improper and deficient legal advice. A QPRT is a type of irrevocable trust that holds a person’s primary residence and is generally created as a tool for advanced tax planning if the person in question is subject to estate tax.
While QPRTs can be beneficial in certain situations, in this instance, it was wholly inappropriate. The gross estate of Keystone’s client was significantly under the estate tax threshold, such that tax planning was largely unnecessary. Additionally, Keystone’s client did not understand complex legal issues or how the QPRT would affect her finances, on account of her first language not being English. Accordingly, Keystone’s petition seeking to rescind the QPRT and confirm the residence as belonging to the client outside of the trust was granted.
Keystone Fights Relentlessly to Secure Court-Ordered Judgment From Trustee of Decedent’s Trust for Unpaid Child Support
Keystone has a great deal of experience representing creditors seeking to enforce judgments against deceased debtors’ estates and trusts, and enforcing their creditor rights. In one such case, Keystone helped a mother enforce her rights against her deceased ex-husband to child support payments that were ordered but remain unpaid? Despite a child support judgment having been entered against the decedent prior to his death, he died without having satisfied this obligation, instead leaving all his assets in trust to be controlled by the trustee.
Keystone’s client was entitled to receive the amount of the judgment from the decedent, but to make the judgment enforceable against the trust, additional work was needed in multiple forums. First, a creditor’s claim was timely filed in the probate court to secure the client’s right to enforce the judgment against the decedent’s estate; however, because the decedent’s assets were held by his trust, more steps needed to be taken. Next, Keystone took the case to trial in the family court, where it was confirmed, over the objection of the trustee, that the trust not only owed the client hundreds of thousands of dollars in child support arrears that the decedent had refused to pay before his death, but that it was an ongoing obligation for the decedent’s trust to pay the child support the decedent would have been required to pay had he still been alive. It was also ordered that neither the decedent’s Social Security nor worker’s compensation death benefits constituted child support and therefore did not mitigate the trust’s obligation.
Despite the successor trustee’s efforts to avoid the decedent’s child support obligation every step of the way, Keystone managed to obtain the court orders its client needed to enforce her rights. The family court not only ordered the trust to pay the client more than $140,000 in attorney fees, but it also recently rejected the trustee’s request to reduce child support based on a “change in circumstances.”
Presently, the trustee is still refusing to fulfill the child support payments that have been ordered. Determined to ensure its client’s rights are enforced, Keystone is commencing efforts to compel the sale of trust assets to satisfy the judgment.
Keystone Dissolves Decedent’s Marriage Post-Death Protecting Assets From Surviving Spouse With Whom He Had a Pending Divorce
Keystone represented the son of decedent who had been appointed as the special administrator of the decedent’s estate. At the time of the decedent’s death, the decedent had been a party to a divorce proceeding, but he and his spouse had, 13 months prior, signed a settlement agreement relating to the division and disposition of their assets. However, the spouse was refusing to finalize the divorce by having the court enter judgment dissolving the marriage, so when the decedent died, he was still legally married. As a result, the spouse was claiming that she was the decedent’s legal surviving spouse, which entitled her to more assets than the amount that had been agreed upon as part of the previous settlement.
Keystone, in conjunction with family law counsel, filed a request to have the dissolution judgment entered nunc pro tunc (i.e., entered post-death, but effective prior to death), arguing that the spouse purposedly refused to sign the dissolution judgment in a scheme to delay the dissolution proceedings and subsequently inherit all of the decedent’s property.
After hearing the arguments and reviewing the documents submitted, the family court granted a rare exception to have the decedent’s marriage deemed dissolved prior to his death, stripping the decedent’s spouse of her standing and rights as the legal surviving spouse in probate court.
If you are dealing with a complicated trust or estate matter, Keystone’s probate attorneys are well-equipped to obtain a favorable resolution for your case. Because Keystone attorneys practice exclusively in probate law, they have an acute and nuanced understanding of probate matters, as well as years of experience in the field. Learn how we can help you with your legal issue by scheduling a free consultation.