Undue influence occurs when a dominant person replaces their will for the will of a dependent and vulnerable person for their own personal gain. Money is usually the motive behind this type of abuse. And most commonly this type of abuse occurs with the elderly and disabled. This is because the elderly and disabled are more susceptible and vulnerable than others. A lot of times they rely heavily on others for daily assistance and are more trusting in nature. The relationship is more than just persuasion, it is a psychological control and the relationship holds many similarities to domestic violence. One of the key factors in gaining this type of control is by isolating the weaker person.

Identifying this abuse can be difficult, below are several examples of how this abuse may appear.

  1. The victim takes actions that are contrary to his or her previous habits, values or beliefs. This could be signing documents, changing estate plans, and the like.

What is a Trust?

A Trust, like a will, is a written document that governs what happens to certain property when a person passes away. Unlike a will though, Trusts can also be used for providing for a person’s needs while they are still alive.  There are many different types of Trusts, trusts can be simple or complex, they can be used to shield beneficiaries from creditors, they can be  used for charitable purposes, trusts can even be set up to care for your pets.  However, for the purposes of this article, we will be discussing a basic Revocable Living Trust.  This type of trust allows a person to retain control over all of the assets in the trust and to make changes to the trust at any time.  The requirements for creating a trust are governed by Arizona Revised Statute §14-10402.  Generally, in order to create a trust, a person must have the capacity to create a trust, the intent to create a trust, the trust must have a beneficiary, the trustee must have duties and the same person cannot be the sole trustee and the sole beneficiary.

Does a Trust affect all my assets?

What is a will?

A will is a written document that governs what happens to certain property when a person passes away. A will is the most basic estate planning instrument one can utilize. In Arizona wills are governed by statute.  Arizona Revised Statute §14-2501 governs who can create a will.  Generally, any person over the age of 18 who is of sound mind and body can create a will.  Arizona Revised Statute §14-2502 sets forth the general requirements of a valid will.  The basics require that a will must be in writing, signed, and witnessed by at least two other people.  A will usually also appoints one or more people to serve as personal representative of the decedent’s estate.  A personal representative is the individual who will be responsible for distributing the estate according to the terms of the will. A personal representative has certain powers and obligations to the estate and the beneficiaries.  These duties are also governed by statute beginning with Arizona Revised Statute §14-3701.

Does a will affect all assets?

The baby boomer generation is aging. Many have no one to appropriately care for them as their capacities diminish.   They often become vulnerable due to age or illness.   This makes them targets for the unscrupulous.  Unfortunately, many times the unscrupulous individuals who prey upon the elderly turn out to be family members.    By the time abuse happens, the victim has often become isolated and dependent.   He or she cannot help themselves and a victim may not even recognize the situation as abusive.

So, what can you do to protect yourself while you are still able? Here are some thoughts:

  1. Don’t wait to make your plans. Act while you are still competent and active.

Estate planning documents are designed to help and provide for families at a critical time, usually upon the death or incapacity of a family member. The typical estate plan focuses on financial needs. But religious needs and the communication of religious values are also important to many of us. Your estate planning documents can be an effective means to communicate your religious and cultural values to those close to you.   This can be done in any number of ways. A few of these might be:

  1. Giving instructions to a trustee that money be provided for religious education, religious travel or a program of charitable giving.
  2. Giving instructions to a trustee to adhere to religious principals in investing estate funds.

The Arizona Trust Code at A.R.S. §14-11010(A) states that “Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.” This provision indicates that so long as the trustee has disclosed his representative capacity that the trustee is not personally liable UNLESS the trustee expressly makes himself or herself personally liable to a contract (i.e. by giving a personal guaranty). This provision is meant to protect trustees, properly acting on behalf of a trust, when entering into contracts with third parties for the benefit of the trust.

In a recent case, the protection of the trust from liability to a third party were challenged where the trustee was thought not to have clearly enough indicated she was operating solely in her representative capacity. In the case of Focus Point/Kantor v. Johnson/Oak Acres, 235 Ariz. 170, 330 P.3d 360 (App. 2014), the Court concluded on the specific facts of the case that the trustee was not personally liable for a breach of contract by the trust, where specific provisions of the listing agreement and the manner in which the listing agreement was signed made it clear enough that the trustee was acting in her representative capacity.

In Focus Point, the Trustee hired a realtor to assist selling a piece of commercial property titled in the name of the Trust. After the initial listing agreement was signed, the realtor requested a second listing agreement for a longer period of time. The second listing agreement was prepared by the realtor, and was not reviewed by the Trustee. The Trustee proceeded to sign her name without further specifying in her own handwriting that she was signing in her representative capacity. The opposing party initially obtained a jury trial judgment against the trustee personally. However, on appeal, the court set aside the personal judgment against the trustee for several reasons.

Proceedings in the Superior Court to contest a will or trust are relatively uncommon. This is very good because these proceedings can be hotly and emotionally contested. The damage done can alienate family members for decades. In some cases, the damage can never be repaired.

Sometimes Will or Trust contests arise when the Will or Trust document is claimed to be defective in some way. The Court must determine if the document is legally sufficient and, if so, what it’s terms are.   Many times, however, the Will or Trust does comply with legal requirements but it is claimed that the document does not accurately reflect the decedent’s wishes due to the decedent’s lack of capacity or due to undue influence exerted over the decedent by another person. These cases are often more difficult. A few of the circumstances that might lead to a contest of a decedent’s estate plan are:

  1. Where heirs who normally would inherit have been omitted.

As we age it is foreseeable that our abilities and mental functioning will degrade. Many of us will need some type of assistance later in life. Often, the assistance needed is with finances and payment of bills.

Since we know that this need is likely to arise, it makes sense to plan for it in advance instead of simply hoping for the best.

Having a plan in place to deal with future incapacity is the best way to protect against the loss or misuse of your funds. In most cases, the financial abuser/exploiter is a family member or other person known to you. By the time help is needed, you are no longer able to protect yourself.

A Life Estate is an interest in real property that terminates upon the death of a specified person, usually the owner of the Life Estate. There are some terms that are unique to life estates. The owner of a life estate is often called a “life tenant.” The life tenant has the right to reside in the home for life or for so long as he or she may choose. Upon the termination of the life estate the persons who obtain full fee simple ownership of the real property are called “remaindermen.” A life tenant may live in the property but cannot sell it without the consent of the remaindermen.   A life tenant must respect the property and do nothing that would decrease its value.

A life Estate is usually created by use of a deed that specifically reserves the life estate. The deed also can specify the conditions upon which the life estate is granted. A life tenant may have the responsibility for maintenance, taxes, insurance and other costs connected with the property for so long as he or she resides there.

One benefit of a life estate is that it allows a person—often an elderly person—to sell their home (usually to a family member), generate cash to live on and still reside in the home for life.

When I first started practicing law digital assets did not exist. Now many of us consider digital assets indispensable since they make up a large portion of the record of our lives. Digital Assets are, of course, all of the things we store on the web; social media pages such as facebook, photos, videos, personal and business documents, personal and business websites, e-mails and even text messages. So what happens to all of this when a person dies? Does it all pass to the decedent’s heirs? Until just recently, these questions were answered by the website’s Terms of Service Agreements. These are the long documents in legalese that a prospective user must accept as a condition of using the site. Most of us are guilty of simply clicking the “accept” button without reading any of it. But these agreements supersede a decedent’s will or trust and can create hardship.

In 2016 Arizona changed this and brought predictability to the disposition of digital assets by enacting the Fiduciary Access to Digital Assets Act (FADAA).   The new law became effective on August 8, 2016 and provides that you can now pass your digital assets to your heirs or beneficiaries by your will, trust, power of attorney, notarized written statement or by using a website’s online tool provided for this purpose, if one exists. Not only can you now pass your digital assets via your estate planning documents, you can also specify that access to certain digital assets is to be withheld and the content deleted.   The complete text of the new law can be found at A.R.S. §14-13101 through A.R.S. §14-13118.

To take advantage of the new law we recommend that you consider amending estate planning documents to give instructions for the disposition of your digital assets. If you use an online tool to give such instructions, you need to know that your online instructions will supersede any instructions given in your will or trust. It works like a Payable on Death account which passes the account balance to the listed beneficiary despite the existence of a will or trust.   We also recommend that you provide your attorney or other trusted individual with a current listing of the online accounts and websites used by you with the log in and password information for each.