Articles Posted in Probate

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.

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.

Probate terminology can be confusing. Even Phoenix Probate lawyers sometimes misuse and confuse probate terms.   But you need to know the language if you are to understand what is going on. So here are some common terms used in estate proceedings along with definitions.   More definitions can be found in A.R.S. §14-1201.

Application is a written request directed to the probate registrar for an order of informal probate or appointment.

Petition is a written request to the Court for an Order after notice to interested parties.

A Living Will is different from a normal Will.   A Will is a common estate planning document that controls the distribution of a person’s property after he or she dies. It is not effective until death. A living will, however, is effective during a person’s lifetime and serves a wholly different purpose.   Also known as an “advance directive” a living will allows a person, in advance, to give written instructions for medical treatment should he or she become terminally ill and be unable to communicate with a physician or family member. Most states have laws authorizing living wills/advance directives. Arizona’s statutes are found at A.R.S. §36-3201, et.seq. A sample Living Will can be found in A.R.S. §36-3262.

Medical care has become so good that life can be extended artificially for long periods. Physicians often opt to extend life where possible, but this may not be what a patient wants. Few of us want our lives to be artificially extended where we are terminally ill with no chance of recovery. Most want to be allowed to die with some dignity.   This is where a living will comes in.

A Living Will provides a means to control the medical procedures provided to you at a time when you cannot speak for yourself.   In most cases, this amounts to a description of what services are not wanted in the event of a terminal illness. Often, people opt for “comfort care” with instructions that they are to be medicated to be free from pain but other life extending procedures such as feeding tubes, blood transfusions, cardio-pulmonary resuscitation and similar services are rejected. In other cases, patients may wish to preserve life as long as possible using current technology. A Living Will can also be drafted with this goal in mind.

Your Will is an essential estate planning document. However, it covers only those assets that make up your probate estate. There are other assets called non-probate assets and your Will does not control these. Your Phoenix estate planning lawyer needs to know about both types of assets when preparing an estate plan.

Non-probate assets are normally those for which you have already designated a beneficiary upon your death. These are often:

  1. Life Insurance policies,

When trying to figure out whether an Arizona probate estate is required, the Phoenix probate attorneys at Platt & Westby, P.C. suggest that it is often helpful to look at the decedent’s assets (especially how they are titled) and the decedent’s debts.

The manner in which decedent held title to his/her various assets makes a big difference. Real estate can be held in a variety of ways including solely and separately, joint tenancy, community property, and as tenants in common. Often the joint tenancy and community property titling is coupled with “right of survivorship” language. This additional language means that when a property is held by two or more persons, the surviving persons receive the deceased person’s share of the property automatically at the time the deceased person passes. This happens without the need for probate. On the other hand, property held solely and separately, or as tenants in common usually require a probate in order to transfer title or to sell the property. Similar to the manner in which title is held, it also depends what name the property is titled in. In the event that the decedent titled his/her real estate into a trust, a probate will be unnecessary. Instead, the trustee or successor trustee as the case may be, can usually proceed to administer the trust without court proceedings.

Bank accounts can be a little tricky because you have to distinguish whether a person associated with the account is an owner, a signer, or a beneficiary. Jointly owned accounts will normally pass to the surviving person automatically without the need for a probate. When the account is owned only by the decedent, and there is a surviving person who is only a signer on the account (or acting as an agent under a power of attorney on the account), then the signer/agent will not have access to the funds upon the owner’s death. Instead, it will have to be determined whether the account has another surviving owner or had a beneficiary designation on it. If there is a surviving joint owner, that person will likely own the funds remaining in the account and will have continuing access to them without anything further. If there is no surviving joint owner, then the next step is to determine if there is a beneficiary to the account. These beneficiary designations are often referred to as TOD (transfer on death) or POD (payable on death) designations. Essentially, these POD/TOD designations work just like a beneficiary designation on a life insurance policy. In order to obtain the funds in the decedent’s account where a valid POD/TOD exists, the person entitled to the funds applies to the bank institution for the funds, proving who they are and providing information about the decedent’s passing. In most cases, these kinds of designations will permit distribution of the funds without opening a probate proceeding. An example where such a designation would not work is when the beneficiary passed away before the owner of the account dies and the owner did not update the POD/TOD designations. In that case, a probate would need to be opened up to collect the funds, to determine who gets the funds, and to distribute them to the person(s) entitled to them.