(anti-) SLAPP Back; Don’t Turn the Other Cheek

This anti-SLAPP blog post should be an item you keep on your litigation check-list in the event you are a defendant in a lawsuit. If anti-SLAPP applies, it can significantly short-circuit and give you an early-end to the litigation in your favor, stop costly discovery, and put you in a strong position to obtain attorneys’ fees and expenses of litigation from the person who sued you. “SLAPP” stands for “strategic litigation against public policy.”  A number of states, including Georgia, have anti-SLAPP laws that provide the above relief to defendants in certain situations.

Two days ago, June 24, 2019, the Georgia Supreme Court issued an opinion for the first time that deals with Georgia’s 2016 broad revision of its anti-SLAPP statutes under O.C.G.A. Section 9-11-11.1. The case is Wilkes & McHugh, et al. v. LTC Consulting, L.P. et al., No. S19A0146 (Ga. June 24, 2019). Click here for this opinion, which also has an excellent discussion by the Georgia Supreme Court setting forth the history and operation of Georgia’s anti-SLAPP statutes (and Georgia cases prior to the 2016 change in these statutes).

This is part one of three blog posts I will provide on this anti-SLAPP topic.

A 15-second short summary of anti-SLAPP is that if you are in litigation that enables you to file a defensive anti-SLAPP motion, the person suing you (the plaintiff) has to convince the court in response to your anti-SLAPP motion that the plaintiff’s lawsuit claims against you (his or her Complaint) are both (i) legally sufficient and (ii) supported by a sufficient prima facie showing of facts to sustain a favorable judgment in favor of the plaintiff.

Now, for a slightly longer introductory summary. Another substantial benefit of you filing an anti-SLAPP motion is that all discovery and pending hearings or motions in your lawsuit are stopped (“stayed” in lawyer jargon).  And, the court generally is required to conduct a hearing on your anti-SLAPP motion within 30 days after you file it.

The above June 24 Georgia Supreme Court opinion, in its opening paragraph, states the 2016 revision of the Georgia anti-SLAPP statutes substantially mirrors California’s anti-SLAPP statutes. Wilkes & McHugh at 1.  In expressly acknowledging that California has developed a considerable body of case law interpreting its anti-SLAPP statutes, the Georgia Supreme Court states that it may look to California case law for interpreting the Georgia anti-SLAPP statutes.  Id. at 15.  [I have experience with the California anti-SLAPP statutes and their litigation application.]

For this first blog post on Georgia’s anti-SLAPP statutes, I purposely do not get into the weeds on the details as to what these laws are and how they apply procedurally in litigation. However, a threshold point in any potential anti-SLAPP situation is to determine whether you, as a defendant, can take advantage of these favorable provisions. The general rule, and I state this broadly, is that the lawsuit you are facing must involve the plaintiff’s claims against you that arise from facts or actions stemming from your constitutional right of “free speech” or “petition”.  I will address these two elements in my next blog post.

My other key take-away points here are:

  • The above two free-speech / petition categories as to when you might be able to get the benefit of anti-SLAPP are much broader than one might initially think. Existing California case law is replete with numerous issues that fall within these favorable anti-SLAPP free speech and petition requirements; and
  • The California courts have effectively seen-through efforts by plaintiffs who, with artful drafting of a plaintiff’s Complaint, attempt to evade the reach of anti-SLAPP provisions by including mixed, unprotected non-SLAPP assertions in their Complaint to try and derail an anti-SLAPP challenge. See, for example, Baral v. Schnitt, 1 Cal. 5th 376 (2016).  I assume this drafting scrutiny will be an important focus the Georgia Supreme Court will follow as more of these anti-SLAPP cases make their way through the Georgia courts.

Subpoenas and the Executive Branch

Back in 2016, I wrote a blog post, captioned “Deju Vu. The 1974 NIXON Subpoena”;  Click here for my earlier post. This post today is merely to restate one of the most interesting, unanswered constitutional law questions that has remained in the forefront of my mind all these years after my earlier days at Emory Law School.

This is not a political blog post, but it does center on how a President can, or might, respond to subpoenas.  Here is this question’s relationship to the 1974 Nixon subpoena.

In short, in 1974 special prosecutor Leon Jaworski, while conducting the Nixon Watergate investigation, obtained a subpoena ordering President Nixon to release certain tapes and papers as to meetings between Nixon and others who had been indicted by a grand jury. Nixon refused. The US Supreme Court, in a unanimous opinion, concluded Nixon could not rely on executive privilege as immunity from complying with the subpoena. The Supreme Court ordered Nixon to turn over the tapes in response to the subpoena. Nixon ultimately agreed to comply with the subpoena.

Here is the constitutional question we discussed (and that hooked me all these years) in my constitutional law school class in response to the Nixon Supreme Court opinion. That is, how would Jaworski’s subpoena have been enforced if Nixon had snubbed the Supreme Court and taken the position he did not have to comply with the subpoena?

Because Nixon’s own executive branch was (and is) the only enforcement branch of government, what would have happened if Nixon did not allow his executive branch to enforce the subpoena? Remember, the judicial and legislative branches have no enforcement capability. Also, you and I would likely be jailed quickly by the executive branch for our failure to comply with a court order.  [Nixon ended up voluntarily complying with the subpoena, without anyone having to deal with its enforcement.]

So, would the military have stepped in to enforce the Nixon subpoena?  Would we have seen military tanks in front of the White House?  Would there be an attempted coup? Would there be vigilante enforcement, etc.? We simply have no answer.

The point of this blog post is to remind each of us of, and elevate, the sanctity and design of our US three-branch system of government. In my view, especially as a lawyer, this three-branch system is the only reason we have been able to maintain our breadth of freedoms and rights against the historical backdrop of disputes, crises, disagreements, differing political and social views, and so forth.

The crucial question, at present, of another potential subpoena stand-off should not focus only on the substance or information of what the subpoena is seeking, but rather on how does the subpoena and its compliance fit with the need of continuing the essential and crucial balance of our three-system government? My imponderable constitutional question still remains unanswered and untested. Let’s keep it that way.

 

Whoops. The No-Contest Clause Backfired!

This blog post is in response to a recent April 2019 California case dealing with disgruntled siblings and an “in terrorem” (or no-contest) clause in their late mother’s revocable trust document.  I use the California case to make the following broader comments for this blog post and tie my comments to a Georgia point.

An in terrorem clause (no-contest clause) in a Will or trust document is to prevent beneficiaries from raising issues as to the Will or trust in order, in most cases, to try and increase their share. The provisions under Georgia law for no-contest clauses are under O.C.G.A. Section 53-4-68 (for Wills) and Section 53-12-22 (for trusts).

An example of a no-contest clause in a Will is:

“If any beneficiary, alone or along with any other person or persons, directly or indirectly, contests or initiates proceedings to contest this Will in any court with a challenge to its validity of all or any part of my Will or in any manner, attacks or seeks to impair or invalidate any of the provisions of my Will or prevent any provision of my Will from being carried out in accordance with its terms, that contesting beneficiary shall be deemed to have predeceased me and as a result shall forfeit his or her interest under this Will in its entirety with his or her forfeited share passing to my other children, per stripes, as though the contesting beneficiary and his or her descendants all predeceased me.”

This blog post is not for the purpose of an extensive discussion about the design and use of a no-contest clause.  But, rather, it helps illustrate that no-contest clauses are not just simply boilerplate provisions that one can, or should, without careful thought merely cut-and-paste into a Will or trust.

Below are a couple broader comments as to no-contest clauses:

I start with reference to a recent 2019 California court opinion dealing with a no-contest clause. This case has an extremely interesting and surprising twist that one of the litigious sisters likely never expected, to her detriment. This case is Key v. Tyler, 2019 Cal. App. LEXIS 358 (April 19, 2019).  Click here for a copy.  The core facts are that three adult sisters are beneficiaries of their deceased parents’ 1999 family trust.  The family trust essentially provides for an equal split among the three sisters after their parents’ deaths. As of January 2006, the family trust was worth over $72 million.  Lawyer-sister Tyler was the trustee.

A 2007 amendment to the 1999 family trust surfaced after the mother’s 2011 death (the mother was the second parent to die). After their mother’s death, sister Key asserted that her lawyer-sister Tyler had unduly influenced their mother in 2007 to amend the 1999 family trust. The 2007 trust amendment was apparently orchestrated by Tyler and resulted in Tyler increasing her own trust share substantially in excess of her other two sisters (including Key). The 1999 family trust and 2007 amendment each included a no-contest clause.

Sister Key, after the mother’s death, filed a California court action and asserted the 2007 trust amendment was the result of undue influence over their mother by lawyer-sister Tyler . The California court agreed with sister Key, with the result that the 2007 trust amendment was essentially disregarded. Although this California opinion is rich with an abundance of procedural details, factors, concepts, and other elements in this sister- v.-sister litigation, I make only the following three comments stemming from this California case (my knowledge of the facts in this case are based solely on information in the court opinion):

One. This point centers on the 1999 family trust and the 2007 trust amendment, each having a no-contest clause.  One might reasonably ask:  With the trust document having a no-contest clause, how was sister Key (the non-lawyer sister) able to attack the 2007 trust amendment, without triggering the clause against herself (Key)?

The reason is that California law, as with some other states (but not Georgia), has an exception to the challenge to a Will or trust with a no-contest clause, if the person making the challenge can show probable cause at the time of filing the challenge, such as probable cause of undue influence, or mental incapacity, etc.

In other words, without probable cause a person cannot simply file a challenge to a no-contest clause Will or trust and hope during the discovery phase of the litigation to luck-up or stumble across evidence of undue influence, or mental incapacity, etc.  Probable cause up front reduces fishing-game litigation. Absent probable cause, the person making the challenge to the Will or trust also risks losing, with the result of being penalized by the no-contest clause.

Two. This next move in this litigation by sister Key is what greatly sparked my interest in this California case.  Here it is:  After sister Key successfully challenged and obtained the set-aside of their mother’s 2007 trust amendment, Key then filed a petition to enforce — against her lawyer-sister Tyler — the no-contest clause as to the 1999 family trust. This is the backfire.

Here the reader might say “Wait a minute, it was sister Key who challenged the 2007 trust amendment.  Lawyer-sister Tyler never asserted any challenge.  So, why now is lawyer-sister Tyler facing loss of her inheritance based on her (Tyler’s) violation of the no-contest clause? “

There are two primary reasons.  First, the California court concluded sister Key had sufficient probable cause of undue influence to file her challenge to the 2007 amendment, even with the no-contest clause.  The probable cause exception under California law provided an exception for Key to the trust amendment’s no-contest clause.  Second, and this is the part of the California court opinion that really grabs my interest.  The court, in concluding sister Key can seek to enforce the no-contest clause against Tyler, states:

“By [lawyer-sister] Tyler obtaining the 2007 Amendment through undue influence and then defending that amendment in court, Tyler sought to ‘impair’ and ‘invalidate’ the provisions of the original Trust that the 2007 Amendment purported to replace.  The No-Contest Clause therefore disinherits Tyler if it is enforceable against her.”

2019 Cal. App. LEXIS, *29.

I assume lawyer-sister Tyler was completely blindsided by now finding herself the subject of a possible no-contest clause violation, and never for a moment considered that her court fight as trustee to defend and uphold the 2007 trust amendment would (or could) be the basis of Tyler herself violating the no-contest clause. Tyler now stands to lose her share of the trust if the court ultimately concludes Tyler violated the no-contest clause [the court has not yet arrived at a conclusion].

Three. This final point ties my Georgia discussion to the above California case. Georgia does not have a probable cause exception that allows a beneficiary with probable cause to challenge a no-contest clause Will or trust. My view is that Georgia (and all other states) needs a probable cause exception.  This is up to the legislature.

Here also is my concern, merely as an example, of there being no probable cause exception in Georgia.  Assume a family friend, business associate, or even a lawyer, becomes a close friend of an elderly widow or widower.  And that person persuades the elderly person to change his or her Will to include him or her as a substantial beneficiary (or gets the elderly person to add his or her church or other charitable institution as a substantial beneficiary). Assume also that person persuades the elderly person to include a strong, no-contest clause in their Will or trust.

This could be a tragedy and, in my view, would prevent another beneficiary or family member from challenging a Will or trust that now benefits the family friend, business associate, or lawyer, even if the challenging beneficiary has probable cause. The person influencing the elderly person, therefore, shields himself or herself by influencing the person to include the no-contest clause.

My final general point is to make sure you know what documents your elderly parents have in place, and whether they are making changes, influenced by others, etc. Don’t end up with no options to challenge their situation where someone influences your parents to include him or her in the Will or trust, and also influences your parents to include a strong no-contest clause.  This person may likely end up with your inheritance,  unscathed.

One last comment for readers who wish to read the attached California court opinion.  That is, the court opinion provides a great deal of discussion about this California sister case being a SLAPP case [“Strategic Litigation Against Public Participation”]. SLAPP is essentially a procedural speed-up option available for certain litigation cases, that I also find is an extremely interesting, evolving court development.  I will write a blog post soon about what SLAPP is and why I find it a compelling and positive development in litigation.  [California has a much broader range of SLAPP options compared to Georgia.]

The 2017 Gibson Opinion. Divorce? Squirreling Away Assets in Trust?

This blog post is about whether the 2017 Georgia Supreme Court opinion in Gibson now opens the door wider for one spouse more easily – while married — to squirrel away his or her assets in a trust, and then later use that trust as a shield in a divorce proceeding. It does not.

In Gibson,the husband during his marriage funded two trusts with $3.2 million of property; the husband prevailed in keeping the $3.2 million out of his divorce proceeding without the trust assets being subject to equitable division. This is $3.2 million that otherwise would likely have been marital property in the divorce, absent the trust planning. Click here for a copy of Gibson v. Gibson, 801 S.E.2d 40, 301 Ga. 622 (2017).

The key factual distinction laying the foundation for the husband to prevail in Gibson was the lower trial court’s conclusion that the husband retained no interest in the trusts, including no interest as a trustee or beneficiary.  As I touch on again below, my experience is that most spouses who unilaterally create and fund a trust during marriage do retain interests in the trust, albeit as part of the purposeful, stealth design of certain opaque, highly-technical trust provisions.

Back to the Gibson opinion. My sense in talking with other lawyers is that some have an over-optimism leading them to conclude Gibson opens the door wider now enabling one spouse to keep his or her trust out of the divorce arena. For the reasons I state below, I disagree. The backdrop to this misplaced optimism is the following portion of the Gibson opinion:

This is not an issue of first impression for our Court, which has permitted property placed in certain types of trusts to be exempt from equitable division.  . .  . Therefore, property that has been conveyed to a third party is not subject to equitable division absent a showing of fraudulent transfer. See id. If a spouse places property in a trust of which he is the sole beneficiary, that property may be subject to equitable division. See Speed v. Speed , 263 Ga. 166, 430 S.E.2d 348 (1993). But if a spouse is not the sole beneficiary of a trust, the corpus of the trust is not subject to the other spouse’s claim of distribution. See McGinn v. McGinn, 273 Ga. 292, 292, 540 S.E.2d 604 (2001).

Excerpt from the Gibson opinion (I added the bolding and underlining).

The optimists read Gibson (and the “sole beneficiary” excerpt above) to support the notion that a spouse who funds a trust – where that spouse is not a sole beneficiary of the trust –  can now exclude the trust from claims in a divorce. This is a misreading of the above Gibson reference to sole beneficiary.

This sole beneficiary reference is merely a passing remark by the Georgia Supreme Court (what lawyers call obiter dictum) in stating the Gibson case was not a case of first impression on the question of how a trust created during marriage fares later in a divorce action. This sole beneficiary element also was not a fact for consideration as to the Gibson husband’s trusts and not part of the holding in Gibson.  [I have not seen the Gibson trust documents.]

Here are my broader Gibson points for this blog post:

One. I am called upon from time to time to assist divorce lawyers with attacking a trust in a divorce proceeding. My job is to help attack the trust and keep it in the divorce proceeding. My attack at times is directed at the deficiency and shortcomings in the trust document itself, where the drafter failed to cross the “t”s and dot the “i”s. My attack also gets into the various quasi-hidden, stealth trust powers purposely built into the design and framework of the trust that do not easily – merely on the face of the trust document – alert a non-trust lawyer to the existence of continuing powers and potential benefits the spouse retained in the trust (such as powers of appointment held by a friend or other family member; powers to decant the trust to another trust; using someone other than the spouse as the purported settlor of the trust document giving the diversionary appearance the spouse did not create the trust, etc.).

One might ask “Why would a spouse hold these stealth ties to the trust?” The answer, in my experience, is that it is a rare instance where one spouse creates and funds a trust during marriage without making sure he or she still possesses indirect options either to get back the property after the divorce situation ends or ultimately later control the property for that spouse’s own benefit.  Thus, arguably most unilateral trusts are not third-party trusts.  I use the term unilateral for when one spouse puts this trust planning in place without the knowledge of the other spouse.

Two. Whether a trust is or is not a third-party trust is not merely an easy simple ‘yes’ / ‘no’ question. The status and nature of any trust depends in most cases (divorce and non-divorce cases) on the effect of the opaque, stealth technical provisions in the trust document, as part of the purposeful design of the trust. This opaque-stealth question, in my opinion, is where the heart of the fight lies when dealing with a trust in a divorce setting.

Three.  When the trust at issue in a divorce is a third party trust (as in Gibson), that trust under the Gibson opinion will still be subject to a fraudulent transfer analysis in the divorce proceeding, as is the case with virtually any other third-party transfer of property prior to divorce.

The procedural rub is that the law requires, as generally in any fraudulent transfer attack, that the opposing party (the non-trust spouse in a divorce) bears the burden of proof for the fraudulent transfer attack.

Four. But, by contrast, I read Gibson as not changing the existing law or theories in divorce proceedings for trusts that are not third-party trusts. Those trusts are still subject to attack, but without the non-trust spouse bearing the burden of proof under a fraudulent transfer attack.  Here the burden is on the spouse who created the trust — during the marriage – to prove the trust is not marital property.

Horribly Annoying Music; Supreme Court Justice Felix Frankfurter

In restaurants, waiting rooms, dentist offices, airports, grocery stores, phone-hold, ad nauseam, we are bombarded persistently with music and television content, not of our own choosing.  This is akin to someone forcing a book or other reading material three inches away from our face with the admonition “READ THIS”.

U. S. Supreme Court Justice Felix Frankfurter and I would have likely agreed fully with one another. While reading a recent The New Yorker magazine, my wife ran across a short comment about Justice Frankfurter having recused [removed] himself from the following 1952 case.  Click here for a link to the supreme court opinion in Public Utilities Comm’n v. Pollak, 343 U.S. 451 (1952).

What triggered my interest was Justice Frankfurter’s spot-on reaction to this 1952 case, that I include further below. This 1952 anecdote also gives me pause (without my further comment) to ponder where Supreme Court justices (and potential justices) fall now in 2018 as to the notion that a Supreme Court justice lays aside private views in discharging his or her judicial function.

The issue in this 1952 Supreme Court case dealt with some Washington DC public transportation passengers who asserted their constitutional rights were violated by having to listen to streetcar, bus, and railway piped-in music, announcements and advertisements. This content consisted generally of 90% music, 5% announcements, and 5% commercial advertising. The Supreme Court did not side with these constitutional objections.

And, Justice Frankfurter had such a strong reaction (and opposition) to this forced audio content, that he recused himself from the case with the following comment (which is in the published Supreme Court opinion) [I added the underlining below]:

Justice Frankfurter:

The judicial process demands that a judge move within the framework of relevant legal rules and the covenanted modes of thought for ascertaining them. He must think dispassionately and submerge private feeling on every aspect of a case. There is a good deal of shallow talk that the judicial robe does not change the man within it. It does. The fact is that, on the whole, judges do lay aside private views in discharging their judicial functions. This is achieved through training, professional habits, self-discipline and that fortunate alchemy by which men are loyal to the obligation with which they are entrusted. But it is also true that reason cannot control the subconscious influence of feelings of which it is unaware. When there is ground for believing that such unconscious feelings may operate in the ultimate judgment, or may not unfairly lead others to believe they are operating, judges recuse themselves. They do not sit in judgment. They do this for a variety of reasons. The guiding consideration is that the administration of justice should reasonably appear to be disinterested, as well as be so in fact.

 

This case for me presents such a situation. My feelings are so strongly engaged as a victim of the practice in controversy that I had better not participate in judicial judgment upon it. I am explicit as to the reason for my nonparticipation in this case because I have for some time been of the view that it is desirable to state why one takes himself out of a case.

 

Asset Protection Trust Planning for Divorce (a Nevada Win)

Here is a link to my recent publication in Steve Leimberg’s Asset Protection Planning Email Newsletter – Archive Message #358 (dated February 15, 2018), titled “Augmenting the 2017 Nevada Trust Win in Klabacka“.   Klabacka is the name of a 2017 Nevada Supreme Court opinion. You are welcome to pass along a digital or hard copy of my Leimberg piece to any other readers.

I suggest in this piece the possible  use of a prenuptial (or in some cases postnuptial) agreement in conjunction with self-settled asset protection trusts, as a way to protect each spouse’s respective property in the event of divorce.

But, because from time to time I also assist divorce lawyers with attacking and finding  chinks in the defensive armor of a divorcing spouse’s trust, this Klabacka piece also provides a backdrop highlighting the importance in any protective trust planning situation of crossing each “t” and dotting each “i”.  The devil in the details most often is the tipping-point difference in whether defensive trust planning succeeds, or fails.

As I state in this Klabacka piece, some lawyers — with too much overconfidence — cut corners in their trust planning process, especially failing to give sufficient attention to long-arm jurisdiction exposure when (and if) the trust becomes the target of litigious attack.

 

 

Divorce: Attacking a Spouse’s Unilateral Trust

One spouse creates a trust during marriage. A divorce later arises. Can the trust be excluded for alimony and equitable division purposes? Here is my recent newsletter centering on a recent June 2017 Gibson Georgia Supreme Court opinion that addresses a spouse’s $3.2 million funding of two trusts without the other spouse’s knowledge.  My newsletter was published yesterday by Leimberg Information Services. You may reprint and distribute my newsletter to other readers. Click here for this newsletter.  Also, click here for more information about Leimberg Information Services.

Winner of the 2016 Heckerling Institute on Estate Planning Tax Court Opinion Writing Contest

 

This blog post is about my recent winning entry in the 2016 Heckerling Institute on Estate Planning Tax Court Opinion writing contest. This is a contest Richard Covey (who is with the New York law firm Carter, Ledyard & Milburn, LLP and a founding member of Heckerling) presented to the Heckerling participants.

This contest centered on an extremely interesting, and now in my evolving view, broadly relevant, estate tax planning question dealing with the QTIP marital deduction.

More particularly, this QTIP question is good food for thought for a broad number of married couples, especially whose net worth hovers around the combined (current) $10.9 million federal exemption value.   For this blog post I am not making a recommendation one way or the other about whether clients apply this QTIP planning.

I include the following two links for readers who wish to delve further into this QTIP question and my hypothetical Tax Court Opinion in response to the contest.

The first link is yesterday’s newsletter in the Leimberg Information Services newsletter service. Click here for a link to the newsletter.

Click this second link here for my contest Tax Court opinion.

You are welcome, and I have no objection, to anyone forwarding or printing this blog post and these two links for other readers.  Also email me if you have any thoughts or comments that further shed light on this QTIP question.  Here also is the link to the Leimberg Information Services website.

 

 

 

 

 

Deja Vu. The 1974 NIXON Subpoena.

Regardless of one’s choice in this 2016 presidential election, last night’s debate took me back to my days at Emory Law School in Atlanta.  In my first-year constitutional law course. The U.S. Supreme Court opinion in United States v. Nixon, 418 U.S. 683 (1974).

I include some more details at the end of this post about this Nixon case.  But, essentially it dealt with President Richard Nixon’s objection to complying with a subpoena for his release of information during the Watergate investigation.

This case made a lasting impression on me in that first-year law school class.  I have thought about it many times over the years in response to U.S. and world news, particularly involving political conflict.  I thought about it again last night.

The key point that struck me many years ago is the question our constitutional law professor raised.

That is, “What would have happened to the balance of our three-branch democratic government if President Nixon had disregarded the federal District Court order that he turn over the information subject to the subpoena?”

Keep in mind the subpoena had been served on Nixon by his own executive branch. The U.S. District Court is the judicial branch.

We will never know this answer.  To the tremendous (constitutional) benefit of our country, Nixon chose to comply with the federal court order and turn over the subpoenaed information.

Here is some more background information about this Nixon case. In short, in 1974 federal special prosecutor Leon Jaworski obtained a subpoena from the Justice Department ordering President Richard Nixon to turn over certain tapes related to the Watergate investigation.  Nixon was still in office at this time. Nixon objected and asked the U.S. District Court in D.C. to quash the subpoena.

As an interesting aside, the news media at that time reported that President Nixon’s attorney, in arguing to the District Court against against the subpoena, stated:

“The President wants me to argue that he is as powerful a monarch as Louis XIV, only four years at a time, and is not subject to the processes of any court in the land except the court of impeachment.”  

[excerpt from Trachtman, Michael G. (2007). The Supremes’ Greatest Hits: The 34 Supreme Court Cases That Most Directly Affect Your Life. Sterling. p. 131. ISBN 978-1-4027-4107-4.]

 

 

Borderline Incapacity; A Family’s Greatest Estate Planning Threat

Ponder, for a moment, who is the winner in this kind of litigation?

A family not willing to plan for incapacity may later find itself hemorrhaging from substantial legal fees and litigation costs.  I see nasty disputes arise when a family member becomes incapacitated, often the problem is Dad in his second marriage. I also remain steadfast with my belief that incapacity, especially borderline incapacity, is the greatest threat we all face in the context of our estate planning.

Here also is a difficult question. That is, who do we trust and who will we designate as the person or persons who will step into our shoes for overseeing our affairs and property if we become incapacitated?

These names (your agents under a power of attorney, trustees, executor) must be trustworthy, self-starters, financially well-versed, and non-procrastinators. Using your own family members is fine. But, you still need to consider these characteristics.

Here are some additional key comments:

  • The term “conservator” typically refers to an entity or individual appointed by a court to manage and oversee an incapacitated person’s property. By contrast, a “guardian” is an individual appointed by the court to oversee an incapacitated person’s emotional and physical well-being, care, education, health, and welfare.
  • But, the goal is to have documents in place now (often revocable living trusts) for the management and oversight of your property to stave off getting a court involved in the event of your incapacity.
  • This means you must now have sufficient written documents as part of your estate planning that help defend against a court stepping-in and mandating a conservatorship or guardianship on your behalf.
  • The lawyer assisting you with this defensive planning must know the relevant procedural, evidentiary, declaratory judgment, and other important court / litigation rules so as best to block a court from becoming the arbiter in determining your incapacity.
  • Absent this planning, a Georgia court (my law office is in Atlanta) overseeing the fray as to a person’s possible incapacity is required to conduct a court proceeding (e.g., a trial) to determine whether incapacity exists. The litmus test is whether the person lacks sufficient capacity to make or communicate significant responsible decisions about the management of his or her property.
  • And, here is the kicker. If the court concludes there is incapacity, the court is not bound to name a family member as the conservator or guardian of the incapacitated person. Instead, the court has the power to name any conservator or guardian the court concludes is in the best interest of the incapacitated person. This might end up being the local county administrator or some other entity or person completely outside the family circle.
  • As to a court’s power to choose, click here merely as an example of a Georgia case where the son, whose mother was found to be incapacitated by the court, lost in his effort to be named by the court as his mother’s conservator. This case is In re Hodgman, 269 Ga. App. 34, 602 S.E.2d 925 (2004). The local county administrator was appointed by the court as the conservator. The son unsuccessfully argued that his having already been named as agent by his mother in her financial power of attorney and in her health care directive supported a conclusion that the court was bound to name the son as the conservator.

I have no personal knowledge of the following Georgia case that I include here as an example of what you hope to avoid. Click here. This case is In re Copelan, 250 Ga. App. 856, 553 S.E.2d 278 (2001), and illustrates what appears to have been a very expensive, time-consuming, painful ordeal for the family and for the mother who ultimately prevailed against her children seeking to have her deemed incapacitated.  Note there was a jury trial at the superior court level that the mother lost; she then successfully obtained a reversal of the jury verdict on appeal.  My guess is the angst and litigation expenses for these family members were substantial.

Finally, the court in this Copelan opinion pointed out that one of the sons had left a voice-mail message with another sibling threatening their mother with “embarrassment” in the community and referring to a lawyer who was ” ‘chomping at the bit’ to take the case.”