Texas Estate Planning

Interference with Inheritance Rights

If someone improperly convinces another person to change his or her will, then the people who are harmed as a result need legal remedies to undo that harm. For example, if an unscrupulous attorney convinces an elderly parent to change his or her estate plan to exclude the children and benefit the attorney, then the children need legal remedies.

The most common remedy is to go to probate court and make a claim of undue influence after the parent has passed away.

If the court finds that there was undue influence, then the changed estate plan can be disregarded in favor of an older one. Another possible remedy is filing a suit for tortious interference with inheritance rights.

Texas Supreme Court recently considered this issue as the Wills, Trusts & Estates Prof Blog discussed in "Unanswered Questions in Texas."

Instead of suing the estate in probate court, as is done in an undue influence case, in a tortious interference with inheritance rights, the person accused of improper influence is sued directly for the damages that he or she has caused.

Depending on the jurisdiction and the facts of the case, this is a cause of action that can be used instead of or in conjunction with an undue influence claim.

The Supreme Court in Texas was asked to determine whether the cause of action exists in Texas. Lower Texas' courts are split on the issue.

Instead of doing that, however, the court declined to do so.  It determined that where undue influence exists, a constructive trust is a sufficient remedy for damages.

Reference: Wills, Trusts & Estates Prof Blog (June 2, 2017) "Unanswered Questions in Texas."

'The General' and the Widow

Details about the life of Alben Sagan, known as "The General," are sketchy. There is a good reason for that. Alben Sagan is not the man's birth name. It is the name that federal authorities gave him when he entered the witness protection program.

It is known that Sagan was formerly a military officer in Eastern Europe who informed the government about many mob-related crimes and was put into witness protection and given a new life in Wisconsin as dna info reported in "How a Mob Informant Who Left Witness Protection Got $100M From a Widow."

Sagan was apparently not happy with his new life and at some point returned to New York City. In 2008 he showed up at the home of Lee Power, a wealthy widow, to ask about renting an apartment in one of her many properties. Soon after that Sagan became Power's driver.

However, their relationship grew from there and eventually Sagan controlled every aspect of Power's businesses.

When she passed away in 2014, it was discovered that her estate plan had been changed to leave almost everything to Sagan. Under the new estate plan he would receive approximately $100 million in assets.

Power's family has challenged the validity of the estate plan claiming undue influence. They appear to have good grounds for the claim.

Reference: dna info (Sept. 20, 2016) "How a Mob Informant Who Left Witness Protection Got $100M From a Widow."

Undue Influence Can Turn Out to Be Costly

 

Sometimes undue influence can turn out to be costly as the Milwaukee-Wisconsin Journal Sentinel reports in "Ex-Derzon Coins operator ordered to pay estate $1.2 million."

David Derzon, who owned Derzon Coins in Milwaukee, passed away from brain cancer in 2007 leaving his wife Rebecca Derzon as the sole owner of the store.

She only survived her husband by eight months before dying from an overdose and that is when the fight over control of the store through her estate began. Those eight months turned out to be just long enough for Rebecca Derzon to become the victim of financial elder abuse.

Rebecca's half-sister, Lori Laatsch, had been estranged from Rebecca for a long time. However, Laatsch got into contact with Rebecca when her husband was ill and caused Rebecca to rewrite her will. Instead of the estate being distributed between several other family members under the old will, the new will left 75% of the estate to Laatsch with the remainder going to one of Laatsch's friends.

In 2012, a court threw out the new will after finding that Laatsch had used undue influence to get Rebecca to change her will. Laatsch was ordered to pay back $725,000 she had taken from the estate.

Recently, a court ordered Laatsch to pay an additional $1.2 million to the estate to reimburse it for the costs incurred in litigation over her fraudulent actions.  

Reference: Milwaukee-Wisconsin Journal Sentinel (May 22, 2016) "Ex-Derzon Coins operator ordered to pay estate $1.2 million."

Can a Lawyer Profit From an Unethical Will He Drafted?

Every state has a basic ethical rule for attorneys: an attorney cannot draft a will for a non-relative that includes a substantial gift for the attorney. The theory behind this rule is that attorneys could manipulate unsophisticated or incompetent clients into leaving the attorney a sizeable inheritance.

Despite this well-known rule, an attorney in Michigan drafted a will for his long-time friend that gave $14 million to the attorney and his children. This was nearly the entire estate. The deceased's family sued to have the will declared invalid. The trial court ruled that since the attorney acted unethically in drafting the will, the will itself was against public policy and invalid.

The attorney appealed and won.

The appellate court decided that the will was not automatically invalid. Instead, since the attorney acted unethically, it created a presumption that he exerted undue influence. If the attorney can prove that he did not exert undue influence, then the will remains valid. The Detroit Free Press reported this story in "Court: Lawyer's $14M inheritance unethical, not invalid."

Ordinarily the person claiming there was undue influence in creating a will has the burden to prove the claim, which is often difficult. It remains to be seen how difficult it will be for the attorney to prove that he did not exert undue influence. This case will be watched closely by those in the estate planning industry as well as legal ethics experts.

Reference: Detroit Free Press (October 9, 2015) "Court: Lawyer's $14M inheritance unethical, not invalid."

 

San Diego Attorney Ordered to Repay Trust

Svi Ljungwe was a longtime schoolteacher who amassed a small fortune through real estate dealings. In 2004, she created a trust that would have divided her estate between four charities. However, that same year, Ljungwe's last living child passed away and Ljungwe became increasingly unstable.

 

She wandered into an attorney's office initially to ask about a restraining order. Over the next few years, she became increasingly attached to the attorney.

 

In 2008, a new trust was drafted that left her entire estate to the attorney.

 

Sound interesting?

 

The U~T San Diegohas the entire story in an article titled "Attorney ordered to pay $4.3M to trust."

 

When Ljungwe passed away, the charities alleged that the attorney had unduly influenced her and drafted the trust himself. A San Diego judge has essentially agreed with the charities.

 

The judge has not only ordered the attorney to pay back the money he withdrew from the trust but also to pay penalties in the amount of $2.6 million.

 

Undue influence is normally very difficult to prove.

 

If you suspect that it has occurred in an estate in which you are involved, contact an experienced estate attorney for advice.

 

Reference: U~T San Diego (December 31, 2014) "Attorney ordered to pay $4.3M to trust"