Fiduciary litigation, which includes disputes involving families, estates, trusts, and property transfers, can be complex and daunting. However, there are certain basic, frequently encountered aspects of fiduciary litigation. Here are four of the most common:
WHAT IS AN ESTATE PLAN?
An estate plan is an action plan for what happens to your assets upon your death. Estate plans are designed to provide precise directives as to, among other things, who will manage and distribute your assets upon your death and to whom those assets will be distributed. Estate plans may also include directives for your incapacity and the custody of your young children upon death. Estate plans may be simple or multifaceted, depending on your goals, preferences, assets, and family dynamics, among other considerations.
CAN I CHALLENGE MY PARENTS’ ESTATE PLAN AFTER THEIR DEATH?
The short answer is yes. There is no limit to who can institute a challenge to someone’s estate plan; however, the challenger must be able to demonstrate their interest or claim in the decedent’s property or estate, otherwise known as “standing,” which is defined as a party’s right to make a legal claim or seek judicial intervention. Children, as heirs-at-law of their parents, have automatic standing to challenge their parents’ estate plans. The garden variety claims for challenging a parent’s estate plan are undue influence, which includes claims that a parent’s free will was destroyed by actions of another person where that person unnaturally benefited from the estate plan, and lack of capacity, which includes claims that a parent lacked the requisite testamentary capacity to enter into their estate plan.
WHAT DO GUARDIANS AND CONSERVATORS DO?
A guardian is a court-appointed fiduciary who oversees and manages healthcare decisions for their agent when that agent is determined incompetent and unable communicate such decisions due to mental incapacity or other diagnosed condition. A guardianship may be plenary or limited. Where the guardianship is unrestricted, the guardian is solely responsible for managing all aspects of the individual’s physical and mental well-being, effectively stripping that individual of their right to make health care decisions on their own behalf. However, in Massachusetts, even general guardians are limited from certain extraordinary actions, including admitting the protected person to a nursing home or consenting to the administration of antipsychotic medication, absent Court authority. Where the guardianship is limited, the guardian may be responsible for only certain aspects of the individual’s physical or mental health decision-making as dictated by the Court.
A conservator is another court-appointed fiduciary who oversees and manages the estate – in particular, the finances – of the individual sought to be protected. A conservator deals with the protection of the property and business affairs of the person needing protection. A conservatorship may be unlimited or limited in scope and limited to specific actions or specific property or may apply to all of a protected person’s property. Some examples of potential duties of a conservator include collecting, holding, and investing assets, paying bills, operating a business, and selling tangible personal property.
WHAT IS THE ROLE OF AN ATTORNEY-IN-FACT?
The role of an attorney-in-fact is similar to that of a conservator, although their appointment is not. An attorney-in-fact is a person designated under a power of attorney instrument rather than appointed by a court. An attorney-in-fact is authorized to act on behalf of another person, whether in business, financial, or personal matters. A power of attorney instrument may be springing or durable: if it is springing, the powers of the attorney-in-fact spring into existence upon the happening of an event, such as the principal’s incapacity, and if it is durable, it is effective immediately, and remains in effect during the principal’s incapacity.
The powers conferred on an attorney-in-fact may be general, limited, or special. A general power of attorney grants the attorney-in-fact the right to conduct any business and financial decisions on behalf of the principal. Under a limited durable power of attorney, the attorney-in-fact is authorized to perform certain financial and business acts and make some decisions but not others. A special power of attorney is the narrowest in scope, limiting the attorney-in-fact’s authority to only that specified in the instrument.
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