Corrupti quos dolores etquas

• 2013
• 17
• Metronic, Keenthemes, UI Design

Executors changing a will to include otherwise omitted heirs is a blatant disregard of the decedent’s wishes, but per news reports, that’s what happened with the move approved by the New York Attorney General as well as a judge. How does this discounting of the clear intentions of a decedent not now set a dangerous precedent that could jeopardize the rights of inheritance of the deceased and other potential heirs?

A trust is generally a private legal instrument that receives no routine court oversight. Trust theory touts language that outlines the trustee’s fiduciary duties and responsibilities to the beneficiaries. While sounding good on paper, the validity of trust management is realistically commensurate to the trustee’s level of integrity and desire for honest dealings with the beneficiaries.

As any prolonged litigation (and count on your IRA adversaries for prolonged litigation) can easily run into six-figure expenditures for each side, IRA victims often recognize the absence of cost effectiveness in going to court. Much can be spent with little or nothing gained. Some attorneys may advise that certain estate amounts are not enough to fight over so the IRA family should “let it go” and save themselves additional grief and expense. Collectability of any judgments rendered becomes another issue – might another legal battle be required to actually secure funds awarded?  Involuntary Redistribution of Assets practitioners know how to target and maximize these opportunities.

If a trustee is viewed as having breached his/her responsibilities, beneficiaries can initiate a legal proceeding. As with contested guardianships and wills, the trustee will use trust resources to fund their side of any legal proceedings. The beneficiaries, on the other hand, must personally absorb their legal expenses. In some cases, a trustee can be held personally liable for his/her actions, but the same dilemma emerges as discussed with other estate cases in which how far does it make sense to go in pursuing legal action that is financially and emotionally exhaustive? And the IRA counterparts are ready to wait you out while simultaneously using your assets to compensate themselves for time spent on efforts contrary to your best interests.

 With legal and financial maneuvering, IRA can sometimes be accomplished within technical limits of the law.
Unfortunately, these cases often occur within frameworks that relegate them to being treated as civil rather than criminal matters.  With a minimal threat of legal consequences, estate theft becomes a more appealing endeavor.  Law enforcement is tepid to become involved often discounting such cases as “family disputes.” Politicians and governmental officials often find cover by feigning ignorance of estate abuse, probate corruption or specific IRA perpetrators with such actions costing targeted Americans their freedom, property or both.  The collateral damage to their families can also be a life changing experience.

 Win or lose, the massive financial expense, as well as emotional toll, often yields the only true “winners” in these cases to be the participating lawyers.
Transparency is an avenue to addressing the egregious process that allows the looting of assets via probate venues or probate instruments.  Meaningful reform, however, will not be an easy task.  The legal industry is powerful with few insiders willing to stand up against their own. Secrecy is a great friend to the IRA practitioner and their protectors.
However, as more of these cases occur and affect people at levels throughout the economic spectrum, “shining light on the dark side of estate management” will become the important first step toward shutting down IRA practitioners, exposing their allies and returning integrity to the arena of estate management and the probate process.

Austin American-Statesman reporter Tony Plohetski wrote a special report entitled Breach of Trust.  In  this article, Plohetski detailed how “Texas estate laws make stealing from the dead a relatively easy crime.” These are nothing more than cases of postmortem IRA. He described not only the estate theft activities of Austin attorney Terry Erwin Stork, but Plohetski also pointed out how Texas probate laws do little to ensure that people’s belongings reach those designated in the decedent’s will.  The article also depicted a loose approach to oversight on the part of some probate judges.

The legal industry won’t tell you this, but an estate executor can basically do anything he/she wants with an estate.  Realistically, judicial oversight is minimal – most judges believe what attorneys tell them and perform little or no independent follow-up.  Heirs believing something is amiss must mount their own challenge.  The Stork case was unique in that it was prosecuted as a criminal case, but most heirs pursuing “justice” in an estate dispute are relegated to the civil court system which is a pay-to-play venue open only to those willing and capable of expending significant sums of money for an eye-opening, but rarely confidence-inspiring experience.  Steal $250,000 from a bank, people get excited.  Steal the same from an estate, it’s hard to get law enforcement or any other officials to care.  These points are never lost on today’s grave robbers or other property poachers while an unsuspecting heir has no idea the web of deceit and gamesmanship into which they are entering with a civil estate dispute case.

Dishonest estate administrators sometimes contrive a dispute to draw legitimate heirs or beneficiaries into litigation requiring their response to be self-funded while the administrator/executor can use the dispute as justification for additional billing against the estate of his/her time along with legal or other applicable professional services.
The threat of legal action can also be used to pressure heirs into forfeiting or sharing rightful bequests rather than risk being the target of a contrived dispute.  It’s been called an inheritance litigation tax, but extortion when defined as “iIllegal use of one’s official position or powers to obtain property, funds, or patronage” is also an apt description.  Either spend time and money fighting or get out – it’s that simple, it’s that ugly.
As people’s entitlement mentality grows, probate has become an excellent venue for weaponization of the legal system by grave robbers, property poachers, asset looters and walker stalkers looking to divert assets in a manner contrary to the stated intentions of honest, hard-working Americans.  Losing the ability to determine the final distribution of one’s assets is a tragedy for Americans individually, as families and for us as a country in that the intergenerational transfer of assets has historically helped to strengthen our social and economic fabric.
Reform in this area will be difficult as the legal industry is powerful.  However, the stories of estate abuse and probate corruption seem to increase almost weekly and as they do, a generally unsuspecting public is starting to awaken to the growing threat to their property rights and to their heirs’ rights of inheritance.

Involuntary Redistribution of Assets occurs.  Estate looting or questionable enrichment can be accomplished through excessive or unaccountable billing, the retention of other “professionals” to provide services allegedly related to estate management (lawyers, accountants, etc.) or even the use of “friendly” vendors – especially those involved with the liquidation of property.

Families who suspect wrongdoing must self-fund any legal recourse while a guardian can use estate resources to defend against challenges of his/her position.  It’s not uncommon for judges to be deferential toward court-appointed personnel.

If desired, guardians’ capacity to block family contact can work as an intimidation tool to deter complaints or serve as a means of masking improprieties.  While court-appointed guardians are a potential source of probate abuse, family members serving as guardians have been known to commit many of these same actions so they should never be viewed as immune from taking similar advantage of their status to perpetrate IRA actions.

These things happen. They happen every day. Don’t think it can’t happen to you. And again, not all guardians are by any means dishonest or abusive, but those that are operate under a system that could not be better designed for untoward acts.

IRA targets – including those affected by abusive guardianships – and their families become trapped in a realm of frustration never previously known to exist.  The legal industry defends questionably acting attorneys, elected officials look for “feel good” legislative initiatives and judges are too often impervious to the pleas of IRA targets being “legally” robbed of their property, freedom and sometimes both.  Family members come to recognize the emotional and financial futility in trying to fight a legal system which is supposed to protect the people it’s destroying.

In recent years, Involuntary Redistribution of Assets activity has taken on a new look as lawyers and other parties not constrained by the boundaries of honesty and truthfulness use the legal system to influence situations in their favor.  Laws may not be technically broken, but ethics violations and breaches of trust often leave people with the same feeling and the same net financial result as experiencing that physical hit over the head prior to assets being taken.

Stealing $250,000 from a bank illicits a far different law enforcement response than stealing the same amount from an estate.  Estate disputes are occasionally, but not often treated as criminal matters.  They usually are relegated to the civil court system.  Many people pulled into IRA battles are simply ill-prepared for the fight.  Not everyone has first-hand knowledge of the legal or court systems, especially those whose lives center around being productive, law-abiding citizens. If your life experience hasn’t included things like divorce, child custody disputes, bankruptcy, DWI/DUI charges or exposure to other criminal activity, chances are your first-hand contact with a courtroom may be limited to an occasional stint of jury duty. With that, you may not realize what a “racket” the court system can be and the amount of good money that can be thrown away on legal fees and court costs with the disposition of even a simple case.

As with the guardianships, powers of attorney and wills, honest management and execution as per the stated wishes of the trust founder is a critical factor. Without a commitment to integrity, today’s legal system and moral environment offer the opportunity for a high degree of IRA gamesmanship. Within this context, the estate arrangements, final wishes or distribution of assets can undergo a complete redistribution that is in no way reflective of the founder’s plan.

Read more

Schenkel-HocusPocus-Trusts.pdf

Exposing the Hocus Pocus of Trusts

Kent D. Schenkel

New England Law | Boston
February 27, 2011

Exposing the Hocus Pocus of Trusts (view)

Abstract:     

A trust beneficiary may receive substantial benefits to property, and perhaps even virtual control over that property, yet the trust shields that property from costs associated with beneficiary’s commission of a tort, or a default on unsecured debt obligations, or the failure to provide for the surviving spouse at death, to give a few examples. While the outright owner of property must hold that property subject to the valid claims of these other parties, no participant in the trust arrangement undertakes these burdens. Instead, in an act of hocus pocus, they seem to simply vanish.

Unfortunately, the magic of trusts turns out to be a chimera, as the costs do not really disappear; they merely resurface elsewhere, falling on those outside the trust relationship. For example, burdens placed on outsiders as a result of property held in trust lead to litigation over rights of tort creditors as against trust beneficiaries and increase the cost of insurance and credit. This article serves as a call for recognition of what it terms these “elective externalities,” as well as a search for a practical approach to reducing them.

Number of Pages in PDF File: 74
Keywords: Trusts, Property, Probate, Externalities, Wills, Asset Protection, Spendthrift, Estates, Gifts, Tax
JEL Classification: K00, K10, K11, K34, K13
Accepted Paper Series