Attention all of you Trustees of Living Trusts and children beneficiaries of the Trust- This case is a wake-up call. You know how you might want to punish a step-mother or step-father for becoming a life partner or spouse to your widowed mom or dad. Once the natural parent is out of the picture many times the kids and/or the Trustee exact some type of revenge on the step-parent. Well, you better take a listen to this California case.
Frank, the natural father, entered a relationship with Marilyn after his wife’s death. It was a married-type, intimate relationship for 25 years. There was dissension between Frank’s children and Marilyn. In 1995, Frank created a Living Trust in his updated estate plan. He made himself Trustee and appointed his daughter, Mary, as his Successor Trustee. The Trust provided that upon his death Marilyn would receive $20,000.00 and the children the remaining assets. Later, Frank and Marilyn arranged a joint account in 2007 in which Frank transferred $100,000.00 from his separate investment account. Subsequently, at Frank’s direction, Marilyn transferred the $100,000.00 to her own account. Thereafter, Frank purchased a $50,000.00 CD and designated Marilyn the beneficiary. None of these transfers were made know to Frank’s children.
A year later in 2008, Frank was diagnosed with early dementia. Over the next year his condition rapidly declined which required Marilyn to provide 24 hour care. Finally, Frank had to be admitted to a nursing home in which records revealed, Marilyn visited everyday. Another daughter, Catherine, became Successor Trustee, discovered various joint accounts between Frank and Marilyn, which had been used for Frank’s care, and closed them. Catherine as the appointed fiduciary in the Health Care power of attorney, placed Frank in various facilities and placed an order with each which prevented Marilyn from visiting. Afterwards, the children sued Marilyn for undue influence over Frank’s financial affairs. Marilyn filed a cross-complaint alleging emotional distress caused by the children’s refusal to allow her to see their father in the last six months of his life and attend his funeral. Frank was 94 at his death, Marilyn was 85.
Trial was to a jury which found no support in the undue influence claim against Marilyn. However, the jury returned a verdict against the Trustee, Catherine, and another daughter, for intentional infliction of emotional distress and awarded Marilyn $323,700.00. The verdict was upheld on appeal.
Evidence supported the claim that the daughters’ actions were intended to punish Marilyn for her being the object which reduced the value of their inheritance. The children also admitted to the close relationship Frank and Marilyn enjoyed, evidenced by Frank’s voluntary willingness to include her in his estate and arrange for her financial security with a gift of funds to her account.
This recent California case of December 2014 exemplifies the seriousness of the tort action of Intentional Infliction of Emotional Distress against a step-parent by the Successor Trustee and/or step-children. Trusts are commonly drafted for blended families which creates the potential for revenge, retribution and contests. Trustees need to be mindful of this cause of action available to step-parents who may be the object of scorn, ridicule and preclusion of their rights regarding a deceased spouse as reflected in this case.
Solution: Consider a Trust Protector provision in the Trust to allow the Protector to moderate differences or issues between the children and the Surviving step-parent to avoid costly legal action and potential damages as in this recent California case.