Importance of Beneficiary Designation

Financial elder abuse can result in heavy double damages against the perpetrator. In a new case, Keading v. Keading, the appeals court ruled that financial elder abusers can be held liable for double damages even absent a finding of bad faith by the trial court. The defendant in Keading attempted to argue that the language of Probate Code Section 859, which concerns wrongful taking of property from elders and other vulnerable populations, requires a finding of bad faith. However, the court ruled that the clause regarding financial elder abuse is distinct from the other portions of the section that mention bad faith. Therefore, any taking of an elder’s property via financial abuse makes the defendant liable for double the amount they illicitly took. In the same case, the court of appeals elaborated on some of the evidentiary standards for proving financial elder abuse. As the court notes, plaintiffs alleging financial elder abuse often have to rely on circumstantial evidence and inferences to prove their case. Courts are directed to consider “(1) the victim’s vulnerability; (2) the influencer’s apparent authority; (3) the tactics used by the influencer; and (4) the inequity of the result” when making these determinations. Importantly, the court also holds that Estate of Sarabia, which lays out necessary conditions for a common-law presumption of undue influence to arise, has no import when a court is making a specific finding that undue influence and financial elder abuse actually occurred. Therefore, the four statutory factors above are the most important in proving financial elder abuse.

Breslin v. Breslin, a recent Court of Appeals case, makes clear the potential risks for beneficiaries or interested parties that choose to not participate in litigation. In Breslin, the testator listed over twenty charities as beneficiaries of his trust, but it was not clear how the funds should be divided. The trustee filed a petition for instructions, which only a small fraction of the charities responded to. Subsequently, the trial court ordered mediation among all interested parties. Notice was provided to all the charities and the intestate heirs, yet only five of the charity beneficiaries participated in mediation. The parties that did participate were successful in reaching a settlement and petitioned the court for approval. Only then did more charities show up in court, objecting to the proposed settlement agreement. The court approved the agreement, because the charities had been on notice since the original petition and failed to take any action until the matter was resolved. The appellate court affirmed the trial court’s ruling. It held that by not participating earlier, the charities had given up any right to an evidentiary hearing or any other interest in the matter. Additionally, the court noted that the trustee did not violate his fiduciary duty to the non-responsive beneficiaries because they had all been noticed. The Breslin decision is a welcome sign to trustees and administrators that have recalcitrant beneficiaries who seek to delay resolution of issues by stonewalling and refusal to negotiate.