Avoiding Estate-Related Disputes

Presented by:

James E. Edwards, Jr., Esquire

Kelly M. Preteroti, Esquire

Ober|Kaler

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Fiduciary Litigation is on the Rise

• WEALTH CREATION ON THE RISE!

– Despite major corrections in stock market, many investors have accumulated significant wealth in their investment portfolios.

– Real Estate value grew 6.4% overall in 2013. The Washington Metro area experienced an even larger increase of 8.8%.

– Number of Filings in the Orphans court has doubled 2009-2012 and is projected to triple by 2013!

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Nature of Fiduciary Litigation

• VALIDITY OF WILL OR TRUST/NON-PROBATE PROPERTY– Lack of Testamentary Capacity

– Undue Influence/Fraud

– Failure to Follow Legal Requirements

– Construction or Modification of Document

• WILL CONTEST: ORPHANS’ COURT

• TRUST DISPUTE: CIRCUIT COURT

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Nature of Fiduciary Litigation

• CLAIMS FOR BREACH OF FIDUCIARY DUTY AGAINST TRUSTEES– Trustees Must Exercise Due Care,

Diligence, and Skill in the Administration of a Trust.

–What Can Go Wrong?•Duty of Loyalty

•Duty to Invest Prudently

•Duty of Impartiality

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Nature of Fiduciary Litigation

• CLAIMS AGAINST PERSONAL REPRESENTATIVE OF ESTATE– A Personal Representative is a fiduciary and

must expeditiously settle the estate of the decedent in accordance with the terms of the will and with as little sacrifice to value, as possible.

–What Can Go Wrong?•Mismanagement of property•Unable or incapable of discharging duties

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Financial Exposure for Fiduciaries

• Commissions worth the risk to your personal finances?– As a trustee you can be personally liable if

you breach the duty of loyalty, duty to invest prudently, or duty to act impartially.

– As a Personal Representative you can be charged legal fees for having to defend yourself against removal if the defense is not made in good faith, with just cause.

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Avoiding Fiduciary and Probate Litigation

•Dysfunctional Families

•Second Marriages/Significant Others

•Nonstandard Estate Plan

•Poor Estate Plan

•Lack of Follow-Up

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