Mediating Probate Disputes
Edmund J. Sikorski, Jr., J.D.
January 2, 2012
Mediation is simply supervised negotiation between parties who want to settle a dispute. Process is the essence of mediation.
Mediating probate disputes is a close cousin to family mediation and commercial mediation because it is usually more interest related than positional but it usually has more players and more complex emotional issues.
The observations that follow are also relevant to trust and guardianship.
Probate disputes are factually intensive and can involve numerous expert witnesses, multiple parties, and numerous trial exhibits. The discovery process, like other civil litigation, is often long, expensive, and a consuming part time job for the participants.
The pretrial and trial process only widens the gap of the participants’ differences and often completely fractures any remaining sense of family for the future generations.
Overall, probate mediation can only be successful it there is a sense of family values in the participants—if only for the moment. If there is not, as will be evidenced if there is a long standing dispute, the prospects of a mediated resolution are dim at best.
BENEFITS OF MEDIATION
1. Early Resolution
a) How long does it take to fully litigate a probate dispute? 1, 2, or 3 years? I tried a trust case early in my practice that was 13 years old before getting to a two solid week trial.
b) While most cases will be non-jury, will a probate court commit to giving days of continuous trial time to the contested case, or will it be subject to trial continuances with long breaks in between?
c) Do the participants realize that they are taking on a part time job in assisting lawyers in answering discovery requests and preparing for trial?
2. Avoidance of Trial Expense and Judicial Decisions Based on Sympathy
Who is going to front the discovery, expert witness fees, and trial expense? Experience tells me that a witness deposition costs about $2500. Expert witness fees are a multiple of that number.
Substitution of the Probate Judges version of appropriate or proper exercise of trustee’s discretion that may cause removal of the trustee, appointment of a receiver, and termination of a trust is a very real possibility.
3. Potential for Creative Solutions
A career in the legal profession has taught me that aside from constitutional and statutory determinations, courts have two things they can do:
a) grant or deny liberty; and
b) order transfer of property (including money) from one person to another.
Both are zero sum results.
Mediation opens the door to creative solutions not available to a court. It can result in a division of assets without rigid adherence to the terms of the governing instruments or laws of intestacy. It can craft resolutions participants will accept and move on with their lives.
4. Family Harmony---At least to some extent
As I suggested before, trial is the point of no return to the concept of FAMILY because it will be a zero sum event—someone will win and someone will lose.
Mediated agreements are by their nature agreements to disagree but leave open the possibility of reconciliation and future family harmony—to some extent.
Avoid a public record of family discord and/or embarrassment.
There is usually some buried body that is suddenly resurrected, much to the chagrin of all.
6. Benefits to Attorneys
Probate disputes are unique in that they often begin as routine probate proceedings. Then without warning, an objection is filed and the routine administration turns into a nightmare. The probate litigation attorneys are brought into the mix and the probate administration attorney is frozen in his tracks.
Mediation may allow the probate administration attorney to participate in the dispute resolution without becoming a party in the dispute. If the probate administration attorney drafted the governing instruments, that attorney may be subjected to claims ranging from undue influence to negligent preparation of the governing documents. This is especially true if here have been periods of time between first documents and amendments. See Wisconsin Lawyer Vol. 84 No.12 December 2011 for a discussion of Risk Management issues facing Estate Planning Attorneys.
SPECIAL CHALLENGES IN PROBATE MEDIATION
1. Dead Men Tell No Tales
Someone got a larger piece of the pie either by the terms of the governing documents or the decedent leaving some asset in joint tenancy outside the estate or by gifting before death. WHY? Did not the estate planning attorney inquire into ALL of the assets as part of his work? Why was this asset not transferred to the TRUST? Why did the decedent create a joint account with one of the beneficiaries rather than simply add hat person as an authorized signature on the account? (This sets up the E&O claim).
Without the decedent the truth is probably impossible to determine but the inquiry if not avoided early will only result in yet another claim to be resolved with the estate planner at the center.
2. Emotional Participants
Participants in probate disputes equate their share of the estate with their deceased parents love and /or trust. Other participants see an estate dispute as a new reason to fight an old fight of sibling rivalry or a demand for some concept of equality at THAT moment despite the fact that their prior behavior merited something other than equality or trust.
A dispute might arise between children of one marriage and the surviving spouse of a later marriage. The decedent’s children may view the decedent’s property as theirs while the surviving spouse may feel a right to a sizable portion of the property.
Litigated solutions to these problems ignore the complex emotional issues that underlie the dispute.
3. Multiple Parties
A mediator must know enough about the case prior to mediation to ensure that all necessary parties are available to reach an agreement that closes the case.
Multiple parties make settlement a very big challenge because one presumably unreasonable party can veto the entire process while at the same time using that potential veto power as a huge bargaining chip to leverage his/her demands.
4. Lack of Information
What are all the assets of the estate?
What items that were pre-administration gifts will be challenged as gifts or transfers under a claim of “undue influence”?
What are the actual value of the real and personal property of the estate?
Are there jointly held asses outside of the estate?
5. Disagreements about Estate Assets, Value, and Distributable Amounts in Combined Trust and Estate Distributions
A few years ago I had a case where the named co-executors (also beneficiaries of the estate and family trust) were at odds over what assets should be included in the estate and the overall combined amounts that the beneficiaries of the estate and trust should receive. The central problem turned out to be that the objecting co-executor owed the trust a very substantial sum of money and if the terms of the governing instruments were to be enforced, he would have had to put money into the estate and trust accounts as opposed to receiving any distribution. Objections to the Proposed Inventory filed by the other co-executor with requests for probate court instructions was answered by the court issuing an order to mediation to be followed by a Contempt show cause hearing set 30 days after the mediation date if the matter was not resolved.
After 2 days of mediation the matter was reported as an impasse.
Two days before the Contempt hearing a comprehensive deal was brokered by the son in law of one of the beneficiaries because he needed the money for nursing home care of the sister of the co-executors.
Lesson learned: There was an elephant in the room that no one paid attention to during mediation. Sometimes a sense of family responsibility overrides the entire fight—although the beneficiaries never spoke to one another after the comprehensive settlement order was signed and the money distributed.
6. Tax Consequences:
Mediated settlements can have tax consequences. The mediation participants should have those potential issues addressed prior to mediation or have access to someone during those proceedings to give that knowledge without adjourning.
Probate mediation presents challenges for how emotions and family dynamics are weighed and balanced with legalities. Rarely if ever will adjudication resolve the family conflict or the dispute. It is probably more accurate to say that adjudication is a death sentence for any sense of family for ensuing generations.
Although here are times when these disputes are NOT a candidate for mediation, it is often the last best hope for resolution and restoration family values even for the moment it takes to finalize the resolution documents.
Edmund J. Sikorski, Jr., J.D. is a Florida Supreme Court Certified Circuit Civil and Appellate Mediator concentrating mediation services in organizational, customer and business conflicts, probate, insurance, securities, and property disputes.