Trusts and Estates

Keading v. Keading

Cite as A151468, A153075
Filed February 18, 2021
First District, Div. Three

By Jaime B. Herren
Holland & Knight LLP
www.hklaw.com

Headnotes:  Elder Financial Abuse – Double Damages – Bad Faith      

Summary: Substantial evidence supported the trial court’s finding of elder abuse, and the award of double damages for elder financial abuse without a separate finding of bad faith was proper.

Siblings, Hilja and Kenton filed multiple actions following the deaths of their parents, Lucille and Lewis Keading in late 2015 and early 2016, respectively.  Both siblings assisted with caring for the Keadings when their health deteriorated.  Following Lucille’s death, Lewis amended the Keadings’ trust to treat the siblings equally and executed a power of attorney (“POA”) in favor of Hilja.  In the month before Lewis’ death, Kenton had Lewis execute a declaration stating no financial abuse had taken place, had him execute a POA in favor of Kenton and had Lewis transfer stock to Kenton.  Further, acting under the new POA, Kenton secretly transferred the family residence to himself and Lewis in joint tenancy and amended the Keadings’ trust to remove Hilja as successor trustee.  Initially, the trial court removed Kenton and appointed a professional fiduciary as trustee.  In advance of trial, the trial court found the latest POA (and the transfer deed executed thereunder) invalid, in part, because Lewis executed it individually rather than as trustee.  Following a four-day bench trial, the court determined, based on testimony of Lewis’ estate planning attorney, that Lewis’ last lucid act was the equalizing amendment.  The court found that Kenton exerted substantial undue influence such that the latest POA, the transfer deed and stock transfer had each resulted from elder abuse.  Without making a finding of bad faith the court awarded double damages for financial elder abuse.

The appellate court affirmed.  Abundant evidence supported the trial court’s finding of elder financial abuse by undue influence.  Rejecting Kenton’s alternative interpretations, the appellate court held that the introductory phrase of Probate Code section 859, requiring bad faith, modifies only the first of the three categories of conduct amounting to undue influence.  Thus, because Kenton took property by elder financial abuse, the appellate court upheld the award of double damages without a separate finding of bad faith, consistent with prior case law and the plain language of the statute.

https://www.courts.ca.gov/opinions/documents/A151468.PDF

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