by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization
Estate of Janice Helena Kraus, deceased, The Regents of U.C. et. al. v. David Kraus (2010) involved mother, Irene, and her two children, Janice and David. Irene was rather elderly; and Janice is hospitalized, dying of brain cancer. Irene had disinherited David from her estate plan and set forth that he refused to return to her $160,000 they (David and his wife) were to have held for her.
Janice, likewise, excluded David from her estate plan. She left her estate via her living trust, written in 2003 and amended in 2005, to the Make-A-Wish Foundation of Greater Los Angeles and the Regents of University of California. Janice had approximately $160,000 in bank accounts; some of the accounts had Irene as a Joint Tenant, and some others had Irene as a beneficiary.
The day before Janice died, David got her “X” on a Power of Attorney which he used to close the bank accounts and take the funds. They were placed in accounts for David, with his daughter as beneficiary.
Janice’s attorney/Trustee wrote to David regarding the funds. Janice’s Will provided that the Bank Accounts were to go to her Trust and the Trustee “assigned all ‘choses [sic] in action and claims’ against David to the beneficiaries.”
Irene died prior to trial, but after Janice.
David wrote a letter to the charities threatening “to expose their greed to the media.” Further, he told them they could not bully him; he knew the law and they “have no standing in the eyes of the court”; that bringing a matter against him would forever prejudice the court against them; and, that they would “long be remembered in her court.”
The Trial Court found that David’s power of attorney was void and that David acted “wrongfully and in bad faith” converting property. He was ordered to pay damages of $197,402 to a court-appointed representative of Janice’s estate; and, per §859, $394,804 (double damages) the personal representative. The minute order changed the total damages to $394,804.
The appellate court reviewed Probate Code §§850-859 and reviewed the persons, including “any interested person” who could bring a §850 action. §48 defines an “interested person;” § 855 defines types of actions which may be brought; and §859 provides for recovery of twice the value of property taken in bad faith “. . . wrongfully taken, concealed, or disposed of property belonging to the estate of a decedent, conservatee, minor, or trust . . ..”
The court does not have to wait until a determination is made as to who ultimately will receive the funds or to award punitive damages. “The statutory emphasis is not on to whom the property belongs, but whether the person in possession in bad faith wrongfully acquired it.”
The probate court did not award damages “it ordered David to hand over misappropriated funds together with a statutory penalty for his bad faith conduct. The funds were taken out of the hands of the person who wrongfully acquired them.”
So, once again, guard against acting in bad faith. There are consequences.
John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
By the California State Bar Board of Legal Specialization
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