Will Caveats vs. Full Scale Lawsuits

In the recent case of Finks v. Middleton (N.C. App. 2016), we saw the court wrestle with an issue that has become all too common. This case arose from a bitter sibling dispute between a brother and sister. Mother had executed a will in 2009 passing her assets equally to three children. From 2011 to 2015, Mother’s estate purportedly was depleted from roughly $800,000 to $0. In 2012, Mother had executed a new estate plan, and what followed was a series of transactions that conveyed property out of the estate into the control of one sibling. The other sibling, the daughter, sued the brother in his individual capacity, in his capacity as executor of the estate, as trustee of the revocable living trust, and as attorney-in-fact under the power of attorney, for fraud, conversion, unjust enrichment, and punitive damages.

I will decline to comment on the merits of her underlying case, except to mention that her case alleged that the brother preyed upon Mother’s state of dementia to wrest control over the assets prior to her death through undue influence. The brother, on the morning of a hearing on his motion to dismiss the lawsuit, obtained an order from the estates clerk admitting the 2012 will to probate. This was an important tactic, but it proved unsuccessful.

The brother argued that because there was a will admitted to probate, the sister’s claims against him lacked jurisdiction because her remedy was only to challenge the estate documents under the rubric of undue influence and lack of testimonial capacity. Basically, the brother’s argument was that the case was limited to a caveat, or challenge proceeding, and sister should not be permitted to bring her lawsuit. The trial court disagreed, and allowed the lawsuit to proceed in court notwithstanding the will at issue being admitted to probate. The appellate court agreed that the sister had standing to bring the action for damages for two very important reasons:

1. When the sister had brought her lawsuit, the brother had not yet admitted the will to probate. The brother attempted a tactical move to cut it off by pushing her claims into the limited legal arena of will caveats. But that did not fly, as the sister’s case had standing when it commenced, and the court reasoned that standing was not a light bulb that can be just clicked on and off; and
2. Even though the caveat proceeding would be based on the same basic facts as those advanced in the lawsuit – undue influence and lack of testamentary capacity – and therefore there is a judicial interest in not advancing cases based on the same transaction of facts in competing actions or courts, as the possibility of different results would cause pitfalls, the will caveat proceeding is so limited that it could not possibly grant complete relief even if successful. The facts state that much of the issue amounts to draining the estate assets prior to Mother’s death, and therefore, those issues needed to be addressed as well.

The court concluded that the best result was to have the sister file the caveat, but for the court to hold it in abeyance until the conclusion of the sister’s lawsuit for damages. Therefore, in this instance, full scale litigation was the appropriate relief as opposed to a will caveat proceeding. Litigation strategy on both sides proved to be essential to achieving a remedy. It is vital to consult with an experienced estate and fiduciary litigation attorney as soon as possible to avoid losing your claim.