Estate Disputes and Vulnerable Adults IN RE THE ESTATE OF ISAAC BY A. PAUL BLUNT

A. Paul Blunt is an attorney in Scottsdale, Ariz. As a trial lawyer, his practice con- centrates on probate, estate and trust litigation, and pro- tecting victims of adult abuse and exploitation. He also speaks and consults nationally on professional topics.

tories of disputes arising out of estates are as old as Isaac’s “blessing” for purposes of this article is a highly valu- history itself. The turmoil in families involving second marriages able estate. There is a sibling rivalry between the brothers that is Sand the divided loyalties of children born of only one common long standing (Jacob had earlier convinced his older brother to parent date from such early tales as the Greek tragedies of Medea trade him the latter’s birthright). Isaac’s blessing upon Jacob is a by Euripides (431 B.C.), Oedipus the King by Sophocles (c. 429 completed transfer of the bulk of Isaac’s estate into Jacob’s own B.C.) and many others. Indeed, life often imitates art: The four name. legitimate children of Sophocles (496-406 B.C.), fearing that Finally, instead of killing his brother upon the death of Isaac, their father’s considerable wealth might be left to his illegitimate Esau chooses the slower torment of suing Jacob in the Superior son Ariston, took their father to court in his later years and unsuc- Court of the State of Arizona. cessfully attempted to have him declared incompetent.1 The question presented and analyzed is this: If Isaac dies three Recently, since the Arizona Supreme Court’s decision in In re years later, what civil actions and remedies are available to Esau the Estate of Denton,2 the area of adult abuse and exploitation has under Arizona law? arisen as a distinct practice of law. History is likewise replete with Three possible approaches by Esau’s attorneys include: (a) stories of guile and intrigue over the estates of vulnerable adults. breach of trust, (b) constructive fraud and (c) statutory financial An excellent example comes from the first book of biblical scrip- exploitation. The effect of Arizona’s Probate Code on Esau’s ture, Genesis, in which Isaac, the son of Abraham, bestowed his rights are included where appropriate. legacy of God’s blessing upon Jacob, instead of Esau.3 This article analyzes current Arizona law touching on estate litigation arising out of allegations of vulnerable adult financial abuse. To illustrate, we examine the biblical story of Isaac, Jacob, BREACH OF TRUST Esau and Rebekah. Breach of trust, also called breach of fiduciary duty, is a tort.4 Of In that ancient tale, Isaac, by then old, blind and somewhat primary importance is the existence of a trust relationship confused, realizes his impending death approaches and deter- between the plaintiff and the defendant. Typically, that element mines to bestow God’s blessing on his eldest son, Esau. He is satisfied by establishing that there was an express trust. Such a instructs Esau, who is described as hairy and rough-skinned, to trust requires a competent trustor and trustee, the clear and hunt some game and prepare for him a good meal, whereupon unambiguous intent to create a trust, ascertainable trust proper- Isaac promises he will bestow the blessing upon him. ty and sufficiently identifiable beneficiaries.5 Isaac’s wife, Rebekah, overhears the conversation. While Esau In the case of Isaac and his family, there was no express trust: hunts, she tells the younger son, Jacob, to bring a kid from the Isaac had not earlier expressly created a trust into which he had goat herd so she can make her husband’s favorite dish and have transferred his property and named Jacob (or another) to man- Jacob receive the blessing. She dresses Jacob—fair and smooth- age that property according to Isaac’s wishes. Under that situa- skinned—in Esau’s best clothes and covers his arms and shoulders tion, Esau would lose. However, breach of trust is not limited to with the skin of the kid. express trusts. A resulting trust is defined as a trust arising, not Jacob enters his father’s tent with the food. Isaac is confused from the four corners of a trust instrument, but instead where upon hearing the voice of Jacob while smelling and feeling his one makes or causes to be made a disposition of property under other son, Esau. Because Jacob identifies himself as Esau, Isaac circumstances that raise the inference that he does not intend resolves it is Esau after all. He bestows God’s blessing on Jacob. that the person holding the property should have the beneficial For purposes of this article, certain presumptions (or poetic interest therein, unless the inference is rebutted or the beneficial license) regarding our fact scenario must be indulged. interest is otherwise disposed of.6 Isaac, besides old and blind, is also presumed to be non-ambu- Under the theory of a resulting trust under § 404 of the latory (or mostly so) and confined to his home. He is confused or RESTATEMENT (SECOND) OF TRUSTS, Esau would assert that his at least capable of being confused and depends on his wife, father’s intent in conveying his estate to Jacob was actually Rebekah, as his primary caregiver. Rebekah is displeased with intended to benefit Esau instead, and therefore Jacob merely Esau because of his choice of wives: They were Hittites, and holds title to the estate as the trustee of a resulting trust. Jacob Rebekah did not like them. would counter that Esau had abandoned his beneficial interest in

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the trust property by trading Jacob his birthright (discussed sub- that, irrespective of moral guilt or intent, is deemed fraudulent by sequently) and that Isaac ratified the gift after the fact when he virtue of the tendency to deceive others, to violate public or pri- was no longer under the misapprehension of Jacob’s identity.7 vate confidence or to injure public interests.13 The sine qua non Other considerations, however, might defeat Esau’s claim, of this theory is a confidential relationship between the grantor particularly the statute of limitations. Arizona law is currently and the grantee of the property, which would give rise to a fidu- unclear as to which statute might apply. Under A.R.S. § 14- ciary duty by the latter in favor of the former.14 The attributes of 7307, the statute of limitations directly applicable to actions by such a relationship include great intimacy, disclosure of secrets or beneficiaries against trustees bars such actions after six months entrusting of power, and in which the fiduciary holds a position following a statement by the trustee terminating the trust rela- of superiority over the other.15 tionship and a full accounting, or three years after such a state- Once a confidential relationship is established and there is a ment and access by the beneficiary to the records applicable to transfer of property to the person in the position of confidence, the trust. fraud is presumed, irrespective of intent. The burden then shifts Thus, Jacob might argue that more than three years had to the defendant to prove by clear and satisfactory evidence that passed since Esau learned of the claim and he is thus barred from his acts were entirely fair and the other acted with complete inde- seeking his remedy. pendence, with full knowledge and free from any undue influ- But Esau might ence.16 counter that there was In this case, if Esau asserted a claim against Jacob for the prop- Finally, instead of no statement from erty he received from Isaac, Jacob would challenge Esau’s stand- Isaac (or whoever the ing to bring the claim. If Esau is Isaac’s personal representative (or killing his brother trustee would have conservator during Isaac’s life), then Esau’s claim would survive been) terminating the the challenge. The case would then turn on whether Jacob had a upon the death of trust and therefore the confidential relationship with Isaac. Jacob did not hold and man- statute did not begin age Isaac’s property nor did Isaac put Jacob in a superior position Isaac, Esau chooses to run. However, that of trust prior to the transfer. Even if Esau brings in Rebekah as an statute begins with the additional defendant alleging a joint action with Jacob, given that the slower torment phrase, “Unless previ- she was Isaac’s primary caregiver, the claim would still likely fail ously barred by adju- for lack of the requisite relationship. dication, consent, or of suing Jacob in limitation.”8 That phrase has been inter- STATUTORY FINANCIAL the Superior Court preted by the Arizona EXPLOITATION Court of Appeals to Perhaps the most effective weapon for Esau would be Arizona’s in the State of mean that other relatively new financial exploitation statute.17 This statute estab- statutes of limitations lishes both criminal and civil penalties and has a seven-year limi- Arizona. apply to breach of tations period.18 The statute authorizes a private right of action trust claims.9 by the victim, and the action survives the death of the victim Although the court in without any limitation on the case.19 that case did not reach In a civil action, the victim must be an “incapacitated” or the question of which statute might apply, it appears clear that “vulnerable adult” as defined in A.R.S. § 46-451(A)(5) or § 46- one does. The time for filing the claim will begin running from 451(A)(10), respectively. The defendant must be in a “position when the beneficiary knew or should have known of the claim— of trust and confidence” with respect to the victim, as defined at the so-called discovery rule.10 A.R.S. § 46-456(G).20 If the defendant is found to have violated Thus, under Harris Trust Bank v. Superior Court, if the appli- the statutory standard of care, the plaintiff is entitled to treble cable statute of limitations is two years,11 Esau would lose damages,21 attorneys’ fees, court costs, consequential and puni- because more than two years would have passed since he learned tive damages and all the pre- and post-injunctive relief of the pre- of Jacob’s act. If the “catch all” limitations statute of four years ceding adult abuse statute.22 Finally, the defendant forfeits his applies,12 then the cause of action would still be good. interest in the victim’s estate, including an intestate share and all statutory allowances.23 As with the action for constructive fraud, Esau’s standing to CONSTRUCTIVE FRAUD bring the claim would be at issue, because the cause of action is Esau’s attorneys also could try to recover under the tort of con- available only to the victim. Therefore, Esau would have to be structive fraud, which does not depend on the existence of a standing in Isaac’s shoes in order to bring the claim. trust relationship, express or resulting. Once that issue is resolved, the first fact dispute would be Constructive fraud is the breach of a legal or equitable duty whether Isaac was “incapacitated” or “vulnerable.” Here, Isaac

38 ARIZONA ATTORNEY DECEMBER 2004 www.myazbar.org would probably not be deemed incapacitated, because he could to be a waiver.25 But quare: Is consent to a breach of trust, which make decisions about his own person and property, despite his breach is also a violation of a statute giving rise to a separate disabilities. However, he might be deemed vulnerable, because cause of action under A.R.S. § 46-456, also a defense to the vio- his blindness rendered him unable to avoid exploitation (goat lation of that statute? hair and appropriate clothing did the trick, not to mention some fine vittles). CONCLUSION Once Isaac is found to be within the class of protected adults, Even by today’s legal standards, liability for Jacob’s actions—and the next question would be whether Jacob was in a “position of his mother’s—is uncertain. But the ancient biblical story does trust and confidence.” Jacob does not appear to be an express serve as an excellent example of the complexity of the social and fiduciary, such as Isaac’s guardian, conservator or trustee. In legal issues underlying such matters, and the extent to which addition, the property taken by Jacob was not held in joint ten- modern statutes and cases have gone to recognize the dangers ancy or tenancy in common with Isaac. Finally, if all he did was inherent in them and to impose severe remedies for misbehavior. prepare a meal for his father, Jacob does not appear to have In transactions in which a party is in a position of trust and con- assumed a duty to provide care to Isaac. fidence, or a confidential/fiduciary relationship to a vulnerable One of the main issues that would confront Esau is his con- or incapacitated adult, the practitioner should be aware of these sent to the transfer of Isaac’s property to Jacob. Earlier, Jacob statutes, the common law, and the social–medical aspects that had convinced Esau to trade him Esau’s birthright.24 Therefore, will be part of any challenge. Jacob could argue either that Esau had renounced his beneficial One thing does seem certain, though. That is, the truth of interest in Isaac’s estate or that Esau had consented to the trans- the old adage: The more things change, the more they stay the fer. A beneficiary’s consent to a breach of trust is generally held same.

endnotes 1. At his trial, Sophocles, in his own defense, is reported to have read from his work in progress of the sequel, Oedipus at Colonus, and concluded by stating, “If I am Sophocles, I am not mad. If I am mad, I am not Sophocles.” The judges, overcome by emotion and applauding as wildly as the audience in the Theater of Dionysus, acquitted him. See publisher’s preface to Oedipus the King (Francis Storr, trans., Easton Press 1980). 2. 945 P.2d 1243 (Ariz. 1997). 3. See 27 Genesis. 4. Tovrea v. Nolan, 448 P.2d 144 (Ariz. Ct. App. 1993). 5. Jabczenski v. Southern Pac. Mem. Hosp., 579 P.2d 53 (Ariz. Ct. App. 1978). 6. In re Pauley & McDonald, Inc., 215 B.R. 37 (Bankr. D. Ariz. 1996); see also RESTATEMENT (SECOND) OF TRUSTS § 404 (1959). 7. After he was made aware of the earlier transfer, Isaac reaffirmed that he had, in fact, given his estate to Jacob and refused to give any more to Esau. Upon confronting his father with the gift to Jacob and asking his father to bless him, Isaac said, “Far from the richness of the earth shall be your dwelling place, far from the dew that falls from heaven. You shall live by your sword, and you shall serve your brother.” 27 Genesis 39. 8. Id. 9. Harris Trust Bank v. Superior Court, 933 P.2d 1227 (Ariz. Ct. App. 1996). 10. Id. 11. A.R.S. § 12-542. 12. Id. § 12-550. 13. McAlister v. Citibank (Arizona), 829 P.2d 1253 (Ariz. Ct. App. 1992). 14. Lasley v. Helms, 880 P.2d 1135 (Ariz. Ct. App. 1994). 15. Id. See also Herz & Lewis, Inc. v. Union Bank, 528 P.2d 188 (Ariz. Ct. App. 1974). 16. In re Guardianship of Chandos, 504 P.2d 524, 526 (Ariz. Ct. App. 1972). 17. A.R.S. § 46-456, effective August 1, 1996. 18. Id. § 46-456(E) and § 46-455(I). 19. Id. § 46-456(E) and § 46-455(O); See also In re Estate of Denton, 945 P.2d at 1243, in which the Arizona Supreme Court upheld § 46-455(O) over the limitation on damages for pain and suffering in the survival statute, A.R.S. § 14-3110. 20. A.R.S. § 46-456(G)(3) defines a position of trust and confidence as any of the following: (a) One who has assumed a duty to provide care to the incapacitated or vulnerable adult. (b) A joint tenant or a tenant in common with an incapacitated or vulnerable adult. (c) One who is in a fiduciary relationship with an incapacitated or vulnerable adult including a de facto guardian or de facto con- servator. 21. A.R.S. § 46-456(C). 22. Id. § 46-456(E). 23. Id. § 46-456(D). What is not addressed directly by the statute is the extent to which this remedy applies to the defendant’s benefi- cial interest under a trust established by the victim. 24. 25 Genesis 29-34. 25. See RESTATEMENT (SECOND) OF TRUSTS § 217(1) (1959).

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