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Some “Friends” Have a Bad Influence


How the Story Starts:

When Dave called his mother, Eva always answered the phone. He didn’t realize this until his lawyer asked him to start from the beginning and tell him everything. He remembered snippets of his last conversation with Eva.


A phone call from Dave

Eva: She’s sleeping now, but I’m glad you called. She wanted me to tell you about some changes in her life.
Dave: Changes? What changes?

Eva seemed like a nice if somewhat nosy neighbor when she moved in next door to Dave’s 87 year-old mother two years earlier. She was particularly helpful when his mother was recovering from knee replacement surgery-visiting every day, preparing meals, and driving his mother to the store. When his mother made Eva trustee of her trust, Dave didn’t object because he was always working or driving the kids here or there and figured he didn’t need another hassle.


Dave: What do you mean, we sold the house?
Eva: We sold the house.
Dave: Who is “we”?
Eva: Your mother asked for my help and I said I would help her.


Dave: She never even told me it was on the market!
Eva: It was your mother’s wishes.
Dave: Who did you sell it to?
Eva: It was your mother’s wishes.
Dave: What was the sale price?
Eva: It was your mother’s wishes.

The Situation

Eva had used her authority as trustee to sell his mother’s home. Eva’s daughter was the buyer. She had put ten percent down and Eva had provided a 10-year note secured by a deed of trust for the remaining purchase price. Eva gave her daughter the money for the down payment. The price was below fair market value, and his mother owed substantial capital gains taxes that could have been avoided if she had held the property until she died.

The only ones who benefitted, Dave’s lawyers would argue, were Eva and her daughter. Eva’s attorney said the transaction was reasonable because Eva was paying an interest rate higher than what Dave’s mother would have received from most other investments.

Many months after the transaction, a court appointed neuropsychiatrist deemed his mother incapable of testifying at trial.

*Disclaimer. This is a fictional narrative based on common fact patterns we have encountered. Names, characters, businesses, places, events and incidents are either the products of the author’s imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, or actual events is purely coincidental. The individuals who appear on the accompanying photos are dramatizations of fictional clients, witnesses, attorneys, or other parties. None of the individuals are actual clients, witnesses, attorneys, or parties to actual legal proceedings.


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Nick Maxwell
Senior Counsel
Trust Administration


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