A California mother recently went to great lengths to obtain an inheritance from her deceased son's special needs trust, but a court decided that her attempt went too far and awarded half of the trust to the woman's ex-husband, even though he had not seen his son in years.
Betty Crick and Louis Silveira, Sr., had a son, Louis, Jr., in 1984. Shortly after Louis was born Ms. Crick and Mr. Silveira split up. Mr. Silveira settled in Rhode Island and started another family, while Ms. Crick and Louis eventually ended up in California.
In 2002 Louis, then 18 years old, suffered a heart attack in his high school that caused severe brain damage. Acting on her son's behalf, Ms. Crick filed a lawsuit against the school district where Louis attended school, alleging that teachers and administrators at the school could have done more to help Louis during his heart attack, thereby preventing some or all of the brain damage. The parties settled and the proceeds from the settlement were deposited into a special needs trust for Louis's benefit. Louis was able to receive significant government medical benefits to help him with his special needs because the funds in the trust were not counted as a resource for purposes of determining Medicaid eligibility.
Louis lived for another five years but passed away from complications related to the heart attack. At the time that he passed away, Louis's special needs trust held approximately $8 million, and, according to the terms of the trust, anything left at Louis's death was supposed to be distributed to his estate. Since Louis did not have a Will when he died, California law mandated that the funds should be split between Louis's parents, despite the fact that Louis had not seen his father since he was very young.
When the law firm that managed Louis's trust attempted to obtain Mr. Silveira's address from Ms. Crick in order to notify him of his son's death, Ms. Crick told the firm to "jump off a bridge." She then met with a lawyer and asked him to draft a disclaimer for Mr. Silveira to sign. (A disclaimer is a legal instrument that a beneficiary of an inheritance signs stating that he does not want the money he is entitled to.) Ms. Crick then drove from California to Rhode Island where she showed up without warning at Mr. Silveira's job and presented him with the disclaimer. Mr. Silveira did not understand the document and considered asking an attorney for help, but Ms. Crick told him that the paper was needed for her to bury Louis and would allow her to move on with her life. Mr. Silveira signed the disclaimer, but, after he discovered that he had been tricked into giving away $4 million, he challenged Ms. Crick in court.
After several years of litigation, a California appeals court found that "there was substantial evidence the father's failure to read the disclaimer (or take it to somebody who could) was not negligent and was induced by the mother's misrepresentations as to the nature of the disclaimer." The court chastised Ms. Crick for lying to Mr. Silveira, and awarded him his rightful share of his son's estate.
The most important lesson from this case is to make sure that you consult an attorney before signing any legal document, especially if you don't understand what is being presented. But on top of that, the case should serve as a reminder that it pays to seriously consider family dynamics when drafting a special needs trust. Although the court that created Louis's trust may not have thought about it, the fact that Louis never knew his father was important and should have been addressed when the trust was established so that Ms. Crick received a "fairer" share of Louis's estate. If you are thinking of setting up a trust for a loved one, make sure that you discuss your entire family history with your special needs planner, even if it may seem embarrassing or unimportant. Doing so could avoid this problem and lead to a more equitable outcome for everyone involved.
To read the court's decision in the case, Estate of Louis Silveira, Deceased, click here.Article Last Modified: 09/07/2011
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