CALIFORNIA: An Introduction to Private Wealth Disputes

Contested Legacies: Litigators’ Field Report on the Great Wealth Transfer

The great wealth transfer arrives

The “great wealth transfer” is no longer a forecast; the long-prophesied financial tsunami has arrived, and we are starting to see how various projections are holding up against the real-world experiences of blended families, family offices and other stakeholders. By the best current estimates, approximately 20%, USD25 to USD30 trillion, of the anticipated USD124 trillion expected to transition in the United States between 2021 and 2048 has already been passed down.

The sheer scale of assets exchanging hands explains the rising prevalence of estate disputes, court proceedings and family intermediaries. Generation X is projected to inherit about USD39 trillion, Millennials USD46 trillion, Gen Z and Gen Alpha USD15 trillion, and baby boomers, mostly surviving spouses, about USD6 trillion. These numbers are not abstract; they shape the realities of families, fiduciaries and courts, all facing a growing volume of contentious estate cases.

Market forces driving current disputes

Giving-while-living transfers

The concept of “giving-while-living”, gifting otherwise inheritable assets, skills or time during one’s lifetime, continues to grow in popularity. Lifetime giving comes with visibility, and with that transparency comes more opportunities for challengers to confront testators, distributees and fiduciaries responsible for shepherding those lifetime gifts. Those confrontations potentially expose planning structures to stress twice – once during life and again at death.

This trend has produced a marked uptick in claims based on lack of capacity, undue influence, and financial elder abuse. Disputes most often emerge where declining health overlaps with an opportunist: a helper gains access; documents get executed outside the purview of the long-standing estate planning lawyer; and routine assistance shades into control and isolation. What started as a well-intentioned effort to experience and influence the impact of one’s giving transforms into one’s golden years being subjected to manipulation and oppression.

For example, consider a surviving matriarch or patriarch in their late-80s, suffering from cognitive decline, recovering from a recent fall and prescribed a cocktail of medications, who becomes reliant on a trusted advisor to manage their daily life care, and appointments. Over time, they

1. name the trusted advisor as a joint owner of various financial accounts;
2. add them to the board of the family foundation;
3. execute a restated trust, with a new lawyer, gifting the advisor a substantial portion of the estate residuary long intended for children and grandchildren; and
4. gift various works of art, cars and other collectibles.

After death, the children and grandchildren challenge the lifetime gifts and post-death reallocations. Medical records reflect early-stage Alzheimer’s disease with intermittent delusions. The new estate planning lawyer’s notes reflect meetings with the principal, arranged and often attended by the advisor, some with and some without private consultations with the client.

The outcome that followed: the joint accounts were treated as convenience accounts and returned to the estate; the trust restatement was set aside for undue influence; and the attorney-in-fact was surcharged for self-dealing. The lesson is less about motive and more about process. A brief capacity snapshot matched to the act, private counsel meetings and explicit limits on power of attorney self-dealing, and a brief “cooling-off” period for major changes could have avoided the fight.

The feminisation of wealth

Currently, at least a third of the world’s wealth is controlled by women, and that proportion continues to grow. This trend, the “feminisation of wealth”, means that women, whether surviving spouses, partners, sisters, daughters or granddaughters, are expected to receive a substantial percentage of inherited estates over the next decades. Women also are playing an ever-increasing role as executors, trustees and principal decision-makers. This shift changes not only who holds discretion but also who has reason to demand transparency.

In many cases, women are assuming fiduciary or beneficiary roles for the first time, often while navigating grief and family dynamics that complicate decision-making. The transition can be jarring. One widow described it as being “handed the controls of an airplane mid-flight”.

Collaboration matters. In a recent ultra high net worth estate dispute, early mediation, initiated by a family fiduciary who assembled a team of advisors, including tax and legal counsel, prevented disagreements among warring factions from escalating into a court battle. The proactive approach saved millions in attorney fees and court costs while preserving family relationships.

Finally, for many women, inheriting significant wealth comes with lifetime stewardship and demands foresight in planning for their own eventual transfer. One widow hoped to spare her children the confusion she endured when managing the family’s wealth. By working with trusted estate planning professionals, she structured a plan that spoke to the family’s ethos with transparent guidelines, resolved ambiguities, set clear expectations, ensured no assets were overlooked and created a roadmap for her family after her passing. That effort gave her peace of mind and her family the guidance needed to continue the stewardship they had been gifted.

Where disputes emerge

Aside from the broader forces reshaping the landscape, such as the sheer volume of wealth changing hands, the rise of giving-while-living transfers and the feminisation of wealth, we also see recurring patterns in day-to-day practice that, while less trendy, often fuel costly and avoidable litigation.

Ambiguities in planning documents

Vague or ambiguous language and unnecessarily complicated obligations in estate planning or corporate governance documents invite argument. Imprecise terms or overloaded conditions inevitably lead beneficiaries, heirs, fiduciaries and corporate partners to read language differently or weaponise well-intended guidelines. Suddenly, every distribution, investment or timing decision becomes contentious.

In a recent matter, a dynasty trust directed that principal and income be used for the “comfort and happiness” of the surviving spouse. With no definition of what those words meant, the surviving spouse and her companion argued it authorised luxury international travel and lavish gifts to friends, while the remaining family members insisted it was only intended to maintain the surviving spouse in her, not her companion’s, accustomed lifestyle. The lack of clarity turned ordinary lifestyle choices into flashpoints for dispute, ultimately costing the estate far more than the disputed expenses.

Some instruments anticipate this and build in pressure-release valves: a neutral trust protector or other third party with limited tie-breaking authority empowered to resolve narrow issues, or mediation and other alternative dispute resolution requirements that must be fulfilled before court proceedings can be initiated, ensuring bequests are tied to a non-judicial path. While no mechanism can erase all potential disagreements, they can keep those disputes from exploding into expensive, prolonged courtroom battles.

Modern assets require modern governance

Another common scenario arises when estate planning documents fail to keep pace with contemporary assets. Modern assets require principled governance. Estate planning documents must take that into consideration. Venture positions require exit triggers tied to liquidity for foreseeable distributions. Private companies benefit from an appendix with key provisions addressing voting, board seats, dividend policy, related-party transactions and appraisal rights. Digital assets call for clarity about who holds keys, how custody works and how losses will be allocated if a custodian fails. Generic fiduciary standards, written for a different era, may be insufficient to address those contingencies, leaving final determinations to judges. This is less a tectonic shift than a practical reminder: contemporary assets require contemporary governance if disputes are to be avoided.

Fiduciary appointments: when trustee appointments fail the structure

Another observation concerns fiduciary appointment, suspension/removal and succession. Far too commonly, fiduciary failure results from a failure of design. Poorly vetted fiduciary appointments, incomplete successor lists, outdated qualifications, and the absence of mechanisms to install independent or corporate trustees without court supervision all but guarantee judicial proceedings when relationships sour. Stronger plans treat fiduciary appointment as a core element, not as a boilerplate provision. For example, a trust agreement may require that a successor trustee be an independent trustee with experience relevant to specific estate assets and family dynamics. Provisions that establish trust protectors, appointers or committees can provide additional procedures and oversight that protect the trustee or allow for quick-trigger removal and replacement. Disputes may still occur, but thoughtful planning can minimise these confrontations and move the disputes that do arise toward resolution instead of stalemate.

Designing enforceable settlements

Unfortunately, some resolutions are illusory, and sometimes settlements unravel. Family settlement agreements frequently collapse when warring relatives cannot co-operate to implement them. The strongest settlements pair governance structures with economic incentives, deadlines, disclosure rules and enforcement mechanisms such as fee shifting or liquidated damages. While no structure can entirely eliminate the risk of renewed conflict, experience shows that financial levers are often what keep bitter parties from reloading.

Conclusion: a field report in progress

Advisers want families to thrive, fiduciaries want guidance on how to manage assets they control, and clients want clear instruments that cover not only the predictable but also the unforeseen. The Great Wealth Transfer has already intensified the volume and complexity of disputes, and it is only just beginning.

As USD100 trillion more dollars change hands, the patterns will continue to evolve. An emerging lesson in today’s courtrooms and conference rooms may be a footnote tomorrow. For now, these are some of the disputes we are observing on the front lines.