Posts Tagged ‘unpublished decisions’

Claimant Must Prove Undue Influence, Lack of Capacity

AUGUST 27, 2012 VOLUME 19 NUMBER 33
It has been some time since we wrote about the concepts of undue influence and lack of testamentary capacity — and the differences between these two legal concepts. A recent Minnesota appellate case strikes us as a good opportunity to revisit challenges to wills and trusts based on allegations of mental shortcomings.

Linda Samson (not her real name) was a widow, living in her own home in Minnesota. She had two children, a son and a daughter. She and her late husband had created a living trust several years before her husband’s death; it provided that after the second spouse died, the remaining estate would be divided into three shares. One share would go to the couple’s daughter, another to their son, and the third to their son’s wife.

In 2003 Linda was diagnosed with “early-state Alzheimer’s disease.” In 2006 she signed an amendment to her trust deleting both her daughter and daughter-in-law (and leaving everything to her son). In 2008 she signed two deeds to her home — one transferred her home out of the trust and into her name alone, and the second one transferred her home from her name into her son’s name (but reserving a life estate for herself).

Between her initial Alzheimer’s diagnosis and 2008 Linda’s medical records periodically referred to her memory loss but indicated that she was stable. She continued to live at home, though with some assistance. She had a sharp mental decline in the summer of 2008, and by fall of that year a home health agency was recommending 24-hour care. She moved into a nursing home in the spring of 2009, was enrolled in a hospice program and died in June of that year.

Linda’s daughter objected to the 2006 amendment to Linda’s trust and to the 2008 transfer of her home. She argued that her mother lacked the capacity to sign either of those sets of documents, and/or that her brother must have unduly influenced their mother to his own benefit (and her detriment).

The probate judge heard testimony from several people who knew and/or treated Linda. Two expert witnesses hired by her daughter, both doctors, had reviewed Linda’s medical records but had never met her. They testified that her capacity was obviously diminished, and that it would have been possible to unduly influence her.

On the other side, the lawyer who prepared the trust amendment and the deeds to her house testified that, though he had not met his client before, she seemed to be able to explain her reasoning for the changes and she knew who her children were and what she was doing. He testified that she had told him that it saddened her that her daughter was not very involved in her life, but that she was pleased at the extra care and attention she received from her son and his son, her grandson.

Both the initial and the follow-up sets of appointments with the lawyer had been arranged by Linda’s son, but in both cases (he testified) it was at her request. Although the lawyer had met with both Linda and her son initially, further discussions were with Linda alone; the transfer of the house had actually been initiated by the lawyer rather than either Linda or her son. The lawyer pointed out that it didn’t really change the disposition of her estate at all, since Linda’s son was already the sole beneficiary of her trust estate.

There was one odd moment, according to the lawyer’s testimony. During one of the interviews with Linda he sought to establish that she knew her family members and the relationships (a key part of the standard for determining testamentary capacity). When he asked Linda about her daughter, she said that she was sorry that they were not closer, that the daughter was on her third husband (in fact, her husband had just died), and that her daughter had suspected that she, Linda, had had an affair with the husband. When the lawyer expressed surprise and asked follow-up questions, Linda dismissed the idea and said she had gotten confused; that had been the plot of a biblical story she had read.

After trial, the probate judge ruled that Linda’s daughter had not proven that her mother lacked testamentary capacity OR that her brother exercised undue influence. The judge noted that the supporter of questioned documents has the burden of proof that the documents were executed properly. After that, though, the contestant of a will or trust has the burden of proving allegations of undue influence or lack of testamentary capacity. Linda’s daughter introduced testimony that there could have been undue influence, and that Linda’s capacity might be suspect — but her burden had been to prove that there was undue influence, or that Linda actually did not understand what she was signing.

The Minnesota Court of Appeals agreed, upholding the probate judge’s ruling. The appellate judges had the same understanding of the burden of proof, and saw no reason to set aside the probate judge’s findings. Linda’s last trust changes, and the transfer of her home to her son, were both upheld. In the Matter of the Smith Living Trust, August 20, 2012.

This Minnesota case is not the most eloquent on the subject, and of course it would have little or no precedential value in Arizona. The opinion is also “unpublished,” which means that the Minnesota Court of Appeals decided that it should not be cited as precedent even in Minnesota itself. Still, there are several reasons we like the decision and call attention to it here:

  • It is a nice exposition of the “burden of proof” issue, pointing out that many will and trust contests lose not because the proponent of the document prevails but because the contestant fails. Generally speaking, the person who challenges a will, trust, deed or other estate planning document has to overcome the presumption that the signer was competent and knew what he or she was doing.
  • It describes the sorts of things a good lawyer should do to protect the validity of documents he or she prepares. The lawyer met with Linda alone (we would have liked it even better if he had never met with Linda and her son together, but at least he dealt primarily with Linda directly), the deed change was prompted not by Linda’s son but by the lawyer himself, the lawyer could testify that he routinely took steps to assure that his clients are competent and aware of what they are doing.
  • On the other hand, the contestant had to rely, as is often the case, on inference and reconstruction. The contestant’s two expert witnesses had never met Linda, and their opinions were consequently guarded (they said that she was susceptible to undue influence, but they could not testify to the extent of any influence they might suspect).
  • Perhaps most importantly, the opinion makes clear that even someone with a long-standing diagnosis of dementia might still be able to sign estate planning documents. Testamentary capacity (the ability to sign a will) is not immediately compromised by virtue of a dementia diagnosis; Linda had carried her diagnosis for several years but still had the capacity to understand the nature of her trust change, to identify her family members and to describe what assets she wanted to pass to her son. The fact that she had one episode of fairly serious confusion did not prevent her from signing her new trust.

Physical Limitations Can Lead to “Vulnerable Adult” Finding

MARCH 12, 2012 VOLUME 19 NUMBER 10
Georgia Griffin (not her real name) moved from Kansas to Arizona in 1997. She lived in her own townhome in Sun City West, a retirement community northwest of Phoenix, until 2001, when she moved in next door to her daughter Barbara, who lived in Scottsdale.

Georgia’s story was fairly typical: she had lived at home independently until, at age 90, her physical ailments made it difficult for her to get along without help. The move to be next to her daughter was occasioned by her daughter’s concern that she was at risk living alone. One particular concern: after Georgia fell in her home, she worried that if she were to fall again she might not be able to get up, even to summon help.

After Georgia’s initial move to Arizona, daughter Barbara helped her with her banking, filling out checks and making transfers and withdrawals. She was a joint tenant with her mother on some accounts; several were changed from joint tenancy to “payable on death” (POD) to Barbara at some point. Meanwhile, Georgia’s other daughter Elizabeth was less involved — though she also lived nearby.

Shortly before Georgia’s move to be next door to Barbara, Barbara had purchased six condominium units in the complex where she lived. In fact, Georgia’s move was into one of those units. Elizabeth would later argue that the money for those purchases came from their mother’s accounts.

After Georgia’s death in 2003, Elizabeth initiated a probate proceeding and was appointed as personal representative of Georgia’s estate. She then filed an action against Barbara, alleging that Barbara had taken advantage of Georgia while she was a “vulnerable adult” — an important term under Arizona’s law protecting seniors and those with disabilities.

After a five-day trial, she convinced the judge that Georgia was vulnerable, that Barbara had held a position of trust with their mother, and that she violated that trust by using Georgia’s money to purchase her condominium units. The judge entered a judgment for $179,518.51 against Barbara, and imposed a constructive trust on five of the condominium units (ordering that they could be sold to satisfy the judgment). The judge also ruled that Barbara had forfeited any right to inherit from her mother’s estate; the judge did not impose treble damages against Barbara, which was an option available at the time (the Arizona legislature has since reduced the maximum penalty to double the amount of the basic judgment, though that would not have made any difference in this case).

The Arizona Court of Appeals upheld the judgment. The key question raised by Barbara on appeal: how could the trial court have found Georgia was “vulnerable” when the evidence indicated she was fully competent? Can vulnerability be based solely on evidence of physical limitations?

The short answer: yes. The appellate judges ruled that vulnerability for purposes of Arizona’s exploitation statute can be predicated solely on physical impairments if, as a result of the impairments, the victim is unable to protect herself from the exploiter. Mental impairment is not necessarily required. In this case, according to the court, Georgia’s “diminished vision and hearing could also have made her more susceptible to exploitation, as they could make her less aware of her surroundings and the circumstances of any transactions in which she became involved, thereby making her less able to protect herself if targeted for exploitation.”

That is not to say that every transaction Georgia might enter into would be suspect. “A vulnerable adult may still have the capacity to transfer property,” according to the judges. In fact, Georgia had transferred her original townhome to Elizabeth and the family home in Kansas to Barbara; those transfers did not necessarily amount to exploitation.

There is a second interesting holding in the appellate decision, though it is perhaps less far-reaching in its scope. After the trial was over, and while one of Barbara’s sons was packing up his belongings to move out of the condominium he lived in (and which would now be sold), he said he discovered old letters written by Georgia. Those letters related how Georgia was helping Barbara and her husband purchase several condominiums so that they would have income when they retired. Barbara moved to reopen the trial to introduce those letters, but the trial judge refused.

That refusal was not error, according to the Court of Appeals. There was insufficient evidence that the letters could have been found by diligent search before the trial. More importantly, the letters would not likely have changed the outcome. Why not? Because Barbara’s (and her husband’s) defense throughout the trial had been not that Georgia permitted the use of her money but that none of her money was involved in purchasing the condominiums. The letters would therefore have run counter to their core argument. In re Estate of Gorsik, April 12, 2012.

There are several footnotes worth mentioning in discussion of the appeal in Georgia’s case. First, the decision is a “Memorandum Decision.” That means that, though the appellate court laid out its reasoning and legal arguments, the decision is not “published” and therefore can not (at least not usually) be cited as precedent in other, similar cases. It is in the nature of lawyers and judges to make and keep records, so one irony about unpublished (memorandum) decisions is that they are published,  can be read by anyone who wants to take the time to look for them, and are often cited as at least some evidence of the inclinations of appellate courts.

Another small irony: even as Georgia’s case was working its way through the courts, the Arizona legislature has been busy weakening the protections afforded to victims of abuse, neglect and exploitation. First, as noted above, was the reduction of “treble damages” awards to “double damages.” That, as it turned out, had no direct effect on Georgia’s case, since the trial judge decided that extra damages should not be awarded — but it does make such cases less attractive to lawyers with experience in exploitation cases, and it reduces the likelihood that any given case will be initiated in the future. Since then, the legislature has continued to push at the margins of abuse, neglect and exploitation cases; there is a bill pending even now that would eliminate the availability of an award of attorneys fees to the successful party in cases involving vulnerable adults.

Why would the legislature want to eliminate protections for vulnerable adult victims? Probably because some abuse, neglect and exploitation cases are filed against nursing homes, long-term care homes and medical providers, and they tend to have legislators’ attention. Vulnerable adults, by contrast, have a very poor lobbying record.

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