Who is Influencing Whom?

 "Undue influence" refers to a person’s will being usurped by the will of another. It is a significant problem when dealing with transfers and estate plans of the elderly or debilitated. It is the most common reason for a will contest. In Pennsylvania to establish the claim of undue influence in a will contest, the contestant must establish by clear and convincing evidence 1) that the testator was of weakened intellect when the will was executed, 2) that a person in a confidential relationship with the testator exercised influence over the testator, and 3) that such person received a substantial benefit under the will.

Usually one thinks of a friend, neighbor, caregiver, or family member as being the person doing the influencing. What about the lawyer?

When an attorney drafts a will, he or she owes the client a duty to be aware of the client’s competency, to ascertain whether the client is being subjected to undue influence, and to make reasonable inquiries about possible influence. An attorney should not draft a will for a client unless the attorney believes the testator has testamentary capacity and is free from undue influence. In making these judgments, the attorney must have undivided loyalty to the client.

But, the lawyer cannot make a reasonable inquiry about possible undue influence with undivided loyalty to the testator if the inquiry may disclose undue influence by another client to whom the lawyer also owes an obligation of undivided loyalty. It would be a conflict of interest for the lawyer to represent the testator in such circumstances. If a Beneficiary who is Lawyer’s client brings in Dad and asks Lawyer to draft a will for Dad that favors Beneficiary, there is a clear conflict.

This was the situation in the New Jersey case of Haynes v. First National Bank of New Jersey.

Charles Dutrow died in 1945 with an $8 million estate. His divorced daughter, Betty Haynes, and her two sons came to live with his widow (Betty’s mother), Isabel Dutrow. Isabel and her daughter Betty and two grandsons lived together until 1968 when the sons left the family home. Betty died unexpectedly in 1973. Isabel, then age 84, was not able to live alone, so she moved in with her other daughter, Dorcas Cotsworth, and her husband John in New Jersey.

During her life, Isabel executed five wills and several trusts all through her local lawyer, Richard Stevens. The theme was consistent - equal shares to the two branches of the family, that is, daughters Betty and Dorcas and their respective children. John and Dorcas began to persuade Isabel that changes to her estate plan were needed after Betty died, pointing out that the two Haynes boys would each receive twice as much as Dorcas’s four children if Dorcas also predeceased.

Dorcas’s husband John (Isabel’s son-in-law) arranged for Isabel to meet with the Cotsworth family lawyer, Grant Buttermore. Buttermore suggested changes and conveyed those recommendations to Attorney Stevens. Changes were made, and with each change, Attorney Stevens became less and less involved. Attorney Stevens testified at trial that Isabel Dutrow told him that Attorney Buttermore was pressuring her. Each change favored the Cotsworths more and the Haynes’s less. But aside from some lifetime gifts to the Cotsworths, equal distribution to the two branches remained.

In her next to last will, Isabel decided to give her entire estate to Dorcas if she survived and, if not, to her six grandchildren in equal shares. This cut the Haynes boys out altogether if Dorcas survived her mother. Attorney Buttermore drew up this will. As an afterthought, Isabel added a bequest of $10,000 each to all the grandchildren; probably realizing that if she didn’t, the Haynes boys would be completely cut off.

Isabel died and after the will was offered for probate, the Haynes boys appealed, claiming undue influence by Dorcas, John Cotsworth and Attorney Buttermore. The burden of proving undue influence lies upon the contestant of the will unless the will benefits someone who stood in a confidential relationship to the testator and there are additional circumstances of a suspicious nature which require explanation.

The court found there was in fact a confidential relationship between Isabel and Dorcas and between Isabel and Attorney Buttermore, and that there were suspicious circumstances (drastic changes to the will after Buttermore became counsel to Isabel) thus shifting the burden of proof to the proponents of the will.

The appeals court found that a standard of clear and convincing proof was needed to overcome the presumption of undue influence, and found that the trial court had only required a standard of the preponderance of the evidence. Therefore, it remanded the case to the trial court to determine if the proponents of the will could meet this more rigid standard.

Buttermore should have had another lawyer do the will. Preparing a will for one client that will affect another client requires consideration of a number of ethical issues. The lawyer’s obligation to provide each client with independent professional advice is the lodestone. You cannot serve two masters.

Undue Influence Worksheet

Thank you to Juan Antunez of Florida Probate & Trust Litigation Blog for this information about the law governing undue influence.

The Undue Influence Worksheet was developed by forensic psychiatrist Bennett Blum, M.D

"The “Worksheet” is based upon the IDEAL protocol, which combines knowledge from the fields of psychiatry, psychology, and sociology regarding the mechanisms of human manipulation, with extensive review of statutes, case law, and legal theory. IDEAL describes those psychological and social factors that commonly co-exist in undue influence situations. These factors are: Isolation; Dependency; Emotional manipulation and/or Exploitation of a vulnerability; Acquiescence; and Loss. "

This is invaluable information for use in preparing your undue influence case.  Read Juan Antunez's post here

Alzheimer's Disease - New Diagnosis Guidelines Discussed

Litigation involving undue influence and lack of testamentary capacity involves the determination of the mental state of the testator.  While a medical diagnosis is not dispositive of the legal issue of whether or not testamentary capacity exists, or whether a testator is susceptible to influences, it is a very important piece of evidence for the fact-finder to consider.

Gina Kolata, writing for the New York Times, reports on new proposed diagnostic guidelines for Alzheimer/s disease.  She states: 

"If the guidelines are adopted in the fall, as expected, some experts predict a two- to threefold increase in the number of people with Alzheimer’s disease. Many more people would be told they probably are on their way to getting it. The Alzheimer’s Association says 5.3 million Americans now have the disease.

The current formal criteria for diagnosing Alzheimer’s require steadily progressing dementiamemory loss and an inability to carry out day-to-day activities, like dressing or bathing — along with a pathologist’s report of plaque and another abnormality, known as tangles, in the brain after death.

But researchers are now convinced that the disease is present a decade or more before dementia.

“Our thinking has changed dramatically,” said Dr. Paul Aisen, an Alzheimer’s researcher at the University of California, San Diego, and a member of one of the groups formulating the new guidelines. “We now view dementia as a late stage in the process.”

The new guidelines include criteria for three stages of the disease: preclinical disease, mild cognitive impairment due to Alzheimer’s disease and, lastly, Alzheimer’s dementia. The guidelines should make diagnosing the final stage of the disease in people who have dementia more definitive. But, the guidelines also say that the earlier a diagnosis is made the less certain it is. And so the new effort to diagnose the disease earlier could, at least initially, lead to more mistaken diagnoses. "

Click here to read the entire article.

J. Michael Young on his Texas Probate Litigation Blog says, and I whole-heartedly agree: 

"I hope the legal community addresses the increasing incidence of those with dementia being led to execute wills, payable on death designations, powers of attorney, and other key legal documents used to transfer assets."

Dementia Rise Puts Stress on Wills

This article from the UK highlights the predicted rise in dementia diagnoses due to the ageing of the population and what that means for will contests.  Click here.

Hat Tip to J. Michael Young, Esq. at Texas Fiduciary Litigation.

Pre-death Will Validation

I always thought there should be some procedure to validate a will before the testator's death.  After all, the testator is the best source of evidence about his or her intent.  And the best time to assess a testator's capacity or susceptibility to undue influence is at the time the will is made, right?  It always seemed bass-ackwards that these issues had to wait for probate when the best evidence was no longer available.  Maybe not anymore  - if the theory of this California case is adopted in other jurisdictions:

This excellent article is a must read:

"Barred by Lunatics Law: How a preexisting substituted judgment order can preclude posthumous challenges to a will in California (and possibly elsewhere): the lesson of Murphy v. Murphy"  By Samantha E. Weissbluth, senior counsel, and John P. Mounce, summer associate, Foley & Lardner LLP, Chicago, published in "Trusts and Estate Fiduciary Litigation Update," August 20, 2008

The authors describe the case:  "The decision, in Murphy v. Murphy, 164 Cal. App. 4th 376 (Cal. App. 1st Dist., June 26, 2008), held that a posthumous challenge to a will was barred by collateral estoppel insofar as those issues were in fact litigated or could have been litigated in a substituted judgment proceeding while the decedent was still alive.

The common law substituted judgment doctrine as applied to property issues dates back to the English Lord John Scott Eldon’s Court of Chancery in the early 1800s. It was built upon a tradition of the king holding for safekeeping the property of “lunatics” within his realm."

In Murphy, a son, William Jr.,  was disinherited.  The holding, as reported by the authors:

"On appeal, the court found that William Jr. was collaterally estopped from litigating the validity of his father’s estate plan—because he had had the opportunity to do so in the substituted judgment proceeding.

The court first noted that the issues presented by William Jr.’s claim (undue influence, fraud and the existence of the oral testamentary agreement) involved the same underlying “factual allegations” as the issues under consideration at the substituted judgment proceeding, even though they weren’t actually litigated there."

The court, with a rather long chain of reasoning, concluded that any matter that was “within the scope of the action, related to the subject-matter and relevant to the issues” was close enough to be barred, and William Jr.’s claims met such standards. 

Their advise:

"Those of you with clients in dicey family situations in which you worry about a posthumous contest might want to weigh the risks, costs and public nature of a conservatorship proceeding (or some kind of declaratory judgment action if permitted in your state) to try and bulletproof your client’s plan."

Legal Guardian vs. Power of Attorney

Appointment of a Legal Guardian


If an individual lacks the mental capacity necessary to make rational choices, there are two ways recognized by the law for proving a substitute decision maker: (1) the individual, while he was still competent, designated someone to be their agent, also known as an attorney-in-fact, by signing a power of attorney, or (2) the state, acting through the courts, may appoint a substitute decision maker known as a guardian (also sometimes called a “conservator”), for the incapacitated individual.

Power of Attorney

A "power of attorney" is a document which is signed by an individual (the "principal") appointing another person or persons (called the "attorney-in-fact" or "agent") to act for and on behalf of the principal. If the power of attorney authorizes the agent to act for the principal in almost all circumstances, it is called a "general" power of attorney. If the power of attorney is effective even if the principal is disabled or incompetent, it is called a "durable" power of attorney.

A person executing a durable general power of attorney naming a husband, wife, child, or other family member as attorney-in-fact authorizes that family member to manage his or her financial and personal affairs even after incapacity, avoiding the need for any guardianship.

Spouse Has No Legal Authority

Just because you are married does not give you legal authority over the property and person of your spouse. It is absolutely essential that you give your spouse, or some other person you trust, power of attorney. If your spouse becomes incapacitated and you don’t hold his or her power of attorney, you cannot sell the home you own jointly, cannot make withdrawals from your spouse’s IRA or other retirement plan, and cannot act for your spouse in any other legal capacity. If you don’t have a power of attorney, the only other alternative is a court appointed guardian.

Guardianship

The court procedure is termed a “guardianship” in Pennsylvania, In some other states, the procedure is referred to as a “conservatorship.” The individual for whom a guardian has been appointed is called a “ward.” Sometimes the ward is referred to as an “incapacitated person,” which has replaced the old-fashioned and offensive nomenclature of an “incompetent person.” Continue Reading...

Eccentricity is Not Incapacity

Capacity to Contract 

Eccentricity or lack of prudence is not incapacity. In the words of Diana Romano:

“The lawyer’s task when considering the legal standard of competency is to be able effectively to distinguish foolish, socially deviant, risky, or simply “crazy” choices made competently from comparable choices made incompetently. “

People generally have the freedom to contract. Nevertheless, sometimes the law deems people unable to make decisions in their best interest. Minors, people with a mental disability, those who are in bankruptcy or people who have impaired judgment due to illness, disability, hypnosis, alcohol or drugs do not have capacity to contract.

In order to be bound by a contract, a person must have the legal ability to form a contract in the first place. This legal ability is called the capacity to contract. A person who is unable, due to age or mental impairment, to understand what she is doing when she signs a contract may lack capacity to contract.

If a person has a legal guardian and a court has made a determination that he or she is incapacitated, that person completely lacks the capacity to contract. Any contract signed by a person who has a legally appointed guardian is void. Many courts have held, however, that a person who is under legal guardianship may make a will if the person has testamentary capacity. The legal capacity required to make an enforceable contract is higher than that required to make a will.

A person may have a physical condition or illness which prevents him or her from performing at the levels expected of other persons of comparable age. If such a person cannot care for himself or herself, or acts in ways that are against his or her interests, such a person is entitled to the protection of the state to make sure they are not abused or exploited. Examples of physical conditions that can cause the loss of capacity to make contracts include paralysis, delirium, strokes, Huntington's disease, Alzheimer's disease, or dementia. Merely having the condition does not make the person incapacitated. The condition must have sufficiently affected the intellect so that the person cannot comprehend the nature and character of the transaction. If the person cannot comprehend the nature and character of his acts, any contracts or agreements such a person makes are voidable. Any contract may be ratified or disaffirmed by the person when he or she regains full capacity, or it can be ratified or disaffirmed by the person’s agent acting under a power of attorney. If the person’s condition is severe enough, the court may appoint a legal guardian.

Legal capacity is a flexible concept. A diagnosis of Alzheimer’s suggests diminished capacity, but you can not assume that a person is incompetent to contract because of such a diagnosis. Capacity must be viewed in terms of a person’s ability to perform a specific task. A person may be competent for some tasks, but lack capacity for others.

In the Pennsylvania case of Taylor v. Avi, 272 Pa. Super. 291 (1979) 1. 415 A.2d 894plaintiff sought to void a release she had signed after a car accident in which she sustained a head injury which left her with impaired memory, decreased ability to concentrate on such things as reading, and increased irritability. Citing a 1929 will case, Lawrence's Estate, 286 Pa. 58, 65, 132 A. 786, 789 (1926), the court said that “"[f]ailure of memory does not prove incapacity, unless it is total or so extended as to make incapacity practically certain. A testator may not be able at all times to recollect the names of persons or families of those with whom he has been intimately acquainted . . . and yet his understanding of the ordinary transactions of his life may be sound."


The standard announced by the court in Taylor is that mere weakness of intellect resulting
from sickness or old age is not legal grounds to set aside an executed contract if sufficient intelligence remains to comprehend the nature and character of the transaction, and no evidence of fraud, mutual mistake or undue influence is present.

Some cases are obvious. The family of an Oregon man with Alzheimer’s succeeded in voiding his contracts - he bought 7 cars from the same car dealer in one month.

What about drinking and substance abuse? While a person may consume enough alcohol and/or drugs to reduce or eliminate his or her ability to understand what he or she is doing, such conditions are self-induced. The law does not generally allow the intoxication or drugged state to be raised as an excuse. There are cases where a contract is voidable when an intoxicated party cannot understand the nature and consequences of the transaction and the other party is aware of the intoxication. Compulsive and chronic intoxication and abuse may constitute a mental illness. A sober party who takes advantage of a vulnerable drunk may be guilty of fraud or undue influence.

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Documenting Testamentary Capacity

This excellent article published in The American Journal of Psychiatry (164:722-727, May 2007) gives advice on how to document your client's capacity. Check it out:

Assessment of Testamentary Capacity and Vulnerability to Undue Influence by Kenneth I. Shulman, M.D., F.R.C.P.C., Carole A. Cohen, M.D., F.R.C.P.C., Felice C. Kirsh, LL.B., Ian M. Hull, B.A., LL.B., and Pamela R. Champine, J.D., LL.M.

The authors state:

"We can expect challenges to testamentary capacity to increase during the coming decades as the number of older adults increases. The increasing complexity of modern families, where asset disposition is sensitive and complicated, may lead to feelings of rejection and injustice and result in more challenges. Finally, the high prevalence of cognitive impairment and dementia in older adults creates a fertile environment for challenges to wills. It therefore behooves psychiatrists and other experts to be aware of the legal, medical, and psychiatric issues that underlie the assessment of testamentary capacity and the role of undue influence—two concepts that are inextricably linked and often combined in legal challenges to wills. "

                                                                   *       *       *        *       *

"The assessment of testamentary capacity and its interrelationship with vulnerability to undue influence bring together the medical and legal domains. The psychiatric and medical experts’ role is primarily to help lawyers and the courts make the best determination of testamentary capacity and to assess the role of undue influence. As the number of older people increases in the coming years, clinicians will likely be involved in these determinations with increasing frequency. Research in this area is needed, and it should involve a collaboration of the medical and legal domains to provide clearer guidelines for the assessment of these complex issues in individual cases (26). Increased awareness within the legal profession of the importance of establishing testamentary capacity at the time of the execution of a will may lead to a greater demand for contemporaneous assessments and possibly avoid a court challenge at the time the will is brought for probate. Proposals to develop "lifetime capacity assessments" for this purpose merit exploration."

 You can download a pdf copy of the article for freeClick here

 

Capacity to Make Will

Growing Old and Issues of Diminished Capacity

The law assumes that adult individuals have mental capacity, that is, they are capable of making rational decisions on their own behalf. Note we say they are “capable” of making rational decisions. The law doesn’t expect or require that they actually make rational decisions. Competent individuals of all ages, old and young, have the right to make foolish, eccentric or idiosyncratic decisions. For better or worse, all of us are free to make bad decisions.

People Vary
A persons’s capacity may change from day to day (or even during the day), depending on the course of the illness, fatigue and the effects of medication. Some folks have good days and bad days. Some are more alert in the morning; some have their best time in the afternoon. Legal competency is not something that a person either has or doesn't have –it can be quite variable.

Standards Vary
Whether or not a person is legally competent depends on the purpose for which the capacity is being determined. The law provides a different standard of competency for 1) making contracts, 2) making wills, 3) having a guardian appointed, 4) and giving informed consent to medical treatment.
Whether or not a person is competent is a legal determination, not a medical one. Medical testimony is important, and is always sought by a court in making the determination of capacity. Since the law has many different defined standards depending on the action being taken, the determination of whether or not a person is competent to do a certain thing is always a legal decision.

Lowest Standard
What surprises most people is that the capacity to make a will, called testamentary capacity, is the lowest level of capacity in the law. All that is required is that the person making the will (1) understand in a general away, the nature of his property, (2) knows who are the “natural objects of his bounty,” that is, the persons who would normally be his heirs, and (3) must be able to comprehend that he or she is making a will.

A person who has had a stroke, or is diagnosed with Alzheimer’s disease, may still have sufficient capacity to make a will even though there is some impairment of speech, some impairment of thought processes, and/or some physical impairment. The fact that a client does not know the year or the name of the President does not necessarily mean that she can not make a will. Since signing a will does not require a great deal of capacity, the fact that the next day the person does not remember the signing of a will does not invalidate the will if he had the minimum required capacity the day before when he signed it.

Continue Reading...

Is it time to take away the car keys?

Growing Old and Issues of Diminished Capacity

“Aging seems to be the only available way to live a long life.”
                                                                 – Daniel Francois Esprit Auber


Maggie Kuhn started the Gray Panthers in 1970 as a response to her forced retirement at age 65. The mission of the Gray Panthers was to speak out against age discrimination, the Viet Nam war, and other political oppressions. There is no doubt that stereotyping due to age exists in contemporary society. The Gray Panthers call this kind of discrimination “ageism.” To be told "you're too old" is as disheartening as to be told "you're too young"; both statements make you a stereotype when in fact you are an individual.

No bright line test

Obviously, mere chronological age does not give an answer to the question of whether or not a person is mentally or physically impaired. Nor does a medical diagnosis give the complete answer on the issue of the ability to be in control of one’s own life. When and to what extent a persons capacity to make decisions is diminished is a very difficult topic for lawyers, care-givers, and families.

The right to make bad decisions

How many of us know an older adult insisting on living alone at home when friends, family, and advisors think it’s a bad idea? Is the person incapable of making decisions? Or is it simply a decision that others do not agree with. Concern in a situation like this stems from the fear that the person will be hurt - they will leave the stove on and burn the house down, they will fall down and not be able to get up or summon help, they won’t eat properly and can’t get around to doctor’s appointments and the grocery store. Is a person who chooses to live this way incompetent? Or merely independent?

There is a long-standing American tradition of individualism - of each person being free to make his or her own choices and decisions and choosing his or her way of life. While fostering independence and self esteem, individualism also tends to promote self-centeredness at the expense of family and community. Individualism can mean being free to make bad choices.

Different competency standards

The issues surrounding diminished capacity run from whether or not an older adult should contihnue to drive, to whether he or she can live alone at home, wheter he or she can make a will, make gifts, and otherwise control finances, to whether or not a court-appointed guardian must be appointed. Often, a family’s first encounter with this question is whether or not the older adult should continue driving a car.

Continue Reading...