Shutterstock[/caption] Over the last several months, our courts have issued multiple decisions stemming from litigation involving claims of undue influence. Cases have emanated from courts in more than half of the counties in New Jersey, and the Appellate Division issued roughly a dozen decisions. None of these opinions has been published and are therefore not binding precedent; however, the facts and court determinations demonstrate certain trends of which practitioners should be aware, and that may provide guidance on how to avoid undue influence claims in the first place. Well-Established Principles Case law has long confirmed that a testamentary disposition or inter vivos gift may be set aside if a claimant proves by clear and convincing evidence that it was the product of undue influence, defined as “mental, moral, or physical exertion of a kind and quality that destroys the free will of the testator by preventing that person from following the dictates of his or her own mind as it relates to the disposition of assets.” In re Estate of Stockdale, 196 N.J. 275, 302-03 (2008). See also In re Livingston’s Will, 5 N.J. 65, 71 (1950) (the “burden of proving undue influence is upon the person asserting it and it must be clearly established”). Although the claimant generally bears the burden to prove undue influence, a presumption of undue influence arises where the claimant proves both a confidential relationship and, in the case of testamentary dispositions, other suspicious circumstances. Haynes v. First Nat’l State Bank of N.J., 87 N.J. 163, 176 (1981). A confidential relationship is typically described as reliance or dependence by the testator upon a more dominant beneficiary, and suspicious circumstances are slightly questionable events that “require explanation.” Id. at 176 (citing In re Rittenhouse’s Will, 19 N.J. 376, 378-379 (1955)). Once the presumption of undue influence is raised, the burden shifts, and the proponent must prove the absence of undue influence by a preponderance of the evidence (in the case of a testamentary disposition) or by clear and convincing evidence (in the case of an inter vivos transfer). In re Estate of Folcher, 224 N.J. 496, 512 (2016) (citing Stockdale, 196 N.J. at 303); Pascale v. Pascale, 113 N.J. 20, 31 (1988). Recent Appellate Division Decisions In almost every decision involving claims of undue influence, the Appellate Division affirmed the lower court’s factual and legal determinations. In a majority of these cases, the lower court found either no undue influence or that the proponent successfully rebutted the presumption of it. In re Estate of Mallas, No. A-5593-15T3, (App. Div. Mar. 6, 2018) (proponent rebutted the presumption as to a will, codicil and power of attorney); In re Evelyn Worley, No. A-0154-15T2 (App. Div. Mar. 6, 2018) (proponent rebutted the presumption as to a power of attorney); In re Estate of Molinski, No. A-4722-15T2 (App. Div. Feb. 6, 2018); In re Estate of Finocchiaro, No. A-4532-14T1 (App. Div. Nov. 30, 2017); In re Estate of Fisher, No. A-0515-16T3 (App. Div. Nov. 28, 2017); In re Estate of Winter, No. A-0 (App. Div. Sep. 27, 2017). In other instances, the Appellate Division upheld the lower court determinations finding a presumption of undue influence and the failure of the proponent to rebut the presumption. Mallas (failure to rebut presumption as to an annuity); Worley (failure to rebut presumption as to a Will); In re Estate of Feiner, No. A-0561-15T3 (App. Div. Oct. 3, 2017). These decisions illustrate ways that attorneys can help avoid or overcome undue influence claims in the planning or litigation phases of a client’s matter.
Reinforce your independence at the outset. Clearly communicate who you represent and meet separately with your client outside the presence of your client’s caretaker. Caretaker children often assist their parents to arrange their estate planning meetings. The children also typically transport their parents and may want to stay and participate. Notwithstanding this assistance, the communications regarding substantive decisions must occur between the attorney and the client outside of the caretaker’s presence. Consider conducting multiple estate planning meetings with the client outside the presence of the caretaker to reinforce free will. Ultimately, attend and conduct the document execution. If you also represent the person standing to benefit, evaluating litigation potential is imperative, and you should refer the client to a separate attorney if litigation is foreseeable. See, e.g., Feiner, at *5 (“the record is replete with proof, including, among other things, the peculiar circumstances in which [the decedents’ wills] were prepared and executed, to support [the lower court] determinations [of undue influence]”).
Document the client’s independence as well. Since undue influence hinges on the presence of “mental, moral, or physical exertion of a kind and quality that destroys” a person’s free will and prevents him from following his own mind (Stockdale, 196 N.J. at 302-03), it will be imperative to demonstrate that the decedent is the one who made the important decisions. Document the referral source and record who contacted you to arrange the estate planning meeting. Keep copious notes of how the client appears, speaks and makes decisions. Independently corroborate directives coming from third parties. Discuss the client’s intentions with the client, or confirm with the client directives received by others. Collect the names of those with whom the client may have shared her intentions. See e.g., Winter, at *6 (“arguably, there were suspicious circumstances, as defendants were present when [decedent] called [his attorney] to the hospital to prepare a new will”; however, the presumption of undue influence was overcome in the absence of evidence of “coercion or mental, moral or physical exertion of any kind” over a decedent who was lucid at the time that he executed the will that he procured by his own volition).
Consider a medical evaluation. To prove a confidential relationship, the claimant must show dependence upon the proponent. Often, that dependence results from physical frailty which is often accompanied by claims of mental weakness. Testimony by the decedent’s treating physician is often used to prove or disprove undue influence claims. A contemporaneous medical evaluation and letter from a treating physician could help reinforce that the client’s decisions are hers and hers alone. See, e.g., Worley, at *7 (commenting that while the attorney anticipated litigation, he “did not obtain at least a primary care physician’s opinion regarding her capacity”).
Consider how dispositive changes and the ways in which they are being implemented may lead to an undue influence claim. You cannot competently estate plan without understanding the client’s assets. If the effect of lifetime gifts or non-probate dispositions differs from the terms of a will or trust, address proposed changes with the client or document that it was intentional. Explain asset structure and beneficiary designations in the letter sending draft documents to the client. Confirm what is changing and what is not. Make sure the client understands the impact of adding one child’s name to an account for “convenience.” If disinheriting a child is the goal, consider specifically addressing it. See, e.g., Molinski, at *1 (lack of a specific provision disinheriting a beneficiary is “at best, circumstantial evidence that the testator did not actually or freely intend to disinherit” the beneficiary).
Involve third parties in the planning phase who may turn out to be your credible witnesses at trial. Much of the evidence at trial comes in the form of witness testimony about a decedent’s demeanor, behavior and statements. These witnesses will recount their relationship with the decedent, their observations and conversations. The trial court must ascertain truth, and determinations by the trial court on witness credibility garner great deference on appeal. Learn to whom the decedent may have confided, and make notes to confirm who is aware of the decedent’s story. Involve the client’s financial advisor in the estate planning process. In doing so, ensure that your communications with the client remain protected by the attorney-client privilege. If an undue influence claim goes to trial, having knowledgeable and adequately prepared witnesses will be essential.
Anticipate a burden shift in litigation. More than half of the recent decisions involved a presumption of undue influence that resulted in shifting the burden of proof. The presumption of undue influence arises upon a showing of a confidential relationship and, in testamentary dispositions, slight suspicious circumstances. A confidential relationship is found in many undue influence cases. Often, the case involves the disparate treatment of children, and one of “the most natural of confidential relationships is that of parent and child.” Pascale v. Pascale, 113 N.J. at 34. The same is true as between spouses. In other instances, the beneficiary who provided a significant level of care, thus creating a confidential relationship, is the one enjoying an increased testamentary benefit. If you identify early on that a confidential relationship does or may exist between the client and a preferred beneficiary, review the above and act accordingly.
Advise your clients not to take matters into their own hands and be critical about how to document a decedent’s intentions. A client may want to disinherit family or treat children differently for a good reason. The reason is rarely communicated to that family member during the client’s lifetime. Efforts may be taken to convey an explanation after death, such as a sealed letter to be delivered after the funeral. Take caution and advise a client as to the risks of not working with counsel in this regard. Writings will be evidence in later litigation. Video recording a client meeting or explanation should be considered cautiously. These matters are often emotionally charged, and your typical client is not an Academy Award winning actor. It is not a far stretch to find an expert to opine that a nervous demeanor is actually evidence of mental weakness. See e.g., Worley, at *4 (medical experts offered competing opinions as to the client’s mental state after viewing attorney-prepared video recording).
Conclusion Our population is aging, and advancements in medicine continue to elongate life expectancies. Our elderly want to remain at home, and loved ones are willing to provide a level of care necessary for that to occur. Estate plans are dynamic, and people change their minds as family circumstances morph over time, often to reward those who cared. Unfortunately, for every Abel there is a Cain, and our elderly sometimes succumb to the desires of others to ensure their own survival. To do what is best for our clients, we must anticipate these unfortunate events, and do our best to protect our client’s intentions. Titus McEwan is a partner in the Parsippany office of Day Pitney LLP and a member of its Individual Clients Department and Trusts and Estates practice group.
