Course 3 — Lessons 1 to 3: California Undue Influence Claims

The basics of undue influence.

What is Undue Influence? Undue influence is considered excessive persuasion where the intent of the victim is replaced with the intent of the wrongdoer. To prove undue influence you need to prove four basic elements:

  1. Vulnerability of the victim,
  2. Apparent authority of the wrongdoer,
  3. Actions and tactics used in unduly influencing the victim, and
  4. An inequitable result.

(Welf. & Inst. Code section 15610.70; Probate Code section 86.)

Hypothetical

Let’s consider a hypothetical situation to demonstrate the problems that arise and the options you have to file a lawsuit based on undue influence. After the hypothetical, we will discuss the application of the rules of undue influence in more detail.

The Facts

Your father is a retired professional basketball player and former broadcaster. He has two children, you and your sister Bernice. You were born during your father’s first marriage, but Bernice has a different mother from your father’s second marriage. Your father divorced his second wife five years ago and remained single since then.

Your father’s estate from playing basketball and being a broadcaster is worth $3.5 million. In March of 2016, your father informs you that he is going to create a Trust. He tells you he is creating the Trust because he is having health issues and his memory is not as good as it used to be.

Your father is referred by a good friend to a well-respected estate planning law firm in Los Angeles. Your father creates the March 2016 Trust naming you and Bernice as equal beneficiaries to receive his entire estate at his death.

You don’t think about the estate plan again and assume that everything is fine as far as your father’s estate plan is concerned.

Your father’s health deteriorates over the next year and he dies less than a year later on February 8, 2017. At your father’s funeral you notice Bernice is distant and does not wish to speak with you. You assume this is because she is grieving in her own way, and you don’t worry about it.

A week later you receive a package in the mail that contains a copy of your father’s Trust. Surprisingly, the Trust is not the one he created and signed in March of 2016, but rather a new Trust that was created on January 15, 2017—just three weeks prior to his death. Under this new Trust you are given a specific gift of $250,000 and the remaining $3.25 million passes to Bernice.

Along with the copy of the Trust is a letter from a lawyer you never heard of before, and a copy of a notice that says you only have 120 days in which to challenge this new Trust. If you do not sue within that timeframe, then you will be forever barred from contesting this Trust.

In reading the new Trust, you find a no-contest clause that says if you challenge the Trust in court you will lose your gift of $250,000.

You do some investigation and find out that the estate planning firm your father used in March of 2016 is a very well respected firm that practices exclusively in estate planning. But that firm did not create the new Trust in February of 2017. The lawyer who drafted the new Trust does not do estate planning, he does criminal, family, and immigration law, but he did draft your father’s new Trust in February.

Further you learn that the initial lawyer who drafted the March 2016 Trust refused to draft the new Trust because she suspected that Bernice was unduly influencing your father, and she further suspected financial elder abuse by Bernice.

The Options

It now seems that Bernice was manipulating your father behind your back and found a new lawyer to draft the February 2017 Trust. It’s now three weeks since you received the 120-day notice, what should you do? Here are your options:

  1. Contact Bernice.

Contact Bernice by calling, emailing, texting, and/or writing a letter to her asking what happened with the new Trust. Determine is Bernice would be willing to talk to you about a more fair outcome.

  1. File a Trust contest lawsuit

File a lawsuit in the Los Angeles Probate Court seeking to set aside the February 2017 Trust on the grounds of undue influence, and ask the court to validate the March 2016 Trust that leaves everything equally to you and Bernice.

  1. File a financial elder abuse lawsuit

File a civil lawsuit for financial elder abuse with the Los Angeles Court, civil department, seeking damages against Bernice for the half of the estate you lost due to her undue influence. Also, ask the court to award you attorneys’ fees and punitive damages.

  1. File a claim of intentional interference with inheritance

File a civil lawsuit for intentional interference with an expected inheritance with the Los Angeles Court, civil department, seeking damages against Bernice for her interference with your inheritance.

  1. Do nothing

Do nothing in court and hope that Bernice will give you more than $250,000. If Bernice fails to do so, take your $250,000 gift and move on with your life.

Our Opinion

Listen to the approach that Stewart Albertson would take to fight for your inheritance.

 

 

Roundhouse

Listen to Stewart Albertson and Keith A. Davidson discuss the options and their recommendations for dealing with this difficult problem.

 

The law of undue influence

In this post, we are discussing how undue influence can destroy intent and make a Trust or Will invalid as a result.

What’s more, undue influence can also provide legal grounds to file a financial elder abuse lawsuit against the wrongdoer. In many cases, the facts surrounding undue influence will be used to both contest a Trust and a Will, and to file a financial elder abuse case.

The legal requirements to prove undue influence.

To establish undue influence, you must show that the following four elements are present:

  1. Vulnerability of the victim,
  2. Apparent authority of the wrongdoer,
  3. Actions and tactics used in unduly influencing the victim, and
  4. An inequitable result.

 

(Welf. & Inst. Code section 15610.70; incorporated into Probate Code under section 86)

  • Vulnerability

Let discuss what each of these terms mean in a bit more detail. First, vulnerability of the victim means the degree to which the victim was susceptible to undue influence. (Welf. & Inst. Code section 15610.70(a)(1).) We presume that perfectly healthy people can withstand excessive influence and make up their own minds on issues. But when a victim becomes vulnerable, then he or she may not be able to withstand the effects of excessive persuasion.

Vulnerability factors that the law considers includes: age, illness, dementia, injury, education level, emotional distress, impaired cognitive functioning, isolation, and dependency. Not only must the victim be vulnerable, but the wrongdoer must have known of this vulnerability.

Note how vulnerability is not just caused by a mental defect, such as dementia or impaired cognitive functioning—although those are two grounds for vulnerability. Rather, vulnerability can include things like old age, illness, isolation, and emotional distress. Anyone who has sound capacity could still be vulnerable to undue influence if they are put in the right condition—such as isolation. That means undue influence can take place even on people who do not have a lack of mental capacity.

  • Apparent Authority

Second, the law presumes that those who have some type of confidential relationship with the victim are better able to exert undue influence. While an official position of authority is NOT required to satisfy this element, there does need to be some apparent authority over the victim.

Apparent authority, by law, includes people who are fiduciaries (such as a trustee, agent, conservator, etc.), family members, care providers, health care professionals, legal professionals, spiritual advisors, and experts—such as accountants and financial planners. (Welf. & Inst. Code section 15610.70(a)(2).) This is not an exhaustive list, it is just an example provided by the statute of the type of apparent authority.

  • Actions and Tactics

Third, the actions and tactics of the wrongdoer help demonstrate that undue influence was used. Actions and tactics include things like:

  1. Controlling the necessities of life, such as: medication, interactions with other people, access to information, and sleep;
  2. Use of affection, intimidation, or coercion; and
  3. Initiation of changes in personal or property rights, use of haste or secrecy in effecting changes, effecting changes at inappropriate times and places, claims at expertise in effecting changes.

 

(Welf. & Inst. Code section 15610.7(a)(3)(A) – (C).)

Again, this is not an exhaustive list of the actions and tactics that are sufficient to support this element, but it gives an idea of the type of behavior necessary to establish undue influence. Note how each of these actions could help manipulate a victim, especially someone who is already vulnerable to excessive persuasion.

  • Equity

Fourth, you must have an inequitable result. (Welf. & Inst. Code section 15610.7(a)(4).) If someone engages in the other three actions, but the result is not unfair, then there can be no undue influence. The statue states that an inequitable result can include:

  1. Economic consequences to the victim,
  2. Divergence from prior intent or course of conduct or dealing,
  3. Relationship between the value conveyed and the value received in services or consideration, or
  4. Appropriateness of changes to the estate plan in light of the length and nature of the relationship.

This is not an exhaustive list, but provides an example of the type of actions that would prove lack of equity. For example, if a major change to a victim’s estate plan takes place where all the children are disinherited and a new friend receives everything, that would be inequitable.

One important point on equity: proof of an inequitable result, without more, is NOT sufficient to establish undue influence. (Welf. & Inst. Code section 15610.7(b).) This is critical because the first thing most people do is focus on the fairness of the result, but fairness—by itself—is irrelevant to proving undue influence. The best way to use equity is to first focus on the other three elements and make sure you have proof of the vulnerability of the victim, apparent authority, and bad actions or tactics. Once you have proof of these three elements, then you can dig into the equities, or fairness, of the result.

Be assured that equity or fairness is an important part of every lawsuit. Judges are people and they often want to do the right thing—they want to do what’s fair. But judges must also follow the law and the law of undue influence requires more than just a lack of fairness. If you focus your case solely on the equities, you will likely leave the judge with no choice but to rule against you. Back up your equitable argument with sufficient evidence of the other three elements and you have a good chance of winning.

Use of circumstantial evidence to prove undue influence:

Undue influence must be present at the time the Trust is singed to invalidate the Trust document. The problem, however, is that direct evidence of undue influence is rarely available. As such, the California Appellate Court has ruled that “while pressure must be brought to bear directly on the testamentary act, the pressure, or undue influence, may be established by circumstantial evidence.” (Lintz v. Lintz (2014) 222 Cal. App. 4th 1346.) In other words, direct evidence of undue influence at the moment of signing a contested Trust is not required—circumstantial evidence of excessive pressure will suffice.

So what is the difference between direct and circumstantial evidence? California jury instructions on this issue provide a helpful explanation. (Judicial Council Of California Civil Jury Instruction 202.) Instruction 202 states:

Direct evidence can prove a fact by itself. For example, if a witness testifies she saw a jet plane flying across the sky, that testimony is direct evidence that a plane flew across the sky. Some evidence proves a fact indirectly. For example, a witness testifies that he saw only the white trail that jet planes often leave. This indirect evidence is sometimes referred to as “circumstantial evidence.” In either instance, the witness’s testimony is evidence that a jet plane flew across the sky.

In other words, no one has to watch the victim sign a contested Trust and see undue influence at play. The presence of things like vulnerability, apparent authority, and actions and tactics being used before or surrounding the Trust signing is sufficient to prove undue influence was present at the time of signing the contested Trust.

Presumptions of Undue Influence

This is where undue influence gets interesting. Whoever is seeking to contest a Trust or Will (referred to as the petitioner, or the plaintiff in a financial elder abuse case) has the burden of proving undue influence using the four factors discussed above. But there are times when that burden of proof shifts to the defendant to prove a lack of undue influence. In other words, at times undue influence can be presumed to have existed by the court. The defendant can still attempt to prove there was no undue influence present, but proving a negative can be nearly impossible.

Below are three primary ways in which the burden of proof can be shifted in an undue influence claim:

The common law presumption—The three part test

Under California law there is a presumption of undue influence that arises if you can establish three facts:

  • Confidential Relationship: the wrongdoer must have a confidential relationship with the victim. Confidential relationships include Trustees, agents under a power of attorney, doctors, lawyers, priests, pastors, family members, care givers, etc.   .
  • Active Participation: the wrongdoer must have “actively participated” in the preparation or execution of the Will or Trust.
  • Undue Benefit: the wrongdoer must receive an “undue benefit” by way of the new Will or Trust.

(Estate of Sarabia (1990) 221 Cal. App. 3d 599; Estate of Lingenfelter (1952) 38 Cal. 2d 571.)

  • Confidential relationship.

Confidential relationships are similar to people with apparent authority discussed above. For example, an agent under a power of attorney has a confidential relationship to the principal. A lawyer is in a confidential relationship with his client; and a doctor is in a confidential relationship with his patient. It can also apply to family members, spiritual advisors, and care givers.

  • Active Participation.

Many people (lawyers included) confuse the concept of active participation with the act of driving the victim to the lawyer’s office to sing a new Trust or Will. The act of driving someone to a lawyer’s office is not necessarily active participation. Participation requires some act to help in procuring the creation and signing of the Rather, active participation refers to the act of procuring the creation of the document. Estate of Lingenfelter (1952) 38 Cal. 2d 571.

For example, someone can be instrumental in finding a lawyer, scheduling an appointment, and coaching the victim on what to say to the lawyer, yet never set foot in the lawyer’s office personally. These acts can be deemed active participation.

  • On the other hand if the only act someone takes is driving a person to a lawyer’s office, but otherwise does nothing to help procure the creation of the Trust or Will, then there likely will not be active participation present.

In other words, the court must look at all the facts and circumstances surrounding the creation of the Trust or Will and determine if the wrongdoer actively helping to obtain the creation of the document, or was just a bystander to its creation. No one action, standing alone, will be sufficient to establish active participation.

  • Undue Benefit.

This is another misunderstood element. The natural assumption is that anytime someone receives more under a new Trust or Will then that person has unduly benefitted. Not so. The California Appellate Court has held that undue benefit is more nuanced that that. Estate of Sarabia (1990) 221 Cal. App. 3d 599.

The concept of undue benefit is not merely quantitative—meaning that getting more is not the sole criteria. Whatever someone receives must be undue. To determine what an undue benefit would be, the court must also consider what a “due” benefit might be.

For example, if you have a child who is set to receive more than his siblings, that is not necessarily undue. It is possible that the decedent intended to benefit that one child more than the others. How do you know? You have to look at any prior estate plans, look at the surrounding circumstances, consider any statements or writings from the decedent regarding his intent. Those factors could establish that one child receiving more is a due benefit, and therefore this element does not apply.

The point is to be careful when framing your arguments for undue benefit. It is not enough to simply say that a wrongdoer received more under the new Trust or Will. Instead, your arguments need to be more nuanced to consider why, given the surrounding fact, an increased gift is also an undue gift. The inquiry is not whether someone received more, it’s whether they received more than they were due.

  • How the presumption works.

Once the court determines that these three elements have been met, then the burden shifts to the defendant (or respondent in probate court) to prove a lack of undue influence. That means the wrongdoer must prove a negative, which can be difficult (if not impossible) to accomplish.

For the best description of the law on undue influence, and all the various cases on the burden shift, see Alter v. Alter (a superior court case—not an appellate case—but a fantastic recitation of the law on undue influence).

Marital Presumption (Lintz v. Lintz)

Oh the many burdens of married couples. Family Code section 721 provides a general rule for married couples that requires each spouse to exercise the highest degree of fair dealing and good faith in inter-spousal transactions. That duty also raises a statutory presumption of undue influence on any transaction where one spouse gains an advantage over the other spouse. (Lintz v. Lintz (2014) 222 Cal. App. 4th 1346.)

An advantage in this context is deemed to occur where one spouse gains property rights, or where the other spouse is hurt in his or her property rights, by a transaction.

For example, if one spouse owns separate property and that property is transferred to the other spouse, an advantage has occurred and a presumption of undue influence could arise.

The marital presumption is particularly important in cases where a spouse, or both spouses, have children from a prior marriage. Such children can be disadvantaged by the actions of a spouse during the marriage. While gifts between spouses are not uncommon, they may be suspect where property rights are radically changed—especially when the amounts in involved are substantial. The marital presumption provides a tool that children can use to hold a spouse accountable for abusing property rights during the marriage.

Prohibited Transferee presumption

There are a few people who automatically raise a presumption of undue influence when they are left a gift in a Trust or Will—referred to as prohibited transferees. These people include (1) the person who drafted the Trust or Will, (2) a person in a fiduciary relationship with the victim (like an agent, lawyer, trustee, conservator, etc.), who either wrote the Trust or Will or caused it to be written, or (3) a care custodian of the victim (but only if care was being provided at the time the Trust or Will was signed, or 90 days before of after that date). This prohibition also extends to anyone related to the people described above, anyone cohabitating with them, or any partner or employee of a law firm. (Probate Code section 21380(a).)

This presumption of undue influence was created due to abuses that have occurred in the past. For example, a lawyer drafting a Will or Trust cannot name himself as a beneficiary without raising concerns. Under this statute, that type of gift is automatically deemed undue influence.

Gifts to a fiduciary or a caregiver can be validated if the person is able to prove by clear and convincing evidence that there was no undue influence. This is essentially proving a negative, which can be very difficult to do. Gifts to the person who drafted the Trust or Will are conclusively presumed to be undue influence, meaning they cannot overcome the presumption. (Probate Code sections 21380(b) and (c).)

These rules do not apply to anyone related to the decedent. Thus, a son can draft a Trust or Will for his parents and not be subject to the prohibited transferee rules. Probate Code section 21382.

The gift to any of the people mentioned above can also be validated by obtaining a certificate of independent review. (Probate Code section 21384). This requires a independent lawyer to review the estate plan, presumably meet with the person creating the plan, and then certify that there is no undue influence, fraud, or coercion occurring. This type of certification can be very difficult to overcome.

Lawyers who are asked to prepare and sign a certificate of independent review should be wary. It can be difficult to determine is a person is subject to undue influence in a single meeting. Oftentimes a victim will be well coached on what to say, and there can be multiple factors that are not visible, and are not known, to the independent lawyer. For these reasons a certificate of independent review can still be attack based on the steps the lawyer took to obtain relevant information. For example, did the lawyer know of any medical diagnoses of the victim, did they speak with the caregiver or whomever is benefitting from the new Trust or Will, where there other relevant facts not known by the lawyer?

Certificates of independent review are great in theory, but they can also cause substantial harm in a misbegotten estate plan. Be wary of any plan that requires independent review.

What are your remedies?

If you are contesting a Trust or Will based on undue influence, and if you win your case, then the Trust or Will will be set aside and any prior documents will control. Obviously, it is important for your sake to review the prior documents to ensure they benefit you before filing in court. That’s about the only remedy you have in a Trust contest.

Of course, if any property was taken out of the Trust during the litigation, you can sue for return of that property if you prevail (assuming the property was distributed to someone who is no longer a beneficiary after your winning lawsuit).

Note that you CANNOT get things like attorneys’ fees, punitive damages, damages for pain and suffering, or any other type of tort remedies. A Trust or Will contest is an action in equity—not a legal action under tort law. As such, you are not entitled to all the various tort remedies you hear so much about (pain and suffering being the most popular). Yes, I know that you suffered emotionally, maybe even physically, during your Trust or Will contest lawsuit. It’s not that you lacked pain and suffering during the process that prevents you from collecting for pain and suffering, it’s that Trust and Will laws simply don’t provide for that type of damage.

And that brings us to financial elder abuse…you may be a bit happier with your remedies under that claim…read on.

How is undue influence used for financial elder abuse?

Under the Elder Abuse and Dependent Adult Civil Protection Act, financial elder abuse is defined as any person or entity who “Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.” (Welf. & Inst. Code section 15610.30(a)(1).)

Makes sense; don’t defraud elders. But the Act goes further to include under the definition of elder abuse any person who “takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in section 15610.70.” (Welf. & Inst. Code section 15610.30(a)(3).)

This means that taking property from an elder by using undue influence is no different under the eyes of the law than taking property by fraud. And the definition of undue influence is the same one discussed above (you remember the four elements of vulnerability, apparent authority, actions and tactics, and equity don’t you?).

What’s more, a taking is specifically defined to include a “donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.” (Welf. & Inst. Code section 15610.30(c).) A donative transfer is a lifetime gift or the creation of a living trust; a testamentary bequest is a Will—Trusts and Wills. That means anyone who obtains a gift under a Trust or Will by undue influence of an elder (defined as anyone over 65) is guilty of financial elder abuse.

You now have two different legal claims when pursing a wrongdoer who obtains a Trust or Will by undue influence. Or makes lifetime gift by undue influence for that matter. The legal elements are all the same for undue influence whether you are contest a Trust or filing a civil lawsuit for financial elder abuse. The remedies you can receive, however, are a bit different.

What are your remedies for financial elder abuse?

While the elder is alive, there are protective orders that can be obtained to protect the elder form further abuse. (Welf. & Inst. Code section 15657.03.) This post is discussing actions after the elder dies, so I am not providing an in-depth look at the protective orders. But be aware of this section of the Act and use it if you can.

As for post-death actions for financial elder abuse, keep in mind that this is a tort claim. That means that the first remedy you have is for compensatory damages, which just means the amount of money that equals the property taken under the new Trust or Will. This is different from a Trust contest claim, where the Trust is set aside and the actual Trust property may pass to you or to the rightful beneficiaries. Under financial elder abuse, the Trust is NOT being set aside, instead you are being awarded money damages to compensate you for the loss of the Trust property.

Furthermore, you have a right to be compensated for your attorneys’ fees and costs. (Welf. & Inst. Code section 15657.5(a).) This is significant because under the American system of justice, you are not typically allowed to recoup your attorneys’ fees from the losing party.

And if you can prove by clear and convincing evidence that the financial elder abuse was undertaken by malice, recklessness, or fraud, then you can also receive punitive damages. (Welf. & Inst. Code section 15657.5(b).) This is something not available to you under a Trust contest claim.

Finally, under Probate Code section 259, any person found liable for financial elder abuse by clear and convincing evidence (and also found to have acted in bad faith, and with malic, recklessness, or fraud) is disinherited from the Trust or Will to the extent any property passes to the estate due to the financial abuse lawsuit.