Trusts and Estates Law Avoiding Issues of Testamentary Capacity, Undue Influence, Fraud

 

by Hon. C. Raymond Radigan and Frank J. Gobes

The typical objections to probate are:

• lack of due execution and attestation of wills (violation of Estates Powers and Trust Law [EPTL] §3-2.1);

• lack of testamentary capacity;

• undue influence and fraud.

In our earlier articles (New York Law Journal, May 19, 2005 and July 29,
2005), we explained how due execution and attestation of wills is an area that is, or should be, within the control of the attorney supervising the will execution ceremony. The prospective will contestant is often encouraged by actions taken, or not taken, by the supervising attorney at the will execution ceremony.

The supervising attorney, will draftsperson or estate planner does not have direct control over the areas of testamentary capacity, undue influence and fraud. In other words, the testator is either competent or incompetent, and undue influence and fraud seldom occurs within the sanctuary of the law offices.

However, lack of direct control does not mean that the attorney draftsperson should ignore these areas when engaged to draft a will. There are cases where reasonable and independent fact finders are truly unsure of a testator’s capacity, and what the attorney did, or failed to do, prior to and at the will execution ceremony tipped the scales one way or the other. (See, for example, the section of our July 29, 2005 article pertaining to a will executed at a hospital.) Also, the alert estate planner/will draftsperson is always on the lookout for signs of possible undue influence and fraud. The will draftsperson who is oblivious to the possibility could unwittingly aid the perpetrator of undue influence and fraud.

Postponing the Execution of a Will

Before we go any further, we would like to propose what is often a simple solution in this complex area of trusts and estates. Without question, it is common knowledge that people are generally living longer. Perhaps as a result of knowing this, many people defer making their last will and testament until their late 80s, even 90s. Unfortunately, this sometimes opens the door for the prospective will contestant. Perhaps an example can best illustrate this point.

Suppose your close friend, Bill Legal, general counsel to XYZ Corp., a closely held business, introduces you to XYZ’s majority owner, Joe Money, who is retiring at age 64. Joe is focused on minimizing taxes and you agree to do his estate plan. You have several meetings with Joe regarding his estate and, in the process, learn a lot about his family. The loves of Joe’s life are his wife and daughter. Joe also has a son, Junior, who, by all accounts, is a worthless bum. Naturally, Joe rarely discusses his son, to the point where Joe’s small family and small circle of friends practically forget that he exists.

Bill Legal remembers Junior. Bill attended a few of the estate planning meetings with you and Joe, and they recounted stories about how Joe gave Junior yet another chance at a fresh start by rehiring him at XYZ about six years ago. In the course of five months, Junior negligently wrecked a company car and was found to be harassing fellow XYZ employees. Bill and Joe implied to you that other problems involving Junior exist, but are too horrible to discuss.

The estate planning meetings culminate in a few trust and partnership agreements involving approximately half of Joe’s net worth. Joe, in his unique, obstinate manner, informs you that he plans on postponing the purchase of a cemetery plot and the making of a last will and testament for at least 20 years. After all, Joe says: “I’m only 64 years old and run in marathons. Why should I do that stuff now?”

You can respond to Joe essentially in two ways. You may decide to not press the matter of the will; after all, Joe is quite obstinate. Besides, you hope to eventually do some of the XYZ corporate work and do not want to appear greedy. Instead, however, you should have a frank and detailed discussion with Joe about the importance of him promptly making a will.

Let’s outline the areas of your discussion with Joe using the typical objections to probate. First, let’s assume Joe promptly executes his will. Joe appears at the will execution ceremony as a vibrant 64-year-old man who is winding down his affairs as president of XYZ Corp. His hearing, sight and signature are all strong. You have just completed his estate plan and, as a result, you and he have detailed knowledge regarding the nature and extent of his assets. At the will-execution ceremony, you discuss his assets and the provisions of the will. Bill Legal and Joe’s 35-year-old secretary of 10 years, Susan Shorthand, act as attesting witnesses. Bill and Susan sign the standard affidavit of attesting witness. In addition, Bill, Susan and Joe execute detailed affidavits which explain why Junior is not included as a beneficiary. Joe’s affidavit describes his relationship with Junior. The affidavits of Bill and Susan describe their own observations of Joe’s relationship with Junior and their discussions with Joe. Given the aforementioned scenario, Joe’s will appears safe from attack.

Case law is full of examples of what could happen to Joe’s estate should he postpone the making of his will until old age. Suppose he needs assistance even to physically enter the room where the will execution ceremony is to take place. His eyesight and hearing are poor. The supervising attorney has great difficulty maintaining, or even getting, his attention. There is no real discussion about the will. There is no evidence to suggest that Joe even has a clue about what assets will be disposed of under the will. The attesting witnesses are strangers to Joe. The attorney who drafted the will was in fact retained by Joe’s daughter, who naively believed, until recently, that Joe’s estate plan was taken care of years ago. Joe’s daughter is the sole beneficiary under the will. Joe dies a few months after will execution. Joe’s daughter is shocked when Junior appears at the funeral and is shocked further when Junior produces a will signed by Joe two months after the first will was executed. Junior has proof that his sister benefited greatly when Joe executed the trust and partnership agreements at age 64. Junior’s position is that his sister received half of Joe’s estate years ago and Joe, by his last will, gave the other half of his estate to Junior so that Joe’s two children would be treated equally. Joe’s wife predeceased or is incompetent. Bill Legal and the attorney who prepared the trust and partnership documents predeceased Joe. Susan cannot be found. The stage is set for a classic will contest.

Fundamentals on Proof

The proponent of a will has the burden of proof with regard to due execution and attestation and testamentary capacity. The will contestant has the burden of proof with regard to undue influence and fraud. The official form affidavit of an attesting witness basically states that the execution ceremony conformed to the statute, that the testator was competent and there was no undue influence or fraud (“not under any restraint”). This affidavit, signed by two attesting witnesses, establishes a prima facie case for the proponent that the will should be admitted to probate. Should the affidavits go unchallenged, probate should be granted. However, the court has the right to conduct further inquiry even in the absence of objections (Surrogate’s Court Procedure Act, SCPA §1408).

The will contestant need only be successful on one type of objection (for example, lack of testamentary capacity) in order to have a will denied probate. Lack of testamentary capacity is related to undue influence in the sense that a testator who lacks capacity, or is close to incapacity, is much more likely to be unduly influenced than a strongly competent person. However, they are separate objections and the differences are important. Since the proponent has the burden of proof regarding capacity and the objectant has the burden of proof regarding undue influence and fraud, objectants are more often successful on the capacity issue. To prevail on the issue of capacity, the objectant will argue that the proponent has not met its burden. To prevail on undue influence, the objectant has the burden of proving that the will of a competent testator should be voided.

To successfully prove testamentary capacity, the proponent must establish, by the preponderance of the credible evidence, that (1) the testator knew the nature and consequences of executing a will; (2) the testator knew the nature and extent of the property that he was disposing of under the will; and (3) the decedent knew who were the natural objects of his bounty and his relations with them. As can be seen by the Joe Money illustration above, the attorney draftsperson and supervising attorney can accumulate proof of capacity during the meetings and correspondence leading up to the will execution ceremony and by the selection of appropriate attesting witnesses.

In situations where the attorney is unsure about the testator’s capacity, he or she should seek the opinion of experts. The attorney should start with any doctors and psychiatrists who have been treating the testator, since evidence produced by them will usually be more credible than evidence produced by a nontreating professional, such as a contestant’s expert witness who will testify based upon records without ever having treated the testator. Regarding medical records, the attorney should ask the testator for his complete records and review them promptly. These records will certainly be demanded later on by the contestant. If the attorney is still not satisfied regarding testator’s capacity, or is not satisfied that he or she has sufficient documentary evidence, the attorney should consider requesting that the testator undergo a complete mental health examination as close as possible to the day of will execution.

In considering the evidence available to prove testamentary capacity, the attorney should be mindful of what should be the most obvious, the will itself. Consider the will, which devotes numerous pages to the tax clauses, numerous pages to the executor’s powers and somewhere in the middle is three inches of print in which the will disposes of the entire estate. One day a finder of fact might have to consider if the elderly testator could even find, no less understand, these dispositive provisions. The attorney should consider expanding the dispositive provisions by including details on specific assets. The attorney should also consider mentioning each distributee by name and relation, including distributees who are not beneficiaries under the will. Such a will would go a long way toward establishing competency, if the will is reviewed in detail at the execution ceremony in the presence of the attesting witnesses.

The draftsperson must have knowledge of all of the testator’s assets, including assets passing outside of the probate estate, such as joint accounts, totten trusts and retirement accounts with a designated beneficiary. The estate plan as a whole should be documented and appear reasonable in order to withstand future attack. Consider, for example, the potential impact of a detailed will, sophisticated in appearance, which effectively disposes of only a small percentage of the testator’s gross assets because of the aforementioned nonprobate assets. Might this be considered credible evidence that the testator did not know the nature and extent of his assets?

Undue Influence and Fraud

The burden of proof on the issue of undue influence or fraud is on the objectant, and the burden does not shift. However, where there is a confidential relationship between the testator and a beneficiary, such as an attorney or a caretaker, the mere fact of the bequest permits an inference of undue influence, and such beneficiary then has the burden of offering an alternative explanation for the bequest provided to him.

Black’s Law Dictionary defines “undue influence,” in part, as follows:

Persuasion, pressure or influence, short of actual force, but stronger than mere advice, that so overpowers the dominated party’s free will or judgment that he or she cannot act intelligently and voluntarily, but acts, instead, subject to the will or purposes of the dominating party. The emphasis should be placed upon the word “undue.” Mere showing of influence is not enough to meet the objectant’s burden. The objectant must meet the burden of presenting facts establishing that the influence exerted destroyed the testator’s own judgment and volition . . .

. . . the will of a person is overpowered and he is induced to do or forbear an act which he would not do or would do if left to act freely . . .

Black’s Law Dictionary defines “fraud,” in part, as follows:

An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury . . .

The alert will draftsperson should be able to thwart attempts of undue influence and fraud. The attorney should communicate directly with the testator as often as possible. Instructions regarding the dispositive provisions of the will and the selection of fiduciaries must come directly from the testator. Preferably, the testator should, on his own, make the appointment to visit the attorney’s office as it would be evidence regarding capacity and freedom of restraint. It would be ideal for the testator to travel to the attorney’s office alone. Should the testator require assistance in traveling, it would be preferable to have a nonbeneficiary travel with the testator to the attorney’s office.

Regardless of who accompanies the testator, the companion should wait in the attorney’s reception area. It is critical for the attorney to have private conversations with the testator at which time the attorney should plainly ask the testator if he is acting freely. During an initial consultation, it would be a good idea for the attorney to ask the testator to outline or sketch his dispositive intentions in his own handwriting. The attorney should send drafts of the will and an explanatory letter summarizing the will provisions directly to the testator. The attorney should then encourage the testator to mark up the documents with notes and questions in his own handwriting and deliver the draft documents to the attorney.

Estate planning documents will be subject to discovery (document production and testimony) in a future will contest. The reasons for changes in bequests should be documented. A drastic change in bequests immediately prior to will execution could be a sign of undue influence. Make certain that the testator understands the fundamentals of estate law. For example, a naïve testator may have been told by his son that it is impossible for a parent to disinherit a child in New York. A testator who does not understand his rights is unable to freely assert his rights. If the attorney learns during the planning process that the testator’s daughter received substantial lifetime gifts, the attorney should inquire as to the donor’s intent and promptly document these gifts, perhaps by affidavit, since upon the testator’s death, the daughter will be barred from testifying about these gifts (Civil Practice Law and Rules [CPLR] §4519).

Conclusion

The mindset of the alert estate attorney must be: “How can I avoid a will contest? If I can’t avoid the will contest, then how do I prevail?”

Although some of the above suggestions may sound like simple common sense, case law is full of examples where the unwary attorney, for example, accepted will instructions exclusively from a primary beneficiary and did not meet the testator until the day of the will execution. At best, such a situation is embarrassing. At worst, the attorney unwittingly aided the “beneficiary” in diverting the testator’s assets away from the intended recipients.

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C. Raymond Radigan is a former surrogate of Nassau County and of counsel to Ruskin Moscou Faltischek. He is also chairman of the advisory committee to the Legislature on estates, powers and trusts law and the Surrogate’s Court Procedure Act. Frank J. Gobes is a senior associate at Ruskin Moscou.

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