Chapter 1—The Capacity to Create a Testamentary Trust
This chapter is divided into two parts. Part I introduces students to the parties that are involved in the creation of a trust. Further, that part discusses the function of each of the parties. Most trusts are testamentary in nature, so they are created as a part of a will. In order for a testamentary trust to be valid, the testator must be legally capable of executing the trust. Thus, in Part II of the chapter, I discuss the mental capacity the testator must possess to be deemed competent to create a trust. In addition, the students will be introduced to the other legal theories that may be used to attack the testator’s ability to establish a trust.
The primary purpose of a trust is to provide a source of income for a person who is not capable of managing his or her resources. For instance, Barbara’s son, John has a gambling problem. Barbara wants to make sure that John always has a place to live. If Barbara gives John a house outright, he would probably lose it in a card game. Barbara cannot give John the house and forbid him from transferring it because a direct restraint on alienation is invalid. Thus, the court would ignore the condition and give John the house without the restriction. Barbara can give John a life estate in the property, so that he would have a place to live until he died. Granting John a life estate may not be a good idea for several reasons. A legal life tenant has a duty to pay taxes and to maintain the property in good repair. However, that duty is limited because the life tenant only has to fulfill that obligation to the extent the income from the property is sufficient to cover those expenses. It is unlikely that the house will produce any income, so John would not be obligated to pay the property taxes or to keep the house in good repair. Even if John has such a duty, he is probably too irresponsible to do so. Thus, giving John a life estate in the house may cause more problems than it cures. Moreover, if the life tenant accrues debt, that person’s creditor can legally seize the life estate and sell it. The creditor would probably realize very little from the sale. But, the sell of the life estate will defeat Barbara’s purpose of providing John with a place to live. Barbara’s best option is to put the house in trust for John. This means that Barbara would give the legal title of the house to a third party. That person would be responsible for maintaining the house for John. As the beneficiary of the trust, John would have equitable title of the house. Since John would not have legal title, he would be unable to sell or gamble away title to the house. Thus, the creation of a trust would enable Barbara to achieve her objectives.
1.1 Parties Involved in a Trust Arrangement
Usually, at least three parties are involved in the creation of a trust. Those parties are the settlor/trustor, the trustee, and one or more beneficiaries. In cases involving testamentary trusts, the settlor is referred to as the testator. Three different individuals do not have to be involved in the transaction in order for a valid trust to be established. For example, one person can serve as the settlor and the trustee. If a self-settled trust is involved, it is possible for one person to serve in all three capacities. However, for the trust to be valid, the trustee must owe equitable duties to someone other than herself. Thus, if the settlor is also the trustee, she cannot be the only trust beneficiary. The settlor/trustor is the person who creates the trust. Since she is the person who established the trust, Barbara is the settlor or trustor.
The third party who manages the trust is the trustee. The trustee may be an individual or a corporation. The settlor may select one trustee or several trustees to manage the trust. The trustee may be appointed by the trust instrument or by the court. The person or entity appointed as trustee must affirmatively accept the role. Once the trustee accepts the appointment as trustee, the person can be released of the obligation only with the consent of the beneficiaries or by a court order. The trustee is entitled to receive reasonable compensation. A trust will not fail for lack of a trustee. If the trustee dies and no successor trustee is named in the trust instrument, the court will appoint a successor in trustee. However, if the trust instrument or other facts indicate that the settlor chose the person to act as trustee because of the nature of their relationship, the court may conclude that the settlor would not want the trust to continue without that trustee. As a result, the court may dissolve the trust on the death or resignation of the trustee. If the trust is created as a part of a will, the executor can also serve as the trustee.
The trust instrument must give the trustee some active duties to perform. A settlor who gives the trustee no managerial responsibilities creates a dry trust. As a result, the court will not recognize the creation of the trust, and the beneficiary will receive legal title to the trust property. The following example illustrates a dry trust:
Example-Utilizing an instrument entitled “Trust For the Benefit of Roberto and Marianna” Sophia placed one million dollars in an irrevocable trust for her two children, Roberto and Marianna. She selected Vincent to serve as trustee. Under the terms of the trust, $100,000 would be automatically paced in the respective bank accounts of Roberto and Marianna each month. Sophia never informed Vincent that he was to serve as trustee.
The above-referenced transaction did not result in a valid trust because the funds were automatically dispensed to Roberto and Marianna. Vincent had no managerial duties. The fact that the trust could function without Vincent’s knowledge further indicates that it was a passive or dry trust. Consequently, the court would invalidate the trust and Roberto and Marianna would have the right to split the million dollars and obtain it without restrictions.
The trustee has legal title to the trust property, and the beneficiary has equitable title. Consequently, the trustee has the managerial authority over the property. Nevertheless, the beneficiary is the one who suffers the consequences of the trustee’s good or bad decisions. In the example put forth at the beginning of the chapter, the trustee has legal title to the house and manages it for the benefit of John. Although the trustee has legal title to the house, a personal creditor of the trustee has no recourse against the house. If the trustee acquires an obligation on behalf of the trust, the creditor has recourse against the house, but not against the trustee’s personal property.
Example 1-Keisha devises Purpleacre in trust to Robert to pay income to Gary for life and the remainder to LaNitra on Gary’s death. Robert accidentally hits April with his car. April files suit against Robert and receives a judgment for $300,000. Although Robert has legal title to Purpleacre, April cannot place a lien on Purpleacre to satisfy her judgment.
Example 2-Gloria devises Blackacre in trust to Tamera to pay income to Ali for life and the remainder to Patrick on Ali’s death. Tamera contracts with Jason to make repairs to Blackacre. Jason submits a bill to Tamera for $40,000. Tamera refuses to pay the bill. Jason can go to court and get a mechanic’s lien on Blackacre. However, Jason cannot sue Tamera personally for the debt.
The beneficiary of the trust is the person who receives the benefit of the trustee. John is the beneficiary of the trust because it was created so he would have a place to live. John has the equitable title to the house. John’s equitable interest entitles him to sue the trustee personally for breach of trust. Moreover, equity gives John, as beneficiary, the right to live in the house. Thus, if the trustee wrongfully disposes of the house, John can recover the house unless it has come into the hands of a bona fide purchaser for value. In addition, if the trustee disposes of the house and acquires other property with the proceeds of the sale, John can enforce the trust on the newly obtained property.
Example-Ivana devises Brownacre in trust to Jessica for George for life and the remainder to Katherine on George’s death. Jessica sells Brownacre to Robin, a BFP, and buys Blueacre. George can sue to receive equitable title to Blueacre.
In the above example, since Robin, a BFP, acquired legal title to Brownacre, George is unable to maintain his equitable interest in the property. George’s remedy is to sue to get the proceeds Jessica received from the sell of Brownacre or to obtain an equitable interest in Blueacre.
1.2. Testamentary Capacity
1.2.1. Mental Capacity
In order to create a testamentary trust the testator must be an adult and must be of sound mind. A person who is 18 years of age or older is considered to be an adult. It is difficult to determine if the person was “of sound mind.” The level of mental ability the testator needs is really low. For instance, a person suffering from dementia or Alzheimer’s disease may be competent to establish a testamentary trust as long as the person has lucid moments. In order to have the necessary mental capacity to create a valid testamentary trust, the testator must know the following: (1) the nature and extent of his property; (2) the persons who are the natural objects of his bounty: (3) the disposition he is making; and (4) the manner in which those facts relate so far as to form an orderly plan for the disposition of his property.
To be found to be mentally competent, the testator does not have to have actual knowledge of every piece of property that will be included in the trust. The testator also does not have to be able to name every relative that may be a beneficiary of the trust.
In the Matter of the Estate of Gallavan, 89 P. 3d 521
Opinion by Judge CARPARELLI
In this formal testacy proceeding as to the estate of Donna L. Gallavan (decedent), Joseph James Verce, Jr. (contestant), as personal representative of decedent’s sister, Carla M. Verce, appeals the trial court’s judgment denying his petition for adjudication of intestacy. Phillips R. McClendon, as decedent’s personal representative, and Shriners Hospitals for Children, as a devisee, opposed the petition. We affirm.
Decedent was a protected person under conservatorship when she executed a will that contained a testamentary trust for the benefit of her sister and brother during their lives. Upon the death of both beneficiaries, the trust was to terminate, and trust proceeds were to be distributed to Shriner’s Hospitals.
Decedent died in July 1999. Her personal representative submitted the will to informal probate. Decedent’s sister survived decedent, but died in September 1999. Her brother also survived her but died in October 2011 while the estate was in probate. Contestant later filed the petition for adjudication of intestacy at issue here, alleging that decedent lacked testamentary capacity to execute the will.
Contestant urges us to conclude that the will is invalid because decedent lacked testamentary capacity. We perceive no basis for such a conclusion.
A person has testamentary capacity if he or she is an “individual eighteen or more years of age who is of sound mind.” Section 15-11-501, C.R.S. 2003. The soundness of a testator’s mind may be evaluated under either the Cunningham test or the insane delusion test. See Breeden v. Stone, 992 P.2d 1167 (Colo. 2000); Cunningham v. Stender, 127 Colo. 293, 255 P. 2d 977 (1953).
Under the Cunningham test, a person has testamentary capacity when (1) she understands the nature of her act; (2) she knows the extent of her property; (3) she understands the proposed testamentary disposition; (4) she knows the natural objects of her bounty; and (5) the will represents her wishes. Cunningham v. Stender, supra.
Contestant contends that the judicial appointment of the conservator establishes that decedent was “incapacitated” and, thus, that she lacked testamentary capacity. We are not persuaded.
Contestant first points to the language of § 15-14-401(1)(b), C.R.S. 2003, which allows appointment of a conservator for one who is unable to manage property and business affairs because of inability “to effectively receive or evaluate information or both or to make or communicate decisions” affecting her assets. He then points to the statutes that allow appointment of a guardian for an “incapacitated persons,” defined in § 15-14-102(5), C.R.S. 2003, as, in pertinent part, one who is unable “to satisfy essential requirements for physical health, safety, or self-care,” because of inability “to effectively receive or evaluate information or both or make or communicate decisions.” He argues that the provisions include similar phrases and that, as a result, the appointment of decedent’s conservator establishes that decedent was “incapacitated” when she wrote the will. This argument is contrary to the explicit language of the statutes.
When the meaning of a statute is plain and free from ambiguity, we may conclude the legislature made a deliberate choice that was “calculated to obtain the result dictated by the plain meaning of the words,” Hendricks v. People, 10 P.3d 1231, 1238 (Colo. 2000) (quoting City & County of Denver v. Gallegos, 916 P.2d 509, 512 (Colo. 1996), and we give effect to that meaning without resorting to rules of statutory interpretation. In re Estate of DeWitt, 554 P.3d 849 (Colo. 2002).
Section 15-14-401 pertains to the appointment of a conservator to ensure that assets a person needs for her own support, care, education, health, and welfare, or for that of others who are entitled to her support, are not wasted or dissipated. The appointment of a conservator does not include a finding of “incapacity.” In fact, when decedent wrote her will, the version of § 15-14-408 (6) then in effect provided that “[a]n order …determining that a basis for appointment of a conservator…exists, has no effect on the capacity of the protected person.” Colo. Sess. Laws 1979, ch, 451, § 153-5-408(6) at 1626 (repealed effective January 1, 20000. Similarly, under the current statute, § 15-14-409(4), C.R.S. 2003, states that appointment of a conservator “is not a determination of incapacity.”
Thus, the statute explicitly states that findings that warrant appointment of a conservator do not equate to a determination of testamentary incapacity.
Here, the trial court reached the same conclusion based on the holding in In re Estate of McCrone, 106 Colo. 69, 101 P.2d 25 (1940), and contestant argues that reliance was error. However, contestant also argues that the court should have applied the current statutes. Because we conclude that the court’s ruling was correct under those statutes, we need not address contestant’s argument concerning McCrone. See People v. Gresl, 89 P.3d 499, 2003 WL 23095411 (Colo. App. No. 00CA1170, Dec. 31, 2003).
Contestant also asserts that the trial court erred when it held that decedent had testamentary capacity. We disagree.
Findings of fact will not be set aside unless they are clearly erroneous. C.R.C.P. 52; Mesa County Valley Sch. Dist. No. 51 v. Kelsey, 8 P.3d 1200 (Colo. 2000); In re Estate of Heyn, 47 P.3d 724 (Colo. App. 2002); In re Estate of Perry, 33 P.3d 1235 (Colo. App. 2001).
Here, the trial court applied and made findings appropriate to the Cunningham and insane delusion tests, and there is substantial evidence in the record to support the court’s findings. We perceive no basis for overturning this ruling.
Contestant also argues that the will or, in the alternative, the trust is invalid because a protected person cannot execute a valid will that includes a trust. Again, we are not persuaded.
When a court appoints a conservator, the protected person’s assets are vested in the conservator. As a result, the protected person cannot transfer assets to others, including an inter vivos trust. See § 15-14-421, § 15-14-422, C.R.S. 2003. Here, however, decedent had testamentary capacity and, as a result, could bequeath assets to others, create a testamentary trust, and bequeath some or all of her estate to such a trust. Because she did not transfer any assets during her lifetime, the conservatorship was not implicated. Therefore, we conclude that, even if appointment of a conservator prevents a protected person from creating an inter vivos trust, it does not prevent a protected person who has testamentary capacity from creating a testamentary trust.
The judgment is affirmed.
Notes, Questions and Problems
1. In Gallavan, the contestant appeared to want the court to establish a presumption of lack of mental capacity based upon the appointment of a conservator. If the court had ruled in favor of the contestant, the decision might have negatively impacted persons with disabilities. For instance, a mentally disabled person who receives SSI has to have a representative payee. Should that status be enough for the person to be presumed mentally incompetent to execute a will or a testamentary trust? What about persons who have been diagnosed with severe dementia?
2. The will in Gallavan was submitted to informal probate. An increasing number of states have statutes permitting informal probate. Informal probate allows the personal representation to administer the decedent’s estate without probate court supervision. The estate is closed when the representative files a sworn statement certifying that the decedent’s debts, expenses, and taxes have been paid and distributions have been made to the persons entitled to them.
3. In Gallavan, the Court indicates that a person who is under a conservatorship may not have the capacity to establish an inter vivos trust. Nonetheless, that same person may be legally capable of creating a testamentary trust. What are some arguments that support the difference in treatment?
4. What are the pros and cons of requiring a testator to be of “sound mind”? Does the Gallavan case give any insight into determining when a person is of sound mind?
In which of the following cases may the testator lack mental capacity to execute a will or trust?
a) Sally had two daughters, Grace and Amanda. Sally’s will contained the following language “I leave 80% of my estate in trust for my daughter Grace and the remaining 20% in trust for my step-daughter, Amanda.” Both Grace and Amanda were Sally’s biological children.
b) Frederick executed a will stating “I leave my entire estate to my three children, Darlene, Mason and Paul.” Frederick only had two children, Darlene and Mason. Paul was Frederick’s pet monkey.
c) Joshua inherited his family’s farm located at 1120 Gates Mill Road. In 1997, the city seized the farm because Joshua failed to pay the property taxes. Joshua claimed that he had receipts showing that he had paid the taxes. Thus, he filed suit to regained ownership of the farm. Joshua lost his case, but vowed to never stop fighting. In 2009, Joshua executed a will containing the following provision, “I leave the farm located at 1120 Gates Mill Road to my son, Theodore.”
d) Elvira was the victim of a scam in which she purchased the Golden Gate Bridge. In her will Elvira stated, “I leave the Golden Gate Bridge to my son, Huey.
1.2.2. Insane Delusion
A person may be mentally competent to create a testamentary trust. Nonetheless, the testamentary trust may be invalid because it was the product of an insane delusion. In order to convince a court to invalidate a testamentary trust based on the testator’s insane delusion, the contestant must prove (1) the testator was suffering from a delusion that was insane and (2) the trust was a consequence of the insane delusion.
An insane delusion that may prevent a person from having the capacity to execute a testamentary trust is a false belief based upon incidents that exist solely in the imagination of the person suffering from the delusion. The “insane’ in insane delusion does not refer to a medical condition. Thus, the testimony of a psychologist or psychiatrist is not necessary to prove it. For instance, one court has stated, “An ‘insane delusion’ or ‘monomania insanity’ is not a general defect of the mind, for the purposes of determining whether the delusion operated to invalidate a will; it is an insanity directed to something specific, that is, a particular person or thing, and the testator can be laboring under the influence of an insane delusion while otherwise acting or appearing competent.” Dougherty v. Rubenstein, 914 A.2d 184 (Md. App. 2007). A delusion is insane even if there is some factual basis for the belief if a rational person in the testator’s position could not have drawn the conclusion the testator reached. See Restatement (Third) of Property: Wills and Other Donative Transfers § 8.1, cmt. s. (2003). The testator’s insane delusion must impact the manner in which she distributes her property. If an insane delusion is shown, but the delusion did not affect the dispositions, the will and the testamentary trust stand.
Consider the following example. After Maxwell’s wife died in child birth, he believed that the baby girl, Amanda, was the devil incarnate, so he sent her away to boarding school. Maxwell’s priest and friends tried to convince him that Amanda was a good, well-behaved child. However, Maxwell held on to his belief that Amanda was evil. Maxwell was delusion with regards to his views about Amanda. That delusion had the potential to impair his capacity to create a testamentary trust. If Maxwell told the lawyer creating his testamentary trust to exclude Amanda as a beneficiary of the trust because Maxwell thought Amanda would use his property to worship the devil, the one Maxwell regarded as Amanda’s true father, a court would probably decide that Maxwell’s testamentary trust was a product of an insane delusion. Thus, it would be invalidated because he lacked the necessary testamentary capacity to establish a trust. However, if Maxwell told the lawyer to exclude Amanda as a beneficiary of the trust because Maxwell had already provide sufficient lifetime support for Amanda, the court would probably conclude that Maxwell’s delusion did not influence his decision to exclude Amanda as a beneficiary of the trust. Therefore, the trust would be declared valid.
A Mistake vs. An Insane Delusion
An insane delusion is different from a mistake. An insane delusion is a belief that is not susceptible to correction by showing the testator evidence indicating that his or her belief is false. A mistake is a belief that is susceptible to correction if the testator is presented with the truth. Courts usually do not reform or invalidate a testamentary trust because of a mistake, but courts do invalidate entire trusts or their provisions that result from an insane delusion.
Insane Delusion: Nicholas believes that his daughter, Taylor, is dead.
Taylor comes to Nicholas’ house to show him that she is still alive.
Nicholas believes that someone is impersonating Taylor, so he intentionally excludes her as a beneficiary of his testamentary trust.
Mistake: Nicholas believes that his daughter, Taylor, is dead. Taylor is alive, but Nicholas does not discover that fact. Nicholas intentionally excludes Taylor has a beneficiary of his testamentary trust.
Taylor will be able to successfully challenge the validity of the trust created as a result of the insane delusion. However, the trust created as a result of the mistake will be validated.
In re Estate of Squire, 6 P.3d 1060
CARL B. JONES, Chief Judge:
This will contest involves a “pour over” will and a revocable trust executed by Betty Louise Squire six years before her death. The decedent had never married and was childless. The contestants to this will and trust are the decedent’s first cousins. In 1990, the decedent executed a living trust naming WestStar Bank of Bartlesville, Oklahoma (Bank) as Trustee and leaving the bulk of the decedent’s residuary estate to three charities: the Washington County SPCA, the American Diabetes Association and Washington County Elder Care, Inc. The decedent also executed a “pour over” will which provided that any assets remaining in the decedent’s name at death would pass to the Trust for administration and distribution.
The first cousins filed a petition for letters of administration and determination of heirs asserting that the decedent had died intestate. WestStar filed its objection to the petition attacking the will executed by the decedent. The cousins contested the will and sought to set aside the Trust, claiming both documents to be the products of undue influence and an insane delusion. After a two-day trial, the trial court denied the cousins’ petition contesting the will and trust. The cousins appeal.
Issues presented on review are: 1 whether the decedent had testamentary capacity at the time she executed the will and trust; 2) whether the trust and will were a product of undue influence; and 3) whether the decedent was acting under an insane delusion at the time she executed the will and trust. Probate proceedings are of equitable cognizance. While the appellate court will study the whole record and weigh the evidence, the trial court’s findings will not be disturbed on review unless they are clearly against the weight of the evidence or some governing principle of law. When a will is offered for probate, the singular concern of the court is: (a) whether the will has been executed with the requisite statutory formalities, (b) whether the testatrix was competent to make a will at the time it was made, and (c) whether it was the product of undue influence, fraud or duress. The significance of this entire process is to ascertain and effectuate the decedent’s intentions regarding the disposition of her property. Matter of the Estate of Sneed, 953 P.2d 1111, 1151 (Ok., 1998).
The cousins assert that the decedent lacked testamentary capacity at the time she executed her will and trust. Relying on In re Estate of Lacy, 431 P.2d 366 (Ok. 1967) the cousins assert that the decedent made an unnatural disposition as she failed to mention the “objects of her bounty” which in this case would have been her cousins. Although Lacy does not hold that this alone is conclusive of no testamentary capacity, the cousins contend that coupled with this failure is the medical evidence introduced that the decedent was a mentally ill person and had been for many years.
Testamentary capacity exists when a person has, in a general way, the faculty to appreciate the character and extent of the devised property, comprehends the nature of the relationship between themselves and the objects of their bounty and perceives the nature and effect of the testamentary act. Whether one possesses testamentary capacity is a question of fact. When a person contests a testator’s soundness of mind, the burden of persuasion rests upon that person. When a court ascertains a decedent’s testamentary capacity, it is appropriate for it to consider evidence of the testator’s mental capacity, appearance, conduct, habits and conversation both before and after the will is executed. In re Estate of Lacy, supra.
The record reflects that the decedent remained in her family home until approximately six months prior to her death. One of the reasons the decedent was able to stay in her home was because pursuant to the trust the Bank paid the decedent’s bills and arranged for caretakers. She suffered from multiple health problems including diabetes and partial blindness. In addition, the decedent was treated for anxiety and depression by a psychiatrist in Bartlesville. In the psychiatrist’s notes, references were made to a “falling out” with the decedent’s cousins for various reasons during the late ’80s. Approximately one month before the execution of the will and trust, the decedent was hospitalized for an insulin reaction and was confused. She was discharged to a geriatrics center until she could return to her home. At the time she executed the will and trust, October 30, 1990, she was still at the geriatrics center. The medical records reflect from October 16, 1990 to November 17, 1990, that the decedent was alert, oriented and frequently went out of the building for social activities. The record is devoid of anyone testifying that the decedent did not know her relatives, did not understand her property, or in any way appeared incompetent. After a review of the record, we find that the trial court’s decision that Betty Louise Squire was possessed of testamentary capacity at the time she executed her will and trust is not clearly against the weight of the evidence.
Relying on In re Estate of Maheras, P.2d 268 (Ok., 1995) and In re Estate of Gerard, 911 P.2d 266 (Ok., 1995) the cousins assert that they were entitled to a presumption of undue influence. They contend that the decedent did not have independent advice and that the trust officer from WestStar used her influence over the decedent to benefit the bank. We do not agree. The Oklahoma Supreme Court held in these two cases that a two-prong test must be used to decide whether undue influence has tainted a will. First, there must be a relationship which would induce a reasonably prudent person to repose confidence and trust in another. Second, the stronger party in the relationship must have assisted in the preparation of the testamentary instrument. It is undisputed that a confidential relationship existed between the trust officer with WestStar and the decedent. However, the distinguishing factor here is that the decedent approached WestStar and requested assistance in setting up the appropriate documents to manage her affairs. In fact, the decedent brought an unsigned will document dated 1987 to WestStar to assist in drafting the trust and will. This unsigned document provided that she wanted to leave the majority of her estate to the three charities. The trust officer opined at trial that the decedent’s previous attorney had drafted the unsigned will. No contradictory evidence was presented on the authorship of this unsigned will. Further, the trust officer testified that the decedent provided all instructions regarding the disposition of her assets. As previously stated, this Court will not disturb the factual findings of a trial court unless they are clearly contrary to the weight of the evidence. We find that the trial court correctly found that the will and trust were not the product of undue influence.
Finally, the cousins assert that the decedent suffered from an insane delusion which materially affected the execution of the will and trust. The cousins contend that the decedent believed that people were stealing from her and that her cousins were after her money. An insane delusion connotes a belief in things which do not exist and which no rational mind would believe to exist. Winn v. Dolezal, 355 P.2d 859 (Ok., 1960). Such a delusion is a false belief, which would be incredible in the same circumstances to the victim if she were of sound mind and from which she cannot be dissuaded by any evidence or argument. We must determine whether the decedent’s condition at the time of the execution of the will and trust was such to show that the disposition which she made was caused by a delusion and but for the delusion the disposition of the property would have been otherwise. This delusion, if it existed, must have existed at the time of the execution of the will. Lynn v. Ada Lodge No. 146, 398 P.2d 491, 496 (Ok., 1965)
The cousins emphasize that until 1983 the decedent had a very good relationship with her cousins. After the decedent and one of her cousins took a trip together, the decedent began to withdraw from this relative. The discord between this cousin arose from a misunderstanding over the transfer of the decedent’s funds shortly before the 1983 trip. The decedent discussed this with her psychiatrist who noted that rifts between relatives occur all the time. No notation was found in his notes referring to an insane delusion. None of her doctors ever noted on her charts that she suffered insane delusions. In fact, one doctor in 1987 specifically stated that while the patient was depressed and anxious, she did not suffer from hallucinations or insane delusions. We find that the trial court correctly found that the decedent was not suffering from an insane delusion at the time she executed her will and trust. Accordingly, the trial court is affirmed.
Notes, Questions and Problems
1. In Squire, the Court stated that the testator’s behavior before and after the execution of the will was relevant to her mental capacity. Why should behavior after the execution of the will matter?
2. A pour over will is used in conjunction with an inter vivos trust to avoid probate. The settlor creates the trust during her lifetime and places very little assets in it. Then, she executes a pour over will that bequests money or property to the existing trust. When the testator dies, the money or property from the will pours over into the trust.
3. If a person executes a will when he is young and healthy, it is difficult for the court to set it aside because of an insane delusion. Prior to committing suicide, Roger Bauer wrote a letter to his girlfriend containing the following statement, “My primary reason for doing this is a near complete lack of family love. It is something that will always be missing from my life. I will never be able to compensate for it no matter what.” In the last sentence of the letter Bauer left everything to his girlfriend who submitted the letter for probate as a holographic will. Bauer’s sister contested the will claiming that his belief that he lacked the love of his family was an insane delusion. The Court found that Bauer had not suffered from an insane delusion. Bauer v. Estate of Bauer, 687 S.W.2d 410. If the Court concluded that Bauer was suffering from a delusion with respect to his family, would that be sufficient to invalidate the will under the doctrine of insane delusion.
In which of the following cases is the court likely to invalidate the will based upon an insane delusion?
a) Mary heard voices telling her that her son, Billy, was poisoning her. Thus, Mary disinherited Billy and left all of her money to charity.
b) Simon thought that his daughter, Maude, was stealing from him. When Simon confronted Maude, she denied the accusations. Simon could not find evidence of Maude’s stealing, but he believed that she was a thief because she had red hair. Simon established a trust on behalf of his two other children and excluded Maude as a beneficiary. After Simon died, his executor discovered that Maude had been stealing from Simon.
c) Craig and Lucy were married for over 50 years. When Craig suspected that she was having an affair, Craig told his friends that he planned to disinherit her. Craig claimed that Lucy was slipping men down the chimney and having sex with them in the attic. Lucy was injured in a car accident and received a large case settlement. Then, Craig told his friends that Lucy did not need his money, so he was not going to leave her any thing. Craig also stated that if Lucy was broke he would not leave her a penny of his money to spend on her men.
d) Rufus had black hair and brown eyes. Rufus married Shelley, who also had black hair and brown eyes. When Shelley gave birth to a little boy, Danny, who had blonde hair and blue eyes, Rufus was convinced that he was not the father of the child. In order to convince Rufus that Danny was his son, Shelley went on a talk show and had a DNA test conducted. The DNA test proved that Rufus was Danny’s father. However, Rufus believed that the DNA test had been rigged to increase the show’s television ratings. Shelley was never able to convince Rufus that Danny was his child, so the couple divorced. Rufus executed a will stating, “Since I am childless, I leave my entire estate to the Red Cross.”
1.2.3. Undue Influence
The requirements that the testator is mentally competent and not suffering from an insane delusion are designed to insure that the testator’s will or trust is a product of a sound mind. However, a person who has a sound mind is still susceptible to being influenced by other people. Estate planning is often a family affair. Thus, persons who stand to benefit from the testator’s actions may intentionally or inadvertently influence the manner in which the testator disposes of her property. The law permits the testator to be influenced by the actions and opinions of others. Nonetheless, if that influence causes the testator to make a disposition that the testator would not otherwise have made, the law considers that influence to be undue. Courts will strike the terms of a testamentary trust that results from undue influence, and allow the remaining terms to stand if they can be reasonably separated from the invalid terms without destroying the testator’s intent or interfering with the testamentary plan.
The test for undue influence is whether someone exercised so much control over the testator’s mind that the person overcame the testator’s free will and caused the testator to do what he would not have otherwise done but for the person’s influence. The person contesting the testamentary trust has the burden of proving the following: (1) that the testator was susceptible to undue influence or domination by another; (2) that the persons alleged to have committed the undue influence had the opportunity to exercise it; (3) that such person had a disposition to influence for the purpose of personal benefit; and (4) that the provisions of the trust appear to be unnatural and the result of such influence. Undue influence is often difficult to prove. In some cases, the burden of proof shifts to the proponent of the testamentary trust. Once the burden shifts, that persons must show a lack of undue influence. The factors that cause the burden of proof to shift include (1) the existence of a confidential relationship; (2) a testator with a weakened intellect; and (3) a trust that gives the person with the confidential relationship the bulk of the estate. Confidential relationships like attorney-client and caretaker-patient are usually enough to shift the burden of proof. In fact, many courts have held that, if an attorney, who is not related to the testator, benefits from a testamentary trust, a presumption of undue influence occurs. The attorney must present clear and convincing evidence to rebut the presumption.
In re Estate of Johnson, 340 S.W.3d 769
CATHERINE STONE, Chief Justice.
Appellants’ motion for rehearing is denied. This court’s opinion and judgment dated December 1, 2010 are withdrawn, and this opinion and judgment are substituted. Our prior opinion contained an incorrect reference to Laura Johnson serving as co-trustee of a foundation as opposed to Laura Johnson serving as co-trustee of a management trust. We substitute this opinion to delete the erroneous factual reference which does not affect this court’s prior analysis.
This appeal arises from a probate proceeding in which a jury found Belton Kleberg Johnson (“B”) executed certain wills and trusts as a result of undue influence. The trial court entered judgment on the verdict, denying probate of certain wills and admitting B’s 1997 will to probate. Additionally, the judgment invalidated certain trust documents. On appeal, the independent executor of B’s estate, B’s widow, and a co-trustee of a trust created by B, challenge the sufficiency of the evidence to support the jury’s finding of undue influence. We affirm the trial court’s judgment.
A. The Family Members
B was a descendent of famed King Ranch heritage. He and his first wife, Patsy, whom he divorced in 1987, were the parents of three children: Cecilia McMurrey (“Ceci”), Sarah Pitt (“Sarah”), and Kley Johnson (“Kley”). Kley, who died in a car accident in 1991, was married to Cecilia Hager (“Hager”). Alice Truehart Johnson and Henry Kleberg Johnson are Kley and Cecilia’s children. Sarah married Steven Pitt, and Sarah Spohn Kleberg Pitt, Stephen McCarthy Pitt, Jr., and Allegra Elizabeth McCarthy Pitt are their children. Ceci married Mark McMurrey, and Harry Bennett McMurrey, Belton Kleberg McMurrey, and Estella Lewis McMurrey are their children.
Lynne Johnson was B’s second wife. They were married in February of 1991, and Lynne died of cancer in January of 1994.
Laura Johnson was B’s third wife. B met Laura in Hong Kong in January of 1994 within days after Lynne’s death. At the time, Laura was still married to her first husband, who also was her business partner; however, they had been separated for several years. Laura’s divorce from her first husband was final in January or April of 1996, and she married B on November 8, 1996.
B. The Estate Planning Documents
Over the course of at least four decades, B engaged in extensive estate planning activity with the aid of various professionals. The following individuals were involved at varying times in B’s estate planning: (1) Ed Copley—an estate planning attorney B hired in 1991; (2) Robert Phelps—a generational planning specialist with J.P. Morgan who was also an attorney; (3) Stacy Eastland—another estate planning attorney B hired in 1997; and (4) Peter Milton—a loan officer with J.P. Morgan who subsequently became an investment advisor for B’s foundation.
Following B’s death in 2001, Copley obtained an order admitting to probate B’s 1999 will and 2000 Codicil and was named as the independent executor of B’s estate. B’s children and grandchildren challenged that order in the suit giving rise to this appeal. A review of B’s estate planning documents for the decade preceding his death is helpful to understanding the parties’ claims.
B’s 1991 will created a life estate for his second wife, Lynne, with the remainder going into trust for B’s grandchildren. The 1991 will list three specific charities as contingent beneficiaries in the event all of B’s descendants predeceased him. B’s 1993 will was similar to his 1991 will; however, a subsequent codicil changed the remainder beneficiaries from B’s grandchildren to his children. B’s 1995 will left $1 million net of tax in trust to each grandchild with the remainder going to five specific charities.
B’s 1997 will left his estate to a 1997 Management Trust. In the 1997 Management Trust, $1,000,000 net of tax was left in trust for each grandchild. The remainder of the estate was to be held in trust for Laura for her life. Laura had a power of appointment and could leave up to one-half of the remaining estate to any or all of B’s descendants, and the other one-half of the remaining estate (or the entire remainder if Laura did not exercise the power of appointment) was to be distributed to the same five specific charities listed in the 1995 will.
In 1989, B created Johnson Properties. B was the general partner of Johnson Properties, and the trusts of B’s children were limited partners. Johnson Properties owned a limited partnership interest in SA–2000, which owned the Hyatt Hotel on the San Antonio River Walk. Upon the dissolution of Johnson Properties in 1998, B and the trusts individually owned the partnership interests in SA–2000. B formed a new family limited partnership, BKJ Interests, to which he transferred his King Ranch royalties and the interest in SA–2000 which he formerly owned through Johnson Properties. The record is replete with evidence that the effect of the dissolution of Johnson Properties on B’s estate plan was intentionally kept secret from Ceci and Sarah until B’s death.
Around the same time as the Johnson Properties dissolution, B created the 1998 Family Trust, which eventually obtained a portion of B’s interest in BKJ Interests. B’s 1998 will left his estate to a 1998 Management Trust. In the 1998 Management Trust, an aggregate of $7 million was left in trust for B’s grandchildren; however, that amount was offset by the fair market value of the assets held in the 1998 Family Trust. The remainder of the estate was held in trust for Laura for her life. Laura then had a power of appointment similar to the power contained in the 1997 will, except the remaining one-half (or the entire remainder if Laura did not exercise the power of appointment) was distributed to the Belton Kleberg Johnson Foundation. Although the trust lists some organizations which B desired to be the primary focus of distributions from the foundation, the trustee of the foundation ultimately controlled the distributions.
B’s 1999 will left his estate to the 1998 Management Trust as amended and restated in 1999. The 1998 Management Trust as restated no longer mentioned a distribution in trust for the grandchildren. The entire estate is instead held in trust for Laura for her life, and the provisions upon her death regarding the remainder were unchanged from the 1998 Management Trust.
C. The Attorneys and the Claims
The Lawter Firm represented the following plaintiffs during the course of the underlying controversy: (1) B’s daughter Sarah, individually and as a beneficiary of her 1962, 1970, 1976, and 1990 trusts; (2) B’s daughter Ceci, individually and as a beneficiary under her 1962, 1970, 1976, and 1996 trusts; (3) B’s daughter-in-law Hager, individually, as successor-in-interest to Kley, as executrix of Kley’s estate, as co-trustee of Kley’s 1970 trust, and as beneficiary of the trusts created under Kley’s will; (4) B’s granddaughter Alice, individually and as next friend for her brother Henry; (5) Houston Trust Co., as trustee of the 1962 trusts of Sarah and Ceci and their descendants, as co-trustee of the 1970 trusts for Sarah and Ceci and their descendants, and as trustee of the 1990 and 1996 management trusts; and (6) Carper Capt, as co-trustee of the 1970 trust for Hager and Kley’s descendants. The Hartnett Firm represented all of B’s grandchildren with the exception of Alice and Henry.
Each of the individual plaintiffs and all of the trustee plaintiffs sued B for breach of his fiduciary duties in relation to the children’s trusts and the dissolution of Johnson Properties. Each of the individual plaintiffs also sued B’s widow Laura for tortiously interfering with their inheritance rights and contested the validity of the will and codicil admitted to probate. They further sought to probate several alternative wills and codicils. B’s grandchildren also sued J.P. Morgan for breaching its fiduciary duties arising from the 1998 Family Trust. Finally, Sarah and Ceci contested the management trusts. All of the plaintiffs will collectively be referred to herein as “Appellees.”
UNDUE INFLUENCE—SUFFICIENCY OF THE EVIDENCE
A. Law on Undue Influence
“[U]ndue influence implies the existence of a testamentary capacity subjected to and controlled by a dominant influence or power.” Rothermel v. Duncan, 369 S.W.2d 917, 922 (Texas 1963). Rothermel [is] the seminal Texas will contest case” in which the Texas Supreme Court established a three-part test to determine whether undue influence exists. Estate of Davis v. Cook, 9 S.W. 3d. 288, 292 (Tex. App.-San Antonio 1999, no pet). To prevail on an undue influence claim, the contestant must prove: (1) the existence and exertion of an influence; (2) the effective operation of such influence so as to subvert or overpower the mind of the testator at the time of the execution of the testament; and (3) the execution of a testament which the maker thereof would not have executed but for such influence. Rothermel, 369 S.W. 2d at 922; Estate of Davis, 9 S.W. 3d at 292-93. The burden of proving undue influence is upon the party contesting its execution. Rothermel, 369 S.W.2d at 922; Estate of Davis, 9 S.W. 3d.at 293. It is, therefore, necessary for the contestant to introduce some tangible and satisfactory proof of the existence of each of the three elements. Rothermel, 369 S.W.2d at 922; Estate of Davis, 9 S.W. 3d at 293.
Not every influence exerted by a person on the will of another is undue. Rothermel, 369 S.W.2d at 922; Estate of Davis, 9 S.W. 3d.at 293. Influence is not undue unless the free agency of the testator was destroyed and a testament produced that expresses the will of the one exerting the influence. Rothermel, 369 S.W.2d at 922; Estate of Davis, 9 S.W. 3d.at 293. One may request or even entreat another to execute a favorable dispositive instrument, but unless the entreaties are shown to be so excessive as to subvert the will of the maker, they will not taint the validity of the instrument with undue influence. Rothermel, 369 S.W.2d at 922. “Influence that was or became undue may take the nature of, but is not limited to, force, intimidation, duress, excessive importunity[,] or deception used in an effort to overcome or subvert the will of the maker of the testament and induce the execution thereof contrary to his will.” Id.
The exertion of undue influence is usually a subtle thing, and by its very nature usually involves an extended course of dealings and circumstances. Id. Undue influence may be shown by direct or circumstantial evidence, but will usually be established by the latter. Id.; Estate of Davis, 9 S.W. 3d.at 293 “[A]ll of the circumstances shown or established by the evidence should be considered; and even though none of the circumstances standing alone would be sufficient to show the elements of undue influence, if when considered together they produce a reasonable belief that an influence was exerted that subverted or overpowered the mind of the testator and resulted in the execution of the testament in controversy, the evidence is sufficient to sustain such conclusion.” Rothermel, 369 S.W.2d at 922. Circumstances relied on as establishing the elements of undue influence must be of a reasonably satisfactory and convincing character, and they must not be equally consistent with the absence of the exercise of such influence. Id.; Estate of Davis, 9 S.W. 3d.at 293. “This is so because a solemn testament executed under the formalities required by law by one mentally capable of executing it should not be set aside upon a bare suspicion of wrongdoing.” Rothermel, 369 S.W.2d at 922-23.
B. Evidence on Elements of Undue Influence
Although the parties cite cases in support of their respective positions, no two cases involving undue influence are alike, and each case must stand or fall depending upon the sufficiency of the facts proven. Id at 921. Attempting to analyze each item of evidence relied upon by the parties would unnecessarily lengthen an opinion. Id. That is especially true in this case which took four months to try and resulted in a voluminous record. Although we do not attempt to summarize all of the evidence, we discuss at length some of the evidence supporting the jury’s finding as to each of the three elements necessary to prove undue influence.
1. Overpowering the Testator’s Mind
Where there is competent evidence of the existence and exercise of undue influence, the issue as to whether undue influence was effectually exercised necessarily turns the inquiry and directs it to the state of the testator’s mind at the time of the execution of the testament, since the question as to whether free agency is overcome by its very nature comprehends such an investigation. Id at 923. “The establishment of the subversion or overpowering of the will of the testator is generally based upon an inquiry as to the testator’s mental or physical incapacity to resist or the susceptibility of the testator’s mind to the type and extent of the influence exerted.” Id. “Words and acts of the testator may bear upon his mental state.” Id. “Likewise, weakness of mind and body, whether produced by infirmities of age or by disease or otherwise, may be considered as a material circumstance in establishing this element of undue influence.” Id.
Conflicting expert testimony was presented regarding B’s susceptibility to undue influence. The evidence established that B was an alcoholic, and psychological and medical tests showed that the alcohol had an adverse effect on his mental state. Although B received both in-patient and out-patient alcohol rehabilitation services several times before his marriage to Laura, the record contains no evidence that Laura made any effort to stop B’s drinking, which he admitted was on-going when he was hospitalized in 2000 and diagnosed with pancreatic cancer.
Dr. Christopher Ticknor, a psychiatrist called by the Appellees, met B while Dr. Ticknor was treating B’s son, Kley. Ticknor described the medical tests performed on B in 1990 during one of his rehabilitation efforts. The tests showed organic brain syndrome/memory dysfunction. Hospital records from 1997 showed a history of continued drinking, including a two-week binge just a few days before the hospitalization. The 2000 medical records also included evidence of an on-going history of drinking. Although the psychiatrist who saw B in 2000 did not recommend in-patient treatment, his notes reflect a concern about B’s drinking, recommending B stop drinking or seek treatment.
Richard Coons, another psychiatrist called by the Appellees, testified that B feared abandonment, having lost his mother while he was young. Dr. Coons opined that B feared abandonment by Laura. Dr. Coons further opined that B’s permanent cognitive defects, continued drinking, and personality features caused him to be vulnerable to undue influence.
Finally, William Dailey, a neuropsychologist called by the Appellees, testified that the 1990 tests showed B had significant memory deficit. Dailey opined that the testing was valid and that the decline in B’s cognitive function increased his vulnerability to undue influence.
Richard Fulbright, a clinical neuropsychologist called by the Appellants, did not provide an opinion on undue influence. Edgar Nace, a psychiatrist called to testify by the Appellants, testified that B was not unduly influenced. Nace’s testimony, however, did not differentiate between an expert medical opinion regarding undue influence and a jury’s finding of undue influence. An expert’s medical opinion is based on a person’s mental susceptibility to undue influence independent of the facts, while a jury’s finding of undue influence takes into consideration the actual facts of the case in determining whether a person was, in fact, unduly influenced. Moreover, at his deposition, Nace was asked hypothetically whether Laura could have unduly influenced B by putting a gun to his head. In his deposition, Nace responded that he was unsure; however, at trial, Nace testified the gun example would be an example of undue influence based on common sense. The jury could consider these conflicts in Nace’s testimony in weighing his credibility.
The jury was required to weigh the foregoing expert testimony and determine the credibility of the testimony based on the experts’ challenges to each others’ opinions and extensive cross-examination challenging each expert’s opinion. See City of Keller, 168 S.W. 3d at 819 (jurors may choose to believe one witness and not another and determine the weight to be given the evidence). Based on the expert testimony, the jury could have found that B was susceptible to undue influence, and given his on-going history of alcoholism, ample opportunity existed to unduly influence B while he was drinking.
2. Existence & Exertion of an Influence
“[T]he establishment of the existence of an influence that was undue is based upon an inquiry as to the nature and type of relationship existing between the testator, the contestants[,] and the party accused of exerting [the] influence.” Rothermel, 369 S.W.2d at 923. Similarly, establishment of the exertion of such influence is generally predicated upon an inquiry about the “opportunities existing for the exertion of the type of influence or deception possessed or employed, the circumstances surrounding the drafting and execution of the testament, the existence of a fraudulent motive, and whether there has been an habitual subjection of the testator to the control of another.” Id.
Although several business associates testified that B made his own decisions and could not be controlled, the vast majority of those business associates testified that B either never drank or was never intoxicated in their presence. As a result, these associates were unaware of how B would respond to influence exercised while he was drinking or intoxicated. The jury would have the right to consider whether in a period of intoxication B’s otherwise strong intellect yielded to unduly exerted importunities. See Craycroft v. Crawford, 285 S.W. 275, 278 (Tex. 1926).
Evidence was presented that B drank alcoholic beverages during his taped interviews with Martin Booth, who was writing a book about B’s life. In one interview excerpt in which the jury could infer B was intoxicated, the following exchange occurred:
MARTIN BOOTH: You were officially engaged in the eyes of the world. Everybody knew about it.
LAURA JOHNSON: A tiny—tiny, tiny diamond, as you can see.
MARTIN BOOTH: Yes, a minute diamond. And then you set a wedding date, presumably.
LAURA JOHNSON: Yes.
MARTIN BOOTH: Which was when?
LAURA JOHNSON: Which was the 8th of November, with 8 being the lucky Chinese number, 8th of November, nineteen ninety—what year, Darling?
B JOHNSON: What—when was it?
LAURA JOHNSON: When was it Darling?
B JOHNSON: I don’t—
LAURA JOHNSON: You have two strikes and you’re out.
B JOHNSON: It was three—three from ’97, wasn’t it?
LAURA JOHNSON: No. Two strikes and you’re out.
B JOHNSON: ’96
LAURA JOHNSON: Oh, good boy, you can stay in the game. You can come home with me.
At trial, this clip was played for Howard Nolan, the president of United Way of San Antonio at the time B was asked to serve as chair of the United Way campaign. Nolan stated that he was uncertain if B was drinking during the taping, but it did not sound like the B he knew. The jury was free to conclude from this taped excerpt that B was intoxicated.
Several of the employees who worked in B’s office, including Rita Sullivan and Madeleine Sandefur, testified regarding B’s on-going drinking, as did his daughters and sons-in-law. Ceci testified that B would disappear for weeks when he was on a binge and could wind up in a different county, state, or country. Testimony was introduced that any flight B chartered was stocked with vodka, and in a nine-month period in 1999, B spent almost $7,000 on liquor and wine. Evidence was also introduced about B’s mental abilities while intoxicated. For example, several witnesses testified that B would call late at night or early in the morning after he had been drinking and want to have long, rambling conversations. Rita Sullivan testified that B called her at 2:00 a.m. to ask her how to use the remote control to the television. Sullivan also called B’s attorney for advice when B called Sullivan while intoxicated to obtain a $200,000 nonrefundable check to purchase a house. Martin Booth testified that B called him one night while intoxicated to report an improvement in his health and then called again the following day and repeated his report. Ceci testified that following his drinking binges, B would be depressed and contrite. The book written by Booth stated that B’s drinking caused him problems, recounting that his fellow directors on AT & T’s board of directors became concerned about his drinking, and B missed a party in his honor after he became intoxicated while drinking on a train on his way to the party. One time B ordered an employee to purchase tickets to Santiago, Chile, but when the employee called B about going to the airport, B had no recollection of requesting the trip. In contrast to this evidence of B’s significant drinking and its effect on his conduct, Laura denied that B had a drinking problem or was ever intoxicated in her presence.
Ceci also testified that before B married Laura the family was traditionally informed of B’s estate planning. Ceci testified that B did not keep his estate plan a secret, and they approached the plan as a team. After B met Laura, however, the evidence established that a decision was made during the course of the estate planning meetings not to tell Ceci and Sarah about the dissolution of Johnson Properties or the formation of the 1998 Family Trust. Notes from estate planning meetings and telephone conferences contained numerous statements by the estate planning professionals reassuring and encouraging B not to disclose the estate plan to Ceci and Sarah.
Evidence was admitted that when Stacy Eastland was first considering the family limited partnership structure for the estate, the children were included in the partnership. However, in mid-July of 1997, the estate planning notes reflect that Ceci and Sarah were to be left out because they were “turning against” B. B was admitted to a hospital in Hong Kong on July 23, 1997. The hospital records reflect that B had been on a two-week drinking binge only days before his admission into the hospital. Around this same time, Eastland testified that B’s comments during a telephone conference were not ordinary, and he could have been intoxicated, so they decided to re-do the phone call. Peter Milton from J.P. Morgan previously had told Eastland to call B in the morning because of his excessive drinking.
Appellees contend the evidence also established a habitual subjection of B to Laura’s control. Although B had a prenuptial agreement with his second wife, Lynne, Laura refused to consider a prenuptial agreement, and B expressed concern that his insistence on a premarital agreement would seriously interfere with their relationship. B discussed his estate plan with Laura prior to their marriage, and Laura attended numerous estate planning meetings. Although Laura testified that she did not pay attention and was not engaged during the meetings, other estate planning professionals at the meetings testified that Laura was attentive and made comments.
Laura also tried to suggest to the jury that she was not a businesswoman as a reason for her lack of involvement, but several witnesses who were B’s business associates testified that she was a smart businesswoman. Laura owned or co-owned several businesses in Hong Kong before she met B, and she helped run those businesses. One of those businesses was a pub called Mad Dogs. B invested with Laura to open a Mad Dogs at the Hyatt in San Antonio, and B loaned the business $1.4 million. After B died, a settlement was reached in which B’s estate was paid only approximately $.50 for each dollar loaned and B’s estate relinquished the ownership interest B had in the business. While negotiating the settlement, Milton sent an email noting the loan was unsecured. In the email, Milton stated, “Believe me B Johnson screwed this up to a fair-thee-well as we used to say up east.” In another email, Milton commented, “I am a little annoyed that I didn’t know how well financed Mad Dogs was. On the other hand I think that we have done more than B Johnson would have done to protect his assets; he was not good about separating his love from his assets. That is a direct quote from him.” Although Laura denied negotiating the compromise with regard to Mad Dogs, another email from Milton to Copley discussing the negotiation of the compromise refers to a meeting with Laura and another person. In the email, Milton stated, “B should never have given this kind of money to Mad Dogs of San Antonio. I think it was love not sense.”
Prior to B and Laura’s marriage, one note by Copley stated that Laura wanted to know what the children were getting under the estate plan. One letter summarizing certain estate planning documents had writing in the brown felt tip pen B traditionally used, but also had writing in a red pen. The jury could infer from the evidence and testimony that Laura had reviewed the document and made comments.
On a few occasions, B requested that Copley investigate whether the King Ranch royalties and a house in Cabo San Lucas could be left to his children, but subsequently called and stated that he changed his mind. The jury could infer that B changed his mind after discussions with Laura. With regard to the house in Cabo San Lucas, Laura testified that B immediately rejected Sarah’s request that the house be left to the daughters/grandchildren for tax reasons; however, the evidence established that B asked Copley to research the issue and had not made an immediate decision. With regard to the King Ranch royalties, evidence was presented that B stated in a conversation with his children in 1999 that the King Ranch royalties were to be kept in the family, and that Laura, who overheard the discussion, stated she would never take a family heirloom. By 1999, however, the King Ranch royalties had been transferred to BKJ Interests, and under the estate plan, the King Ranch royalties would not remain in the family but would eventually be controlled by the foundation. Evidence was presented that in 2000 B again broached Copley with the idea of leaving the King Ranch royalties to the children. Copley sent an email regarding his conversation with B about this request in which Copley stated leaving the King Ranch royalties to the children “would require an audit of his estate, whereas, at the present time, it is a non-audit.” At trial, however, Copley stated that a “slight chance” existed that leaving the King Ranch royalties to the children would enhance “the possibility of an audit.” Moreover, in his letter to B regarding the manner in which such a transaction could be structured, Copley spent considerable time discussing the tremendous tax consequences of the transaction and concluded, “the tax cost is heavy.” When Eastland was asked, however, whether there would have been “tax efficient ways” to transfer the King Ranch royalties to the children, he responded that there were, and he would never have told B not to leave the King Ranch royalties to the children. Moreover, evidence was presented from which the jury could find that Copley represented Laura on several legal matters and could have a conflict of interest in providing advice that would result in assets being left to the children, thereby diminishing the assets in the life estate left to Laura.
Laura also retained the family scrapbooks and photo albums, claiming that B did not want Ceci and Sarah to have them until after Patsy died; however, the evidence established that Laura did not return the family scrapbooks and photo albums even after Patsy died, but kept possession of them for the duration of the trial. Evidence also was presented that Laura refused to give B’s granddaughter, Alice, a silver spoon set that B wanted her to have. Although Laura testified that the attorneys had told her not to give away any of the estate assets because of the pending litigation, evidence established that she gave items belonging to the estate to other non-family members.
Prior to meeting Laura, B was an avid hunter and often hunted with his children and grandchildren. As the book on B’s life stated, “B lived to hunt.” After meeting Laura, B rarely hunted. In one of his notes to his employee Madeleine Sandefur, B stated that dove hunting continued to be a problem for Laura. B was scheduled to hunt on property belonging to his ranch manager, Claude Johnson; however, the hunt did not occur after Claude expressed his concerns about offending Laura. Although B issued a press release and was quoted in a newspaper saying that he purchased Black Creek Ranch intending to continue its commercial hunting operations, to continue the tradition of South Texas hunting, and to hunt with his grandchildren, no hunting was permitted on Black Creek after the first year’s commercial commitments were fulfilled. Although Laura testified that B and she agreed before Black Creek was purchased to end the hunting, Laura’s testimony was inconsistent with the newspaper accounts of B’s remarks. Moreover, a passage in the book about B’s life also states Laura put an end to the hunting.
B had expressed to Ceci that he was glad Laura was older and would not want children. The record contains evidence that B underwent sperm testing in 1995 prior to his marriage to Laura. Laura subsequently underwent in vitro fertilization. The evidence was conflicting as to whether at some point Laura became pregnant. Laura testified that home pregnancy tests taken in November of 1998 showed that she was pregnant. Although Laura subsequently went to a hospital to be checked, the testing did not show anything in her uterus, but a hormone that becomes elevated during pregnancy was in fact elevated. There was some suggestion, however, that the elevated level could have been caused by the in vitro procedure. When B called Ceci and Sarah to tell them they lost a baby, Ceci and Sarah were shocked and reacted negatively. Ceci sent a letter apologizing, which Ceci testified would normally reopen communications. The evidence contained a letter that B had drafted accepting the apology; however, the letter that was actually sent did not accept the apology. Only after a letter was written specifically apologizing to Laura was communication reopened. Sarah testified that when she met B in his office after this incident, B told her that he did not want to have a child, but Laura insisted.
One expert testified that relationship poisoning can be a tool to unduly influence a person, including making negative remarks about a person’s children and re-interpreting historical events in a negative manner. Although several people were interviewed for the book about B’s life, Ceci, Sarah, and Hager were not interviewed. Instead, Laura was extensively interviewed about events that occurred before she met B. The book contained a suggestion that Kley had committed suicide based on Booth’s interview of Laura; however, Laura had no proof that Kley committed suicide, and other evidence established that he was killed in a car accident, likely driving while intoxicated. In the early 1990’s, before B met Laura, B was having financial trouble; B and Laura’s interviews for the book conflict as to whether Ceci and Sarah knew of the extent of the financial trouble. Laura said they did; B said they did not. B sold the Chaparrosa ranch to alleviate the financial trouble. The children’s’ trusts, which also owned an interest in the ranch, sued B because the sales agreement had money going to J.P. Morgan before the trusts, and the trustees did not believe the trusts were receiving the amount they were entitled to receive from the sale. Laura stated in an interview that Ceci and Sarah filed the lawsuit to bury B financially; however, B had stated Ceci and Sarah did not know the extent of his financial trouble. The jury could consider Laura’s reinterpretation of these historical events in a negative manner as evidence of relationship poisoning.
The jury also heard evidence that Laura made negative remarks about Ceci and Sarah. Laura’s friend, Reverend Zbinden, was interviewed by Booth and stated Laura had told him that Ceci and Sarah were greedy and ungrateful. During his deposition, Reverend Zbinden testified it was not unusual for Laura to speak negatively of Ceci and Sarah. Laura told Copley in a telephone conversation that Sarah was vile, not smart, and had the attention span of a gnat. Based on the evidence presented, the jury could infer that Laura also spoke negatively of Ceci and Sarah to B.
Having reviewed the record, we conclude the evidence is legally and factually sufficient to support a finding that undue influence existed and was exerted.
3. No Execution “But For” the Influence
“Finally, the establishment of the fact that the testament executed would not have been executed but for such influence is generally predicated upon a consideration of whether the testament executed is unnatural in its terms of disposition of property.” Rothermel, 369 S.W. 2d at 923. During oral argument, the Appellants placed great emphasis on one sentence in this court’s decision in Estate of Davis v. Cook, 9 S.W.3d 288 (Tex. App.-San Anonio 1999, no. pet). In that case, when describing a jury’s consideration of unnatural disposition, we stated, “In this respect, only where all reasonable explanation for the devise is lacking may the trier of facts consider the disposition as evidence of disorder or lapsed mentality.” Id. at 294. (emphasis added). Based on the italicized portion of this statement, the Appellants argued that the standard of review for no-evidence claims in undue influence cases is different than in other types of cases. In short, Appellants contend the evidence could not support a finding of undue influence because evidence was presented establishing a reasonable explanation for B’s disposition of his estate. We cannot accept Appellants’ interpretation of the quoted portion of the Davis opinion because it ignores the standard of review established by the Supreme Court in City of Keller v. Wilson, 168 S.W. 3d 802, 827-30 (Tex. 2005), and establishes a totally different standard of review in undue influence cases. Tracing the source for the statement made in Davis reveals the fallacy of Appellants’ position. The source for the statement in question is Craycroft v. Crawford, 285 S.W. 275, 278-79 (Tex. 1926), in which the court stated, “If all explanation be lacking, the trier of fact may take the circumstance as a badge of disordered or lapsed mentality or of its subjugation; if some explanation be advanced, the jury may pass upon its adequacy and attribute to the circumstance and its explanation such weight as may be thought proper, having in view all other relevant evidence.” Accordingly, evidence of a reasonable explanation for an unnatural disposition does not prevent a jury from finding undue influence. Instead, where such evidence is preferred, the jury must determine which explanation should be given more weight and which explanation is more credible. In this case, the jury disbelieved the explanation proffered by the Appellants in finding undue influence.
Considering whether the disposition was unnatural, we must consider evidence of B’s stated desires and actions. The evidence established that B made several comments about the interest in the Hyatt being passed to the children/grandchildren. Similarly, evidence established that B was very proud of his heritage and wanted his descendants to inherit the King Ranch royalties. The majority interest in both of those assets, however, was not inherited by the grandchildren. Instead, Laura initially would benefit from the income from those assets during her life, and the interest would then pass to the foundation. Although the Appellants contend Laura did not receive any greater interest in B’s estate than B’s prior wives, the inclusion of the majority interest in these two assets in Laura’s life estate greatly increased its value and was contrary to evidence that B wanted his descendants to inherit those assets. All of the estate planning documents that the jury found were the result of undue influence were executed after the dissolution of Johnson Properties and in connection with the creation of BKJ Interests.
Perhaps more importantly, the 1997 Management Trust expressly lists five charities as the remainder beneficiary after Laura’s life estate consistent with the charities B had listed in his prior documents, which included: (1) United Way of San Antonio & Bexar County; (2) Cornell University; (3) National Cowboy Hall of Fame; (4) Trinity University; and (5) Trustees of Deerfield Academy. The evidence established that B had strong ties with these five charities. The documents found to be the product of undue influence eliminate a mandatory distribution to these favored charities. Instead, the remainder beneficiary after Laura’s life estate became a perpetual foundation. Although the trust document listed charities that B wanted to be the primary focus of distributions from the foundation, the trustee of the foundation had complete control over the selection of the charities that would benefit from foundation distributions. In addition, the list excluded the National Cowboy Hall of Fame with which B had strong ties, but included a foundation with which B had no ties and which Eastland admitted was mistakenly included. Finally, the list included “[a]ny other organization benefiting conservation, environmental causes, protection of animals, [and] protection of nature or the environment,” which described causes supported by Laura, not B. Similarly, the remainder beneficiary of the grandchildren’s trust under the 1997 trust document are the five charities B selected, as opposed to the foundation which was the remainder beneficiary in the 1998 trust documents.
The evidence presented was legally and factually sufficient to support a finding that the wills and trusts rejected by the jury would not have been executed but for the undue influence.
After full consideration of the Appellants’ claims, we conclude the record supports the jury’s finding that Belton Kleberg Johnson executed certain wills and trusts as a result of undue influence. Accordingly, we affirm the judgment of the trial court.
Wright v. Roberts, 797 So.2d 992
COBB, Justice, for the Court:
¶1. In December of 1995, attorney Armon Lee prepared wills, a deed, and powers of attorney for Emma Jane Wright and her husband, Homan Wright. Homan signed his will and power of attorney on December 28, 1995, at Lee’s law office. Emma Jane signed the deed, her will, and her power of attorney on January 2, 1996, while on her eventual death bed.
¶2. The deed conveyed, to the exclusion of her husband Homan, Emma Jane’s two-thirds interest in 200 acres of timber in fee simple to Mamie Roberts, a cousin by marriage, and reserved a life estate in a house and one acre of land surrounding the house for Emma Jane and Homan. Emma Jane’s will conveyed all of her remaining property to Roberts, in trust for the care of Homan, then to Roberts and to Roberts’s children upon Homan’s death. Homan’s will had parallel provisions. The attorney was not present when Emma Jane signed the instruments. One of the attesting witnesses to Emma Jane’s will was the attorney’s secretary. The other attesting witness noted on her affidavit that neither the secretary nor Emma Jane identified the document she signed as a will, rather it was referred to as “papers to take care of Homan Wright”. She also marked through on the affidavit the part which said “Emma Jane was of sound and disposing mind.”
¶3. The powers of attorney gave Roberts complete power to run the Wrights’ affairs. Attorney Lee had been Roberts’s attorney over the years, having done extensive land transaction work for Roberts and her son. Attorney Lee predeceased Emma Jane.
¶4. Emma Jane died on January 22, 1996, and a week later, Homan filed suit to set aside the deed and to contest the will which Emma Jane executed. On May 27, 1997, Roberts presented the will for probate and the cases were later consolidated The matter was continued twice because Roberts was hospitalized, and it eventually was heard in August of 1998.
¶5. The Chancellor issued his opinion on December 30, 1998, finding the following:
1. A confidential relationship did not exist between Roberts and the Wrights.
2. Even if a confidential relationship existed, Roberts’s action of taking all of Emma Jane’s real property did not over-reach or abuse her authority as the dominant party to the relationship.
3. Although Emma Jane stated specific items which were inconsistent with the instruments which were executed, she knew the objects of her bounty and the quantity of her estate and had testamentary capacity.
4. Although Dr. Coghlan examined Emma Jane shortly before the execution of the documents and stated her condition at that time as “senile” and suffering from other ailments, such did not meet the legal criteria of lack of capacity.
5. There were no suspicious circumstances surrounding the execution of the documents.
Aggrieved, Homan Wright brings this appeal raising the following six issues:
I. The Chancery Court manifestly erred in not finding specifically that a fiduciary or confidential relationship existed between Emma Jane and Homan Wright and Mamie Roberts and that powers of attorney signed by them interposed no confidential relationship because they were set up only to protect the attorney in fact, Mamie Roberts.
II. The Chancery Court manifestly erred in failing to apply the correct standard, in that the existence of a confidential relationship required independent counseling for both Homan Wright and Emma Jane Wright.
III. The Chancery Court manifestly erred in finding that Mamie Roberts did not overreach or abuse her authority and that the only things done were for Emma Jane’s benefit.
IV. The Chancery Court manifestly erred in finding that no “suspicious’ facts exist surrounding the execution of the documents.
V. The Chancery Court manifestly erred in finding that the only evidence of lack of capacity was the testimony of Dr. Coughlan and that did not rise to the requisite level of proof.
VI. The Chancery Court manifestly erred in finding that Emma Jane knew the quantity of her estate.
¶6. Because we determine that the chancellor abused his discretion and committed manifest error, we reverse and render in part and remand in part.
¶7. Emma Jane and Homan Wright lived in an old frame house which she had inherited from her father. They did not have the amenities of an air-conditioner, hot water, telephone or bathroom (only an outhouse). They had married late in life and had no children. Emma Jane managed their finances. At her death, they had been married for twenty-four years. Homan is a retired saw mill and chicken farm worker. He had only attended a few days of school in the first grade, and his literacy was limited to signing his name.
¶8. Mamie Roberts was married to one of Emma Jane’s cousins and had known Emma Jane for fifty-eight years. When Emma Jane’s health declined, Roberts provided her with transportation to the doctor and helped her in other ways. On December 9, 1995, when Emma Jane’s medical condition worsened, Roberts took Emma Jane to the hospital where she was admitted. By that time Roberts had begun assisting Emma Jane in paying bills.
¶9. Armon Lee, the attorney who prepared the documents, had done extensive work for Roberts and her son. Roberts stated in her deposition that she had chosen Armon Lee to prepare the power of attorney because he was a good attorney. In court she refuted that she had selected the attorney, but stated that she had driven Homan to Armon Lee’s office on December 28, 1995 where he signed his power of attorney. Roberts’s son was present at the attorney’s office when Roberts and Homan arrived. Roberts’s son testified that his presence was just a coincidence. Homan was never consulted regarding his wishes. No one identified the instrument as a broad power of attorney, and Homan thought he was signing something which would allow Roberts to take care of his mail. Homan testified that he would not have signed otherwise. Roberts testified that she requested that the Wrights execute powers of attorney in her favor to facilitate her helping them with their affairs and to protect herself.
¶10. Roberts testified that her son was fairly sophisticated concerning real estate and that he had “owned a good bit, and his dad before him owned a good bit.” When asked if her son had ever met with Armon Lee to discuss how the documents were to be prepared, Roberts replied, “Not about that, I don’t think. But now he was with Mr. Lee. He’s, he’s a busy man, and Mr. Lee did his work.”
¶11. Roberts conceded that Lee was an attorney with whom Emma Jane had never had prior dealings. She asserts that Armon Lee first came into contact with Emma Jane when he brought a deed unconnected with the Wrights’ property to the hospital for Roberts to sign when she was visiting Emma Jane.
¶12. Roberts’s brief states “[i]t was Emma Jane who talked to Attorney Lee about the deed, and it was Emma Jane who was in contact with Attorney Lee by phone as to the other instruments.” Yet Roberts testified that within a few days of having the power of attorney drafted, she had the deed and will made in her favor. It is undisputed that the powers of attorney, the deed and wills were prepared at the same time.
¶13. Emma Jane, already very ill, had a particularly bad night of January 1, 1996. Around noon the next day, Roberts visited Emma Jane and Homan at the hospital. During that visit, Roberts called Lee’s secretary to ask if the documents were ready and to request that someone bring them to the hospital because Emma Jane was “ready to sign her papers.” Although Lee was at lunch, his secretary brought the documents immediately. Five or six relatives, including Roberts, were in Emma Jane’s hospital room when the secretary arrived. There was testimony of a general confusion in the room and that Roberts was telling jokes. There was conflicting testimony concerning whether the documents were actually read word for word. After approximately one and one half hours of coaxing Emma Jane signed the instruments. There was testimony that she was confused during the process, apparently thinking she was writing a check and that she had asked for, but was not given her glasses. After executing the documents, Emma Jane told the secretary of several bequests that she would like for her will to contain. These bequests included a gift of the one-half acre of land that she had just deeded to Roberts and Roberts’s son. None of the requested changes were made prior to her death three weeks later.
STANDARD OF REVIEW
¶14. A chancellor’s findings of fact will not be disturbed unless they are manifestly wrong or clearly erroneous, or unless the chancellor applied an erroneous legal standard. If the Chancellor’s findings are supported by substantial, credible evidence in the record, this Court will not reverse. In re Estate of Grantham, 609 So.2d 1220, 1223 (Miss. 1992).
¶15. Homan Wright’s six assignments of error in essence claim that the chancery court committed manifest error by not finding that Mamie Roberts and Emma Jane had a confidential relationship and that Roberts exerted undue influence over Emma Jane through this confidential relationship. Because of this alleged undue influence, Homan argues that both the will and deed in question must be voided.
¶16. The law in this state on fiduciary or confidential relationships and undue influence is well settled. Its application has been made to both inter vivos and testamentary transactions. Murray v. Laird, 446 So.2d 575, 578 (Miss. 1984). With both gifts testamentary and gifts inter vivos, once the presumption of undue influence has been established, the burden of proof shifts to the beneficiary/grantee to show by clear and convincing evidence that the gift was not the product of undue influence. In re Estate of Dabney, 740 So.2d 915, 921 (Miss. 1999).
I. Did a Confidential Relationship Exist Between Emma Jane and Roberts?
¶17. This Court has long held that a confidential relationship does not have to be a legal one, but the relation may be moral, domestic, or personal. The confidential relationship arises when a dominant, over-mastering influence controls over a dependent person or trust, justifiably reposed. Murray v. Laird, 446 So.2d at 578. Whenever there is a relation between two people in which one person is in a position to exercise a dominant influence upon the other because of the latter’s dependency upon the former, arising either from weakness of mind or body, or through trust, the law does not hesitate to characterize such relationship as fiduciary in character. Madden v. Rhodes, 626 So.2d 608, 617 (Miss. 1993).
¶18. This Court has enumerated several factors to consider in determining whether a confidential relationship exists: (1) whether one person has to be taken care of by others, (2) whether one person maintains a close relationship with another, (3) whether one person is provided transportation and has their medical care provided for by another, (4) whether one person maintains joint accounts with another, (5) whether one is physically or mentally weak, (6) whether one is of advanced age or poor health, and (7) whether there existed a power of attorney between the one and another. Dabney, 740 So.2d. at 919.
¶19. Emma Jane and Roberts’s relationship had become confidential in nature even before the powers of attorney were signed. Emma Jane had relied on Roberts’s son for advice regarding the sale of timber off her land. He had negotiated oil leases for her. He had also arranged for repairs and maintenance on the Wrights’ home. When Emma Jane became ill in 1995, Roberts began taking her to the doctor. Roberts admitted her to the hospital in December of 1995. By that time, Emma Jane had entrusted her purse to Roberts who assisted the Wrights in paying their bills. This arrangement continued throughout Emma Jane’s hospitalization.
¶20. Clearly, Emma Jane was of advanced age, in poor health, physically and mentally weak and was dependent on Roberts for transportation and medical care. They were related by marriage and had been friends for fifty-eight years. Considering the Dabney factors, Homan proved by clear and convincing evidence that Roberts had a confidential relationship with Emma Jane.
II. Did Roberts Abuse Her Confidential Relationship with Emma Jane?
¶21. Having ascertained that a confidential relationship existed between Roberts and Emma Jane, the next inquiry is whether Roberts abused that relationship. With regard to the deed, there is a presumption that it is a product of undue influence, which Roberts must rebut by clear and convincing evidence. With regard to the will, additional proof is required in order to raise the presumption of undue influence and shift the burden of proof to Roberts.
[A]lthough the mere existence of confidential relations between a testator and a beneficiary under his will does not raise a presumption that the beneficiary exercised undue influence over the testator, as it does with gifts inter vivos, such consequence follows where the beneficiary ‘has been actively concerned in some way with the preparation or execution of the will, or where the relationship is coupled with some suspicious circumstances, such as mental infirmity of the testator;’ or where the beneficiary in the confidential relation was active directly in preparing the will or procuring its execution, and obtained under it a substantial benefit.
Croft v. Alder, 237 Miss. 713, 723-24, 115 So.2d 683, 686 (1959).
When there is a fiduciary or confidential relation, and there is a gift or conveyance of dubious consideration from the subservient to the dominant party, it is presumed void. This is not because it is certain the transaction was unfair; to the contrary, it is because the Court cannot be certain it was fair. Estate of McRae, 522 So.2d 731, 737 (Miss. 1988). Given the finding that a confidential relationship does exist between beneficiary and the testatrix and that the beneficiary has been actively concerned in some way with the preparation or execution of the will, the law raises a presumption that the beneficiary exercised undue influence over the testatrix, and casts upon the beneficiary the burden of disproving undue influence by clear and convincing evidence. Dabney, 740 So.2d. at 920.
¶22. While Emma Jane was in the hospital, Roberts took Homan to the law office of Armon Lee. Neither Emma Jane nor Homan had any prior dealings with Armon Lee, nor had Homan ever met him prior to this time. Further, Homan did not ask to be taken to Lee. Roberts conceded that she selected Armon Lee to prepare the powers of attorney, the deed and the wills. Roberts’s son was meeting with Lee when Mamie Roberts and Homan arrived at Lee’s office. After Roberts’s son left, Homan was asked to sign “a paper” which he believed would only allow Roberts to take care of his mail. Instead, the instrument was a broad power of attorney for Roberts to conduct all of Homan’s affairs. Further, Lee’s secretary testified that she had first learned about someone wanting these documents prepared from Mamie Roberts.
¶23. There is substantial evidence in the record to demonstrate that the beneficiary of the will, Mamie Roberts, had been actively involved with both the preparation and execution of the will. Therefore, there is a presumption that Roberts exercised undue influence over Emma Jane, and the burden of proof shifts to Roberts to rebut.
[Once] the circumstances give rise to a presumption of undue influence, then the burden of going forward with the proof shifts to the grantee/beneficiary to prove by clear and convincing evidence of: (1) good faith on the part of the grantee/beneficiary; (2) grantor’s[/testator’s] full knowledge and deliberation of his actions and their consequences; and (3) [independent consent and action by the grantor/testator]. Murray, 446 So.2d at 578.
III. Did Roberts Rebut the Presumption of Undue Influence by Clear and Convincing Evidence?
A. Did Roberts prove she exercised good faith by clear and convincing evidence?
¶24. This Court has previously stated that the important factors for the appellate court to consider in determining whether the grantee/beneficiary used good faith are:
“(a) the determination of the identity of the initiating party in seeking preparation of the instrument, (b) the place of the execution of the instrument and in whose presence, (c) what consideration and fee were paid, if any, and (d) by whom paid, and (e) the secrecy or openness given the execution of an instrument.”Id.
¶25. Roberts and her son had both tried to buy Emma Jane’s land on several occasions. With Emma Jane’s permission, Roberts’s son had put a cabin built by their grandfathers on the land in the 1970’s. He stated that it was his desire that the property with which he had been familiar all his life, and on which he had hunted over the years, remain in his family. He testified that he offered to buy the land from Emma Jane, but that she “definitely” did not want to sell it. He later testified that he never “tried to buy Mrs. Wright’s part,” rather the remaining one-third interest owned by Emma Jane’s closest blood relatives in Birmingham, Alabama. Roberts herself testified: “I went out there, and it was hot, it was hot as it could be. And I said, ‘Emma, why don’t you sell me this land and let me help you get somebody to put you in a bathroom and things that you need and an air conditioner.’ ” Homan testified, regarding the land, that “[e]ver time, Mrs. Mamie Roberts tried to buy it.”
¶26. Roberts stated that she did not consider Homan capable of caring for himself and that she had arranged for him to be admitted to a personal care home while Emma Jane was in the hospital. Yet at the time of trial (three years later) Homan was still living independently … even gardening.
¶27. Emma Jane’s primary concern was that Homan was cared for after her death. Regarding her power of attorney over the Wrights’ affairs, Roberts testified that she had believed she “might have to sell some of the timber to take care of Homan, because he needed eye surgery.” Nevertheless, her attorney prepared documents giving her Emma Jane’s timber. In her brief she stated: “There was no need for either of them, especially Homan, to own any land beyond the reserved life interest.” Additionally, Lee was never paid for his services, nor was anyone ever billed.
¶28. Roberts’s only evidence of good faith was her testimony that she intended only to do what was in Homan’s best interest, since she had promised Emma Jane she would take care of Homan for the rest of his life. This testimony is insufficient to rebut the undisputed evidence to the contrary.
¶29. Roberts selected the attorney, arranged for the preparation of the documents in which she was a beneficiary, and attended their signing. Emma Jane was presented the documents while lying sick in her hospital bed. Any consideration given by Roberts was dubious, at best, consisting primarily of an illusory promise to take care of Homan in the future.
¶30. Roberts has failed to prove by clear and convincing evidence that she acted in good faith in her dealings with Emma Jane.
B. Did Roberts prove Emma Jane had full knowledge and deliberation of her actions and their consequences by clear and convincing evidence?
¶31. This Court has not hesitated to set aside instruments where there were suspicious circumstances regarding their execution. In one such case involving an elderly couple, no consideration was given for a deed, the grantors thought they were signing a will, the wife was physically exhausted by caring for her husband, both lacked mental capacity, and one thought they could still sell the property. Ladner v. Schindler, 457 So.2d 1339 (Miss. 1984). This Court has stated:
Factors important to address the grantor/testator’s knowledge, at the time of execution of any instrument are (a) his awareness of his total assets and their general value, (b) an understanding by him of the persons who would be the natural inheritors of his bounty under the laws of descent and distribution or under a prior will and how the proposed change would legally affect that prior will or natural distribution, (c) whether non-relative beneficiaries would be excluded or included and, (d) knowledge of who controls his finances and business and by what method, and if controlled by another, how dependent is the grantor/testator on him and how susceptible to his influence. Murray, 446 So.2d at 578.
¶32. Emma Jane’s physician, Dr. Coghlan, had seen her near the time she signed the documents. He testified: (1) Because she was in congestive heart failure she might not have been getting adequate oxygen to her brain, and it may have affected her mental ability some; (2) She would not take the oxygen which would affect her ability to remain conscious to a certain extent; (3) In noting that he would not rely on her ability to understand the effect of signing a deed conveying real property on that date, he stated, “… if I were dealing in some kind of business deal with her, I would not have thought she was competent to make the business arrangement … I had a problem with the decisions that she made in regard not to eat, not to take her medication, and not to do anything along that line that would have been contributing to her health.”
¶33. During that period of time, Dr. Coghlan noted that she was probably unable to concentrate due to the state of her health. It was his impression that Emma Jane was senile prior to and including the time during which she signed the documents.
¶34. In addition to Dr. Coghlan’s testimony, there was other evidence of Emma Jane’s lack of capacity. Testimony by Roberts and the lawyer’s secretary showed lack of capacity. Roberts conceded Emma Jane seemed confused and believed that she was writing a check for legal services. The lawyer’s secretary testified that after signing away her real property by deed, Emma Jane then attempted to convey by will land which she had just deeded away.
¶35. Roberts also admitted that Emma Jane asked for, but was not given, her glasses. Regarding the documents, Roberts stated, “She couldn’t read ‘em very well. She wanted her glasses…. They were in the drawer right there by her, in her bed, in the stand….” Emma Jane’s confusion at the time of signing clearly created doubt as to whether she knew the quantity of her estate.
¶36. Roberts has failed to present clear and convincing proof that Emma Jane exhibited full knowledge and deliberation of her actions.
C. Did Roberts prove Emma Jane had independent consent and action?
¶37. We have previously stated that “[t]he participation of the beneficiary/grantee, or someone closely related to the beneficiary, arouses suspicious circumstances that negate independent action. Harris v. Sellers, 446 So.2d 1012, 1015 (Miss. 1984).
¶38. This third prong of the Murray test for rebutting the presumption of undue influence, was formerly stated by this Court as, “Advice of (a) competent person, (b) disconnected from the grantee and (c) devoted wholly to the grantor/testator’s interest.” Murray, 446 So.2d at 578. However, three years later this Court revised the third prong, stating:
The independent advice prong of Murray has been read too strictly. Considering the heavy burden placed upon one seeking to overcome the presumption of undue influence, we find it necessary to redefine the third prong of the Murray test. This we do to the end that the power our law vest in property owners to make bona fide inter vivos gifts not be practically thwarted by often impossible evidentiary encumbrances. We declare that the appropriate third prong of the test is a requirement that the grantee/beneficiary prove by clear and convincing evidence that the grantor/testator exhibited independent consent and action. Mullins v. Ratcliff, 515 So.2d at 1193.
¶39. There is no proof that Emma Jane or Homan spoke with any other attorney independent of Armon Lee, the Roberts’s attorney, before or after signing the documents. When Roberts was asked if she were aware of whether Emma Jane or Homan had ever talked to any attorney other than Armon Lee regarding the documents, she stated that she was not. Roberts and her son used Armon Lee extensively as their attorney. Roberts testified that neither Emma Jane nor Homan had ever contacted Armon Lee to perform legal services.
¶40. Roberts in one instance stated that she procured the preparation of the documents, but in another she denied this. It appears that the documents were prepared before the Wrights were consulted, because Lee’s secretary, based upon personal knowledge, believed that Homan could not write his name and had typed spaces for his mark to be attested by witnesses. It was Roberts’s son who brought to the secretary’s attention the fact that Homan could sign his name. If the Wrights had, in fact, consulted the lawyer, he would have likely determined such information. Furthermore, the documents were prepared in early December, and some were not signed until the next month. Lee’s secretary testified that Emma Jane was hesitant in signing the will. Even Roberts stated: “I didn’t know whether she was [going to sign] or not. She wanted to think about it, and she wanted to think about selling the place….” Roberts told Emma Jane that if they kept the secretary too long, it would cost them money. In an attempt to convince Emma Jane to sign, Roberts told her that if she did not sign, her property would go to the state and the lawyers. Roberts’s brief unconvincingly states that this was not an effort to coax Emma Jane, rather, merely an “expression of frustration.”
¶41. It is clear from the record that Roberts failed to prove by clear and convincing evidence that Emma Jane exhibited independent consent and action.
¶42. Homan showed by clear and convincing evidence that a confidential relationship existed between Emma Jane and Roberts, thereby creating a presumption that the deed was the product of undue influence. Homan has further shown that Roberts abused that confidential relationship by being involved in the preparation and execution of Emma Jane’s will, under which Roberts was the main beneficiary, raising a presumption that the will was the product of undue influence. In order to rebut this presumption of undue influence, Roberts had to prove by clear and convincing evidence (1) good faith on her part, (2) full knowledge and deliberation of her actions and their consequences on the part of Emma Jane, and (3) independent consent and action by Emma Jane. Not only did Roberts fail to prove each and every element as required by Mississippi law, she failed to prove even one of the three elements.
¶43. The chancellor was manifestly in error in his decision. For the reasons set forth herein, this Court reverses and renders with regard to the validity of the will and deed executed by Emma Jane Wright, which are void. We remand this case to the chancery court for further action, consistent with this opinion, with regard to administration of the estate of Emma Jane Wright in the absence of the will.
¶44. Reversed and remanded; remanded in part.
Notes, Questions and Problems
1. In the Wright case, the court emphasized that a confidential relationship was created when Roberts started doing things like taking Emma Jane to the doctors. As a society, we want to encourage people to help the elderly and the disabled. Will people be discouraged from assisting persons in those populations if that assistance may lead to a fiduciary duty? When a person with a confidential relationship receives a bequest from the person they are helping, there is a presumption of undue influence. The purpose of that presumption is to protect vulnerable people from being taken advantage of by their caregivers. However, people often develop friendships with the persons who take care of them. This is especially true if they are neglected by their relatives. Is it fair to invalidate gifts to caregivers, and give the property to relatives who did not bother to assist the testator?
2. When deciding whether to invalid a testamentary distribution based upon undue influence, the court starts by focusing upon the testator’s state of mind and not on the actions of the person who received the contested bequest. A person may go to great lengths to influence the testator. However, if the testator’s will was not a result of the influence, the will is valid. Thus, the first thing to determine is whether the testator was susceptible to being influence. A person’s age, mental capacity, and health are usually factors the court considers when resolving this issue.
In which of the following situations is the court likely to conclude that the person was susceptible to undue influence?
a) An 85 year old man becomes severely depressed after his wife of 57 years dies.
b) A 45 year old attorney is addicted to alcohol and prescription drugs.
c) A 37 year old woman is suffering from brain cancer.
d) A 27 year old man is permanently disabled after he is injured in a motor cycle accident.
e) A 55 year old woman with low self-esteem who desires to please people, so she can have friends.
4. Another factor the courts consider to be relevant is the opportunity that the alleged influencer had to influence the testator. In determining whether or not someone had the opportunity to exert undue influence, the courts evaluate the relationship that existed between that person and the testator. The existence of a special or confidential relationship indicates that the person had the chance to exert undue influence.
In which of the following situations is the court likely to conclude that a confidential relationship existed?
a) Allie took her grandmother, the testator, to pay her bills once a month and to buy groceries once a week.
b) Shepherd mowed his seventy-eight year old neighbor, the testator’s yard for free.
c) Tyler was the pastor of the church that the testator attended.
d) William was the testator’s law school professor.
1.2.4. Fraud and Duress
Courts will invalid a provision of a testamentary trust that is obtained by fraud. The other terms of the trust will be enforced unless the fraud pervades the entire trust instrument or the provisions nullified by fraud are indivisible from the valid parts. In order to proof fraud sufficient to invalidate a trust, the contestant must show that a person made a misrepresentation with the intent to deceive the testator for the purpose of influencing the testamentary disposition. The two types of fraud are fraud in the inducement and fraud in the execution. Fraud in the inducement occurs when a person’s misrepresentation causes the testator to make a disposition he would not have made if he had not been deceived. The person making the misrepresentation must intend to deceive the testator. Fraud in the execution happens when a person deliberately causes the testator to sign a testamentary instrument that does not achieve the testator’s intent. See the following examples:
Example: Cory omits his son, Benjamin as a beneficiary of his testamentary trust because his daughter, Diane, tells him that Benjamin has taken a vow of poverty. At that time, Diane knows that her statement is untrue, but she wants to receive a larger portion of her father’s estate. This is fraud in the inducement because Diane’s misrepresentation caused Cory to remove Benjamin as a beneficiary of the trust. If Cory knew that Diane’s statement was false, he would have not omitted Benjamin. However, if Diane mistakenly thought that Benjamin had taken a vow of poverty, no fraud would be involved because she did not have an intent to deceive.
Example: Whitney was seventy years old, illiterate and the mother of four sons. Whitney had her son Juan bring her the document prepared for her as a testamentary trust for her four sons so that she could sign it. Without Whitney’s knowledge, Juan inserted a clause in the trust giving himself half of the proceeds of the trust. Whitney signed the trust document believing that it contained the provision she had discussed with her attorney. This is fraud in the execution because Juan’s deception caused Whitney to sign a document that did not carry out her intent.
Duress is the equivalent to aggressive undue influence. In order to insure that the testamentary follows his wishes, the culprit uses severe physical or emotional pressure. The test for duress is whether the wrongdoer threatened to perform or performed a wrongful act that coerced the testator into making a disposition that the testator would not otherwise have made. Testamentary trusts that are the product of duress of invalid. See the following examples:
Example: Eighty-five year old Elvira had three children. Elvira lived with her daughter, Barbara. Elvira’s late husband Joseph left her a substantial estate. Elvira created a testamentary trust for the benefit of her three children. Barbara thought that she deserved to receive a bigger portion of the trust than her siblings. Thus, Barbara told Elvira that if she did not amend the trust instrument and grant Barbara a 50% interest in the trust, Barbara would have her put in a nursing home. Elvira was terrified of going to a nursing home, so she complied with Barbara’s demands. The terms of the trust granting Barbara a 50% interest should be invalidated because they are the product of duress.
Class Discussion Tool I.
Nova wanted to establish a trust for the benefit of his children, Nicole and Jeremy. Jeremy convinced Nova that Nicole was abusing drugs. Nova confronted Nicole and insisted that she enter a rehabilitation program. Nova told her that if she did not obey his command, he would disinherit her. Nicole did not have a drug problem, so she refused to enter a rehabilitation program. Thus, Nova executed a will stating, “I leave my entire estate in trust for my son, Jeremy. I am disinheriting Nicole because she refuses to give up the drugs.” Based upon the facts, what legal arguments could Nicole make to get the trust invalidated?
Class Discussion Tool II.
Anna was diagnosed with breast cancer. Her doctor treated the cancer with radiation and chemotherapy. In order to combat the side effects of the treatment, Anna got a prescription for medical marijuana. Anna smoked three joints a day to alleviate her pain and nausea. Anna moved in with her only child, Jean, so she could take care of her. Jean believed in natural healing, so she put Anna on a regiment of organic food, herbal supplements and yoga. Maggie, Anna’s best friend, told Anna that Dr. Oz said that some herbal supplements increased the growth of cancer cells. In fact, Dr. Oz stated that some herbal supplements might decrease the growth of cancer cells. On the day she watched the show, Maggie was having trouble with her hearing aide. Anna refused to take the herbal supplements. Jean got tired of fighting with Maggie over the supplements, so she started slipping them into her food. One day, Anna saw Jean open up a capsule and sprinkle it over her pasta. After that, Anna became convinced that Jean was poisoning her. Anna shared her concerns with Maggie. Maggie told her pastor, Donald, that Anna was in danger. Maggie took Anna to the church to meet with Donald. After the meeting, Anna was so grateful that she gave the church a $500 donation. When he discovered that she had money, Donald convinced Anna to move into an apartment complex owned by his church. Donald and the other members of the church prevented Jean from visiting Anna. Eventually, Donald took Anna to the church’s attorney and had her create a testamentary trust leaving all of her money in trust for the benefit of the church. A few months later, Anna read in a magazine that Dr. Oz stated that some herbal supplements might decrease the growth of cancer cells. Consequently, Anna told Donald that she was wrong about Jean. Anna told him that she planned to return home to Jean and to modify her testamentary trust to leave her entire estate in trust for the benefit of Jean. In response, David placed guards, so that Anna could not leave the apartment. One night, Maggie helped Anna escape from the apartment and reunite with Jean. Anna died a few days later before she could amend her testamentary trust. Jean plans to challenge the validity of the trust. What are her strongest arguments?