Undue Influence to challenge a Will or Power of Attorney

Undue Influence to challenge a Will or Power of Attorney    

         Some clients wish to challenge the outright admission of the Will to Probate because they are unhappy with the outcome. Undue influence is the most common challenge. Another common challenge is Lack of capacity. In prior chapters we addressed how the attorney drafting documents can avoid being involved in this type of litigation.

      The seminal major case dealing with undue influence was Haynes v. First National State Bank of New Jersey, 87 N.J. 163 (1981). Here the NJ Supreme Court held that the burden of proof establishing undue influence shifts to the proponent when a Will benefits a person who stood in a confidential relationship to the decedent and there are suspicious circumstances, which need explanation. The suspicious circumstances need only be slight. Id. at 176. Moreover, when the evidence is almost entirely in the possession of one party and the evidence points to the proponent as asserting undue influence, a clear and convincing standard may be applied rather than the normal burden of proof of preponderance of the evidence. Id. at 183.

      Furthermore, the Haynes analysis was extended to situations in which there is a transfer of property where the beneficiary of the property and an attorney is on one side and the donor on the other. See Oachs v. Stanton, 280 N.J. Super. 478, 483 (App. Div. 1995).

      The court in Oachs determined that under circumstances such as these the donee bears the burden of proof to establish the validity of the gift, even in situations in which the donee did not dominate the decedent’s Will. Id. at 485. This rule was established to protect a donor from making a decision induced by a confidential relationship the donee possesses with the donor. Id.Again, the burden is a clear and convincing standard. Id.

      The NJ Supreme Court in Pascale v. Pascale, 113 N.J. 20, 31 (1998), stated that when a donor makes a gift to a donee that he/she is dependent upon, a presumption arises that the donor did not understand the consequences of his/her act. In these situations the donee must demonstrate that the donor had disinterested and competent counsel. Id. Likewise, undue influence is conclusive, when a mentally or physically weakened donor makes a gift without advice or a means of support, to a donee upon whom he/she depends. Id.

      A confidential relationship can be found to exist when one is certain that the parties dealt on unequal terms. In re Stroming’s Will, 12 N.J. Super. 217, 224 (1951). The appropriate inquiry is if a confidential relationship existed, did the parties deal on terms and conditions of equality?Blake v. Brennan, 1 N.J. Super. 446, 453 (1948).

      Suspicious circumstances are not required to create a presumption of undue influence with regard to inter vivos gifts and the presumption of undue influence is more easily raised in an inter vivos transfer. See Pascale, supra, 113 N.J. at 31; Bronson v. Bronson, 218 N.J. Super. 389, 394 (App. Div. 1987). 

      Generally, an adult is presumed to be competent to make an inter vivos gift. See Conners v. Murphy, 100 N.J. Eq. 280, 282 (E. & A. 1926); Pascale v. Pascale, 113 N.J. 20, 29 (1988). However, when a party alleges undue influence with regard to an inter vivos gift, the contesting party must prove undue influence existed or that a presumption of undue influence should arise. Pascale, supra, 113 N.J. at 30.

      A presumption of undue influence arises when a confidential relationship exists between the donor and donee or where the contestant proves the donee dominated the Will of the donor. Id.; see also Seylaz v. Bennett, 5 N.J. 168, 172 (1950); In re Dodge, 50 N.J. 192, 227 (1967); Mott v. Mott, 49 N.J. Eq. 192, 198 (Ch. 1891); Oachs v. Stanton, 280 N.J. Super. 478 (App. Div. 1995) (holding that where a confidential relationship existed and that the donor did not rely upon the donee, a shifting of the burden was still appropriate); In re Neuman’s Estate, 133 N.J. Eq. 532, 534-35 (E. & A. 1943) (stating in a Will context “Such burden does not shift merely because of the existence of a confidential relationship, without more, as in the matter of gifts inter vivos.”)

      The In re Dodge court explained why a presumption of undue influence arises in a confidential relationship and stated: “In the application of this rule it is not necessary that the donee occupy such a dominant position toward the donor as to create an inference that the donor was unable to assert his Will in opposition to that of the donee.” In Re Dodge, 50 N.J. 192 (1967). The court referenced a much earlier case in explaining the rule’s application:

      "Its purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by the donee, as it is to afford him protection against the consequences voluntary action on his part induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate." In re Dodge, supra, 50 N.J. at 228 citing Slack v. Rees, 66 N.J. Eq. 447, 449 (E. & A. 1904).

      In sum, once it is proven that a confidential relationship exists the burden shifts to the donee to show by clear and convincing evidence that no undue influence was used. Although the case law indicates suspicious circumstances need not be shown the donee must show all was fair, open and voluntary, no deception was practiced and that the transaction was well understood. Pascale, supra, 113 N.J. at 31; see also In re Dodge, supra, 50 N.J. at 227; Seylaz, supra, 5 N.J. at 173. Furthermore, confidential relationships arise in all types of relationships “whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.”  In re Fulper’s Estate, 99 N.J. Eq. 292, 314 (Prerog. Ct. 1926); see Pascale,supra, 113 N.J. at 34. It appears confidential relationships exist in all cases in which:

      "The relations between the [contracting] parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from over-mastering influence; or on the other from weakness, dependence or trust justifiably reposed, unfair advantage is rendered probable." Pascale, supra, 113 N.J. at 34, quoting In re Fulper, supra, 99 N.J. Eq. at 314; see also In re Dodge, supra, 50 N.J. at 228.

      In determining whether the Defendant was the dominant person in the relationship there is no clear-cut rule and instead the court must look to the particular circumstances of the matter. In re Fulper, supra, 99 N.J. Eq. at 315; Giacobbi v. Anselmi, 18 N.J. Super. 600, 616 (Ch. Div. 1952). In Fulper the court determined that a confidential relationship existed in a father-son relationship in which the father was advanced in age, weak and physically depended upon the son. Moreover, since the father sought the son’s assistance on business matters, lived with the son during the winter months and gave the son joint and several power over his checking account an actual repose of trust and confidence in the son was demonstrated. In re Fulper, supra, 99 N.J. Eq. at 318.

      In the Giacobbi case, supra, a confidential relationship was determined to exist between a mother and daughter, even though the mother did not suffer from mental or physical infirmity. There the mother was found to be alert, active, and somewhat independent. However, she turned to the daughter for small issues and problems when they occurred. Giacobbi, supra, 18 N.J. Super. at 617. 

      Therefore, the burden can shift to Defendant to prove by clear and convincing evidence the transaction was not unduly influenced. Furthermore, where a donor makes an “improvident” gift to the donee upon whom she depends that strips the donor of all or virtually all their assets, as here, a presumption arises that the donor did not understand the consequences of their act. Pascale, supra, 113 N.J. at 31, citing Vanderbach v. Vollinger, 1 N.J. 481, 489 (1949). Under those circumstances the donee must establish that the donor had the advice of competent and disinterested counsel. Id. citing Vanderback, supra, 1 N.J. at 488-89.

      Similarly, when a mentally or physically weakened donor makes a gift to a donee whom the donor is dependent upon, without advice, and the gift leaves the donee without adequate means of support, a conclusive presumption of undue influence arises. Id. citing Seylaz, supra, 5 N.J. at 173. However, when a donor is not dependent upon the donee “independent advice is not a prerequisite to the validity of an improvident gift even though the relationship between the parties is one of trust and confidence.” Id. citing Seylaz, supra, 5 N.J. at 173. 

       Although suspicious circumstances are not required to be established in an inter vivos transfer for a presumption of undue influence to exist, thereby shifting the burden of proof, Plaintiff has raised the issue. Pascale, supra, 113 N.J. at 30. 

      The testatrix's Will was properly rejected as the product of undue influence because the proponent and the testatrix had a confidential relationship and because there were "suspicious circumstances" surrounding the execution of the Will. In Re Probate of the Last Will and Testament of Catelli 361 NJ Super. 478 (App. Div. 2003).

 

         It is difficult to challenge a Will or other legal documents on the grounds of incompetency or lack of capacity.  Duress, undue influence and coercion are less difficult.