Bar News - March 22, 2017
Elder, Estate Planning & Probate Law: Undue Influence: An Analysis of NH Trust Docket Rulings
By: Michael Lewis
As baby boomers age and transfer their wealth to the next generation, the NH Circuit Court’s special trust docket, part of the court’s Probate Division, has emerged as a central forum for the resolution of disputes over end-of-life decision-making. Over the past two years, the Trust Docket has issued four rulings in complex probate cases involving end-of-life estate planning and questions about the exertion of undue influence over those with high-asset estates.
A careful analysis shows that those decisions articulate legal standards that stand in internal tension with each other and that conflict with case law in New Hampshire and other jurisdictions.
In two early decisions, Geraldine Webber Revocable Living Trust (Aug. 18, 2015) and In Re: Alice Stedman 1989 Trust (Oct. 27, 2015), the Trust Docket set aside end-of-life conveyances through affirmative findings of undue influence.
In two later decisions, Stomper v. Stomper (Feb. 2, 2016) and In re: Estate of Maurice L. Belair and the Maurice L. Belair and Yolande M. Blair Revocable Trust (Dec. 23, 2016), the Trust Docket denied claims of undue influence and affirmed the challenged conveyances.
All four decisions acknowledge that undue influence cases are difficult to resolve and involve credibility determinations in an emotionally fraught legal environment.
Webber, the most well-known of the cases, involved a successful challenge to estate planning documents that distributed substantial property to a Portsmouth police officer from an elderly woman with diagnosed dementia. Stedman involved a successful challenge to changes to a trust document by a strong-willed woman within a month of her death, advantaging one child over other family members during a time when some (though not all) the evidence suggested the donor’s physical and mental health was in steep decline.
Stomper involved an unsuccessful challenge to estate planning documents executed by parents who were “failing physically and mentally,” benefiting one child, who “helped” with late-life estate planning changes executed “under suspicious circumstances,” to the detriment of two other children. Belair involved an unsuccessful challenge of the estate planning decisions of a “stubborn man,” who executed estate planning changes near the end of his life, while his physical health was in decline – changes that benefitted his care-giving child over his other children.
The New Hampshire Supreme Court has not weighed in through a published decision. On Nov. 10, 2016, the Court affirmed Stedman in an unpublished decision, which did not resolve the outstanding legal issues presented in the four cases, and was not acknowledged as precedent by the Trust Docket in Belair, the most recent case.
Defining the Undue Influence Test
The Trust Docket applied the following legal test across all four of the cases:
- There is a presumption of the absence of undue influence;
- A challenging party must come forward with “substantial evidence” of undue influence;
- A challenging party need only show that a distribution has been made to a person acting in a “fiduciary capacity” or while in a “confidential relationship” with the donor, to overcome the effects of the presumption, notwithstanding the requirement of “substantial evidence,”
- The burden of proof shifts to the donee to prove the absence of undue influence by a preponderance of the evidence in such circumstances.
The test contains a series of legal standards drawn from decisions spanning many jurisdictions over at least a century of jurisprudence. To understand how the Trust Docket decisions can be viewed as being in conflict with one another, consider the following:
The Trust Docket stated that a “confidential relationship” is one in which “influence has been acquired and abused” or “reposed and betrayed.” It also described a “confidential relationship,” as encompassing almost every close family relationship or friendship. Perhaps even more fundamentally, the Trust Docket construed “undue influence” narrowly, as the taking away of another’s “free will” or “destroying free agency,” as opposed to “mere persuasion.” The Trust Docket further described “undue influence,” however, as involving “more subtle conduct designed to create irresistible ascendency by imperceptible means” working in “veiled and secret ways.”
As a practical matter, in the absence of a more limiting definition of “confidential relationship,” the Trust Docket’s current test shifts the burden of proof in almost every case, because the majority of cases involve a transfer to some person who had a close relationship with the deceased. Due to an absence of specific case law on this issue, the undue influence test arose from the first New Hampshire cases in this area, as decided through the Trust Docket, all of which shifted the burden to the donee.
Three of the four decisions did not have the advantage of the NH Supreme Court’s published opinion in Cohen v. Raymond (March 2016). The decision recognizes strong policy reasons favoring gift transfers to close family members, including wives and children, to reduce the requirement that such gifts be accompanied by the kind of legal formalities rarely associated with gifts between family members.
More limited definitions of what constitutes a “confidential relationship” are available. A principal case the Trust Docket relies on, Neill v. Brackett (Mass. Supreme Judicial Court, 1920), noted that the influence of a wife does not give rise to the kinds of suspicious circumstances requiring “careful scrutiny” under Massachusetts law. Massachusetts courts since have struggled to determine whether a “confidential relationship” exists if the beneficiary had no role in the drafting of the probate instrument in question, with at least one appellate court, in Rempelakis v. Russell (2006), noting that fiduciaries are often the natural object of a testator’s affections.
Moreover, in a 2001 decision, Sylvester v. Benjamin, the Supreme Judicial Court of Maine refused to shift the burden on intra-family transfers, ruling that “a finding of great disparity of position and influence remains a necessary prerequisite to a determination that a confidential relationship exists, even where the parties are related.”
The New Hampshire Supreme Court’s unpublished decision in Stedman suggests a willingness to adopt this approach, finding that “when the donor is dependent upon the donee for transportation, banking, and payment of bills, a confidential relationship exists.” Future litigants may press these more limited definitions in Trust Docket cases involving intra-family transfers.
Medical Testimony from Treating Doctors. The four cases before the Trust Docket relied heavily on the testimony and records of treating physicians. In at least one case, Stomper, the Court took issue with the presentation of expert testimony from “hired” guns. Litigants must therefore be prepared to engage medical providers, as opposed to medical experts, in these types of cases.
Close Relationships. All four cases turned on contradictory assessments of the “closeness” of the relationships between the parties at the time of the challenged estate decisions. Webber found undue influence where a police officer interposed himself in the life of an aging woman on a regular basis, becoming a “central figure” in her life. Stedman found undue influence where an aging woman became dependent on her daughter for the management of her finances and medical care. Belair, an unsuccessful challenge, involved a daughter who attended to her father’s medical and legal needs and benefited from his late-life legal decisions. The cases are hard to distinguish from each other based solely on the closeness of the relationships.
Distance clearly helps the defense in these cases. Stomper affirmed an estate plan benefitting a son who lived thousands of miles away but returned to New Hampshire to play a “suspicious role” in orchestrating changes to his parents’ estate plans. The extent to which a child who lives thousands of miles away benefits in this fashion raises obvious policy questions regarding the incentives or disincentives our laws create with regard to the obligation one has when caring for aging parents.
Relatives in the Dark. In each case, the Trust Docket considered the extent to which other family members (and confidantes) remained aware of developments with the donor. Webber described a donor who alienated herself from former close relations. Stedman remarked that the donee did not make siblings aware that the donor’s health was failing, an observation made by the Trust Docket and the New Hampshire Supreme Court. Stomper involved an active son who did not keep an alienated son up to speed on developing legal events involving the parents. Belair similarly involved children who were not in the loop on developing legal and medical issues with a shared parent. Once again, an assessment of underlying family dynamics under fraught circumstances played a substantial role in determining the case outcome.
Probate Lawyers as Protection. The Trust Docket devoted considerable time in each decision to its assessments of the roles attorneys who prepared the challenged estate plans played in the challenged processes. Webber involved an attorney “fiduciary,” who developed a highly documented execution process, involving video of the signing and multiple witnesses, that was intended to preempt any challenge to the validity of a trust.
The Trust Docket concluded the process was contrived and one-sided, criticizing the attorney for “turning a blind eye” toward other evidence, including from an earlier attorney whose concerns about capacity were dismissed. In the Trust Docket’s view, a video documenting the execution of the challenged estate documents proved the testator was suggestible and confused.
Stedman similarly involved an attorney who oversaw the execution of estate planning documents without reviewing medical records indicating impairment. The Trust Docket criticized the attorney for failing to become aware of the extent of his client’s assets and even called the credibility of the attorney’s testimony into question.
In Belair, the Trust Docket noted that the attorney executed the challenged will only after voicing concerns about his client’s decisions and conducting an independent investigation. Unlike in Webber, little was contrived about the circumstances surrounding the attorney’s supervision of the client’s execution of the will.
As a backdrop to these cases, recent changes to New Hampshire probate law permit parties to petition the court for preapproval of a will under RSA 552:18, which sets forth a process for obtaining a ruling on the validity of the will during life. This process is often expensive and time-consuming.
The four cases outlined in this article illustrate the fact-intensive nature of undue influence cases. While more recent case law suggests the Trust Docket is stepping back from a more aggressive review of estate-planning decisions, parties should expect that cases will turn on the presentation of medical records, the credibility of witnesses regarding relationships at issue, and the validity of the legal processes giving rise to estate documents. However, uncertainties will remain, until the NH Supreme Court provides further guidance in a published decision with precedential weight.
Michael Lewis is a shareholder at Rath, Young and Pignatelli in Concord, where he maintains an active litigation and administrative practice with a focus on tax, regulatory, probate and commercial disputes.