What constitutes undue influence in an estate plan? What are some of the reasons why beneficiaries might challenge an estate plan over undue influence? How do different states handle claims of undue influence? Read on for answers from attorneys who specialize in estate planning.
Fair?
When it comes to estate planning, it is important to understand this fundamental truth: estate planning does not have to be fair. The person creating an estate plan is free to choose how to distribute assets to beneficiaries. Setting up a pet trust, leaving money to charities, putting everything in special needs trust for a family member who needs it, or traditionally giving children an equal slice—these are entirely valid personal decisions. Of course, some decisions may leave relations or friends hurt, or disappointed, but bad feelings alone are not a cause for claiming undue influence. As the American Academy of Estate Planning Attorneys explains:
Undue influence occurs when someone takes unfair advantage of another individual, usually elderly, especially when the first individual holds real or apparent authority over the elderly person. Simple enough to explain but harder to understand. To gain an understanding of what constitutes undue influence requires an examination of the underlying behavior. The American Bar Association indicates that undue influence occurs when an individual in a fiduciary capacity or other confidential relationship substitutes their own desires for that of the influenced person’s desires. Put another way, a person influenced the testator in such a way that convinced the testator to alter his or her Estate Plan, usually in favor of the individual exerting the undue influence and to the detriment of the testator’s other beneficiaries.
Avoiding Claims of Undue Influence
When you work with an estate planning attorney to create a will, trust—or combination, it is important to carefully document decisions—especially if you believe they may strike friends and relations as unusual. Even when difficult, it is also best practice to communicate your plans while you have the capacity to do so. Even if not everyone agrees with your decisions, the understanding that they are in fact your decisions, may prevent major conflicts and costly, time consuming probate litigation down the road. Frequently, attorneys find that when an estate plan deviates from the equal treatment of all beneficiaries in the same class (e.g., children), a claim of undue influence may follow, and offer this observation: “Often the unequal treatment results because one beneficiary took on a caregiver role as the testator aged. Perhaps a niece or nephew stepped in when the client’s children were out of state. Regardless of the reason, many a beneficiary who has not received what they considered their “fair share” of an estate has challenged an Estate Plan based upon undue influence.”
Among the most important decisions made when working with an attorney on an estate plan is the designation of a friend or professional to serve as your fiduciary. This person is generally referred to as the executor, trustee, or personal representative, depending on the circumstances and location. Taking care with this decision—and clarifying your intentions with your designee is another important way to prevent claims of undue influence later. Essentially, your fiduciary will serve as the administrator of your affairs, in accordance with the intentions set forth in your estate planning documents—and the law. Estate Bonds are frequently requested—and sometimes even required. Sometimes alternatively referred to as administrator, executor, probate, personal representative or trustee bonds, estate bonds safeguard the interests of the estate and your beneficiaries in accordance with state law. At Colonial, a leading national provider of all types of fiduciary bonds, the steps to obtaining an estate and other bonds are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond right from anywhere—even the law office. Obtain Estate Bonds Here.
State Law?
Attorneys point out that undue influence remains somewhat of a gray area, with states differing widely in their definitions and approaches:
Some states, like Florida, Georgia, Louisiana, Nevada, North Dakota, South Dakota, and Ohio, have partial definitions in their statutes which broadly define undue influence as something that occurs when a fiduciary or confidential relationship exists and one person substitutes his own will for that of the donor’s will. Other states have definitions of undue influence in their civil code or penal code, rather than their probate code. In addition, most states, like California, have case law that sets out defining aspects of undue influence. It appears that most states rely upon case law to determine what constitutes undue influence and most of the time it occurs in the probate context. Each state lists certain factors that indicate the presence of undue influence, such as intimidation, physical threat, or coercion. Perpetrators of undue influence use subtle tactics and usually enjoy a close relationship with the testator.
Given the trend toward longer lives—and the large number of elderly people coping with alzheimers, attorneys say that some states are taking more steps to prevent elder abuse, including the exertion of undue influence. Meanwhile, while reasonably good mental and physical health is on our side, it’s important to know that estate planning tools can help us plan for our own future needs if we experience a capacity decline. For example, consider talking to an attorney about a revocable living trust.
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