SUBSTANTIVE LAW IN WILL CONTESTS AND CITATION PROCEEDINGS – PART 2
Undue Influence and Breach of Fiduciary Duty.
The most common bases for attacking wills, trusts, or transfers by a Decedent are claims of undue influence or breach of fiduciary duty. While the two theories are separate, they are related, and many Courts have considered breach of fiduciary duty to be a particular type of fraud or undue influence. Schmidt v. Schwear, 98 Ill.App.3d 336, 424 N.E.2d 401, 53 Ill.Dec. 766 (1981) summarized the law as follows:
Undue influence sufficient to invalidate a will is that influence which prevents the testator from exercising his own will in the disposition of his estate [citation], or which deprives the testator of free agency and renders the will more that of another than his own. [citation] The influence may be exerted at any time [citation] but must be directly connected with the execution of the will and operate at the time the will was made. [citation] The influence may be that of a third person, such as the spouse of a beneficiary, as well as that of direct beneficiaries. [citation]
In certain instances, the law will raise a rebuttable presumption that the will was executed as a result of undue influence. Where a fiduciary relationship exists between the testator and the devisee who receives a substantial benefit from the will, and where the testator is the dependent and the devisee the dominant party and the testator reposes trust and confidence in the devisee, and where the will is written or its preparation procured by that devisee, proof of these facts establishes prima facie the charge that the execution of the will was the result of undue influence exercised by that beneficiary. [citation].
Also refer to Illinois Pattern Jury Instructions Nos. 200.03, 200.03.05, 200.04, and 200.09 (all for will contests).
The law on undue influence is relatively clear. Tracking down the facts is the major task for a party trying to prove the undue influence. The challenge to the contestant is significant, since the undue influence must go directly to the preparation and execution of the will or trust. In the usual case where an attorney represented the testator, that burden may be insurmountable.
Undue influence can take many forms. Some examples are: obvious and open domination over the testator; subtle psychological pressure such as isolation; using words to “poison” the relationship between the testator and others; inducing dependence on the wrongdoer; and even exhibiting unduly excessive kindness toward the testator. On the other hand, the law encourages people to take care of parents, friends, and others, and merely doing so, even to a great extent, does not by itself constitute undue influence. There is no one decisive factor or group of factors that will decide every case. In the end, each case will be decided on the facts as a whole. It is also true that in almost all cases of alleged undue influence, the testator also exhibited some degree of diminished capacity which allowed or facilitated the undue influence.
It is in cases of undue influence in connection with a will (and associated trust) that the Dead-Man’s Act may be a massive impediment. It is those closest to a decedent who usually stand to benefit from overturning the document who also have the firsthand knowledge necessary to prove the case. However, their testimony (and that of their spouses) is barred. Often, there are no other witnesses to testify as to the particulars of the undue influence, especially where the wrongdoer has isolated the testator from others.
Breach of Fiduciary Duty.
A fiduciary relationship may arise as a matter of law or as a matter of fact. Execution of a power of attorney gives rise to a fiduciary relationship between the principal and the agent as a matter of law, and any transaction between the agent and the principal which benefits the agent is presumptively fraudulent. The relationship of principal and agent without a power of attorney is also fiduciary as a matter of law as are the relationships of attorney-client, trustee-beneficiary, and numerous others. In circumstances where a fiduciary relationship does not arise as a matter of law and must be established by the facts, there are a number of factors courts have considered. These include the relationship between the parties, disparities in age, health, mental condition, education, and business experience between the parties, the extent to which one party entrusts the other with handling of financial matters, and the degree of trust that one party places on the other in general. Many of the same evidentiary difficulties noted above are also present in trying to prove a fiduciary relationship as a matter of fact.
Once a fiduciary relationship is established, the burden shifts to the fiduciary to prove by clear and convincing evidence that there was no breach of that relationship. Especially where one party has been the primary or sole caretaker of another, it is often possible to prove the fiduciary relationship and to then require the fiduciary to rebut that proof. Very few agents keep meticulous records of expenditures and other financial records of the principal. They may not be able to present evidence of expenditures and will then be found liable.
Practical Note: There is a potential Catch-22 for the petitioner in some breach of fiduciary duty situations. Assume that the petitioner establishes a fiduciary relationship and shifts the burden to the fiduciary. Assume that the fiduciary then says “I do not have any records.” The court then turns back to the petitioner and asks how much the petitioner is seeking. At that point, the petitioner must prove the amounts that are claimed to be missing. In essence, that position shifts at least part of the burden of proof back to the petitioner. Bank records may no longer be available due to mergers or passage of time. The petitioner must at the very least establish the initial “pot” of assets in order to then shift the burden of proof back to the fiduciary to substantiate any expenditures, deductions, or other reductions in the amount claimed.
The moral of this story is that even though the burden of proof may shift to the fiduciary, at least part of that burden may shift back. The petitioner should obtain the supporting documents and prepare the case promptly in order to avoid the problem.
©2005 by Cary A. Lind, all rights reserved