Undue Influence: Guilty Until Proven Innocent
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Many people are familiar with the prodigal son parable that Jesus shared with his critics in Luke 15:11-32. In that story, the prodigal son demanded and squandered his inheritance, returned home in disgrace, and received his father’s embrace and celebration upon return. The story also shows that the faithful son was upset about the celebration because his father had not given him a similar celebration. The father reminded the faithful son that he would inherit the father’s entire wealth because of his faithfulness. Many disputes in estates and trusts arise out of this kind of sibling rivalry, but the faithful sons and daughters do not always fare as well as the young man in Jesus’ parable.
It is common for some family members to live nearer their older relatives and maintain more frequent contact than other, more distantly located family members. The older relatives often develop special fondness for their attentive family members, which causes the other family members to feel envious and spiteful toward the attentive family members. Sometimes, those harsh feelings are justifiable when attentive family members exploit their close relationship with older family members for personal gain improperly.
Controversies about attentive family members receiving generous gifts and estate distributions often end up in court. It is difficult to distinguish when the generosity has resulted from genuine favoritism instead of greedy manipulation of a feeble, elderly person.
Courts in most states have developed a philosophy over the past century to discourage fraud through a legal concept known as “undue influence.” The idea behind the concept is that if someone complains that a person’s receipt of more benefit than other family members is improper, the person receiving the greater benefit should be able to prove that the benefit did not result from fraud. Otherwise, a crook could hoodwink an older person into leaving wealth to the crook, and there would be no way for cheated family members to prove what really happened.
Undue influence is a necessary concept to overcome fraud and corruption, but it creates serious problems for a person who has merely benefited from a deceased person’s love. Most people guard their privacy closely and do not share awkward family business outside the family. When a discreet person rewards an attentive family member with extra generosity without leaving an explanatory record to justify the generosity, disgruntled “prodigal sons” can attack the faithful family member in court with undue influence claims.
There is nothing wrong with rewarding good people in an estate plan. It is important, however, to think realistically about whether the extra generosity will create conflict. If the generosity will likely create controversy, a skillful estate planning lawyer will guide the estate planning client through steps to support the estate plan against controversy. Defensive planning procedures include things like using independent witnesses that understand the awkward family dynamics personally, engaging neurologists for mental capacity evaluations, and other evidence preservation techniques. Every case is different, so preventative procedures do not work perfectly in every case.
Family estate disputes can become almost as ugly as custody battles in divorce cases. Some people seem to be born to pick fights, but as we wrote in our blog on March 14, 2016, open family discussions can help avoid or minimize some disputes. No one wants to open the proverbial “can of worms,” but controversy management during the estate planning process may help cherished family members far more than generosity if it is possible that the generosity will trigger controversy.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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