Undue Influence Can Result in the Improper Disbursement of Will or Trust Assets Followed by Estate Litigation

While the term undue influence may seem overly legalistic and formalistic, it actually describes a relatively common set of circumstances that can embroil an estate in litigation. The legal term undue influence generally means that an individual leveraged a close, often familial relationship to unjustifiably enrich him or herself at the expense of the estate’s other beneficiaries. While common undue influence situations often involve an elderly parent and their child and children, it can also apply in the case of a close and trusted financial or retirement advisor who may also be a fiduciary. If you think you need a Baltimore fiduciary litigation lawyer, contact William S. Heyman.

What Does Maryland Law Hold Regarding Undue Influence?

Maryland law holds that the existence of certain confidential relationships can give rise to a presumption that the benefit received was because of undue influence exercised through the confidential relationship. Certain relationships, such as an attorney-client relationship or a fiduciary duty, are clear signs that a confidential relationship exists. However, whether a confidential relationship exists outside a parent-child relationship is typically a fact-specific analysis focusing on whether:

• The individual has reached an advanced age.
• The individual has mental or physical disabilities.
• The individual is dependent upon the party who received the gift

Once the existence of a confidential relationship exists, this fact influences the law governing both inter vivos gifts and testamentary gifts. Inter vivos gifts are gifts given during the lifetime of an individual while testamentary gifts are those gifts provided by a will or other testamentary document.

For inter vivos gifts, the presumption holds that any gifts received during the life of the grantor were given due to the exercise undue influence. The party benefitting from the gift holds the burden of rebutting the presumption once it has been raised successfully. As for the application of a confidential relationship to a testamentary gift, the fact that this type of relationship exists is merely a factor in the analysis. It does not shift the burden of proof on its own. See Figgins v. Cochrane, 403 Md. 392 (2007).

What Happens when a Child Convinces His or Her Elderly Parent to Transfer Estate Assets?

A common scenario involving undue influence exists when one child has a particularly close relationship with a parent who has reached an advanced age. Consider, for instance, an elderly father who passed away in Maryland who had two living children at the time of his death.  The children, Adam and Bruce, were both named as Co-Personal Representatives of the estate and shared equally in the estate. No other individual was named as a beneficiary in the will.

Following initial proceedings, the attorney for the estate sends both children a copy of the decedent’s federal estate tax return. Bruce is surprised by the contents of the report since they seem to indicate that certain bank accounts were accounts jointly held by his father and Adam. Bruce believed that these accounts were solely held by his father and should have been considered assets of the estate. Due to these joint accounts, the distribution was no longer equal and Adam would receive significantly more in assets. Faced with the prospect of taking a significant loss on his inheritance and his father’s wishes going unfulfilled, Bruce turns to the services of an experienced estate litigation attorney who can address the potential undue influence exercised by Adam.

How Can an Affected Will Beneficiary Challenge the Conduct of the Executor?

If a beneficiary believes that an individual has utilized undue influence to improperly obtain money or assets beyond the wishes of the deceased, he or she is may have numerous options regarding the approach they take. Returning to our example concerning the close familial relationship between the father and Adam in our hypothetical situation, it is likely that a Maryland court would recognize the existence of a confidential relationship. Therefore, exploring how the law governing undue influence functions in this factual scenario should be instructive.

Here, an inter vivos gift was effectively granted by the father to Adam. This occurred when the father provided Adam with instant access to his bank account by converting the account to a joint account. When an inter vivos gift is made in the context of a confidential relationship, “the existence of a confidential relationship shifts the burden to the donee to show the fairness and reasonableness of the transaction.”Upman v. Clarke” 359 Md. 32, 42-45 (2000). Therefore, upon Bruce making a sufficient showing that a confidential relationship exists, the burden would be shifted on Adam to show that the transaction was fair and reasonable.

If Adam is unable to rebut this presumption against inter vivos transfers within a confidential relationship, Bruce will likely be able to recover the funds that were improperly diverted through the inter vivos gift. Since the action would be one to preserve estate assets, Bruce would also likely to be able to recover attorney’s fees. However, all matters are governed by the facts that are present. Facts and circumstances that differ from those set forth above can significantly influence the outcome of a matter so it is always wise to consult with a careful and strategic lawyer prior to taking any action.

Work with a Baltimore Trust Lawyer If You Suspect Undue Influence

If you suspect that undue influence has played a role in allowing a beneficiary to override the testamentary intent of a parent, relative, or other loved one it may be necessary to take legal action. For more than 20 years, Baltimore will and trust contest attorney William Heyman has handled estates and trusts and fiduciary litigation. To schedule a confidential consultation, call the Baltimore-based Law Firm of William S. Heyman at (410) 305-9287.