Challenging Inter Vivos Transfers Procured by Undue Influence: Factors to Consider
Anyone who watches the evening news knows that Florida has more than its fair share of opportunists who take unfair advantage of the frail and elderly. When the unfair advantage takes the form of a coerced, yet facially valid transfer of assets by gift or bequest, the transfer often may be reversed as the product of undue influence.
Undue influence is often not discovered until the death of the transferor, leaving it to the rightful heirs and personal representatives to decide whether the facts justify a legal challenge. When the result of the undue influence is in the form of a contested will, the Florida courts have provided significant guidance that the heirs and personal representatives can consider in making their case. When the result of undue influence is an inter vivos transfer or gift, however, the courts have failed to clearly describe the various factors that tend to prove (or refute) an undue influence case.
While each case will always be decided on its unique facts, heirs and personal representatives who are aware of the generally applicable indicia of undue influence with respect to inter vivos gifts can tailor their review of suspicious transfers to determine whether actionable undue influence has occurred.1 Equally important, rightful donees with an understanding of these factors can take care to structure a gift in a manner that will avoid later challenge.
To the extent that the implications of the various factors may be understood by the donee and by potential challengers, needless litigation may be avoided.
Definition of Undue Influence
Undue influence has been variously defined over the years. In one early Florida Supreme Court case, Newman v. Smith, 82 So. 236 (Fla. 1919), the court states that “[u]ndue influence comprehends overpersuasion, coercion, or force that destroys or hampers the free agency and will power of the testator.” The court later expanded on this definition in In re Starr’s Estate, 170 So. 620 (Fla. 1936):
To constitute undue influence the mind … must be so controlled or affected by persuasion or pressure, artful, or fraudulent contrivances, or by the insidious influences of persons in close confidential relations with him, that he is not left to act intelligently, understandingly, and voluntarily, but … subject to the will or purposes of another. … The rule seems to be well settled that undue influence justifying the setting aside of a will, deed, or other contract must be such as to dethrone the free agency of the person making it and rendering his act the product of the will of another instead of his own. (Citation omitted.)
Presumption and Burden of Proof
In In re Estate of Carpenter, 253 So. 2d 697 (Fla. 1971), the Florida Supreme Court noted “[i]t is established in Florida that if a substantial beneficiary under a will occupies a confidential relationship with the testator and is active in procuring the contested will, the presumption of undue influence arises.” The Carpenter presumption has been extended to inter vivos transfers.2 Recently enacted F.S. §733.107(2) clarifies that the presumption of undue influence is a presumption shifting the burden of proof.3 As a result, once the plaintiff has met the Carpenter presumption of undue influence, the burden of proving that undue influence did not take place is shifted to the beneficiary/donee.4
The standard of proof that must be met in an undue influence case is preponderance (greater weight) of the evidence.5 The evidence considered is generally circumstantial — the Carpenter court “acknowledge[s] that undue influence is rarely susceptible of direct proof, primarily because of the secret nature of the dealings between the beneficiary and the testator, and because of the death of one of the principals to the transaction, the testator.” The Florida Supreme Court determined in Rich v. Hallman, 143 So. 292 (Fla. 1932), that “the degree of proof necessary to invalidate a will is much greater than that required to set aside a gift inter vivos.”
Preliminary Factors Indicating Undue Influence
In order to raise the presumption of undue influence, a plaintiff must show a confidential relationship between the donor and the donee and active procurement of the gift. The court in Carpenter explained that “‘[a]ctive procurement’ and ‘confidential relationship’ are legal concepts operating within a broad sphere of factual situations. Within this sphere, the trier of fact is vested with discretion to determine whether or not the facts show active procurement and/or a confidential relationship.”
Carpenter holds that “the term ‘confidential relation’ is a very broad one which may embrace informal relations which exist wherever one person trusts in and relies upon another.” Courts have found a confidential relationship in all but the most arms-length of relationships, making this factor a given in most cases.6
Carpenter also contains a list of criteria to be considered in determining active procurement of a will.7 Since the same facts are used to prove undue influence as are used to show active procurement, this list is a good summary of the factors the beneficiary will need to consider in disproving undue influence once the presumption is applied. However, the Carpenter factors are specific to wills and are of little use in the inter vivos gift context, and no list of indicia of active procurement for such gifts has ever been adopted.8
Notwithstanding the lack of explicit court guidance, it is possible to discern the indicia of active procurement in the inter vivos gift context. While each undue influence case is very fact specific, upon a close review of cases, clear patterns emerge. After finding or assuming a confidential relationship, courts reviewing the facts in undue influence cases involving inter vivos transfers have focused on one or more of six recurring factors: 1) the donee’s level of involvement in the donor’s affairs; 2) the donee’s level of involvement in the actual gift in question; 3) the relationship of the donee to the donor as compared to the natural objects of the donor’s bounty; 4) the secrecy or openness of the transaction; 5) the effect of the transfer on the donor’s pre-existing estate plan; and 6) the physical health and mental acuity of the donor at the time of the gift. No one factor is determinative, and in many cases, different factors lead to conflicting inferences that are then weighed by the court. Each of these factors will be touched on below.
Factors Indicating Undue Influence
• Donee’s Level of Involvement in the Donor’s Affairs — Many cases focus on the donee’s level of involvement in the donor’s affairs, including the donee’s taking over the writing of checks and balancing the donor’s checkbook, and the donee’s involvement in changing the donor’s attorney, doctor, accountant, or stockbroker.9 The greater the level of involvement, the greater the inference that the donor was in a relationship of trust and dependence with respect to the donee and, therefore, susceptible to undue influence.10
• Donee’s Level of Involvement in the Actual Gift in Question — A key factor in the undue influence analysis is the donee’s level of involvement in the actual gift in question, if it can be determined. For example, a court will consider whether a donee transported the donor to a bank or attorney to accomplish a transfer, or was present at the time of the transfer, or actively solicited the gift.11
• Relationship of the Donee to the Donor as Compared to the Natural Objects of the Donor’s Bounty — A gift that is at the expense of the natural objects of a donor’s bounty may be more readily considered to be a result of undue influence. A court will consider, among other things, the relationship between the donor and the challengers, determining that the more strained or distant the relationship, the less likely the donor had to be unduly influenced in order to disinherit them.12 Specifically, a long line of cases in Florida and elsewhere consider a gift made in the course of a meretricious relationship (such as a gift to a mistress) to be essentially per se undue influence.13
• Secrecy or Openness of the Transaction — Courts appear to consider a secret transfer more suspect than an open one.14
• Effect of the Transfer on the Donor’s Pre-existing Estate Plan — A transfer may be given greater scrutiny if it disrupts a longstanding estate plan.15
• Physical Health and Mental Acuity of the Donor at the Time of the Gift — In the case of a donor with diminished mental acuity (though competent), a mere suggestion by a dominant party may be sufficient to show active procurement.16 A court will look at the donor’s medical history to determine mental acuity even though an attorney testifies that the gift was knowing.17 A showing of particular sharpness of mind and strength of will may be used to refute an inference of undue influence.18 Note, however, that a donor may be in full control of his or her faculties and still be unduly influenced.19 Even without direct evidence of diminished mental acuity, courts take note of the physical condition of the donor as an indication of mental acuity or of the dependent nature of an elderly donor of limited mobility and ability to care for himself or herself.
Rightful heirs and personal representatives need more guidance than the courts have previously offered if they are to be able to determine whether inter vivos transfers were procured by undue influence. Similarly, rightful donees could benefit from additional clarity when structuring gift transfers. Absent further judicial clarification, rightful heirs, personal representatives, and rightful donees can use the six factors listed above as a map, however imperfect, to guide them in this otherwise poorly charted territory.
1 Factors suggesting undue influence can often be discerned through a review of the decedent’s books and records and by interviews with the decedent’s family members, friends, neighbors, professional advisors, medical care providers, and others.
2 See, e.g., Cripe v. Atlantic First National Bank of Daytona Beach, 422 So. 2d 820 (Fla. 1982).
3 This statute, recently adopted, greatly strengthens an undue influence claim. The Carpenter court noted that “[b]ecause it is frequently as difficult to disprove undue influence as to prove it, the practical effect to shifting the burden of proof is to raise the presumption virtually to conclusive status and require a finding of undue influence….”
4 Though Fla. Stat. §733.107 applies by its terms only to undue influence in wills, its clear statement of public policy, together with the Florida Supreme Court’s confirmation that undue influence rules for wills also apply to trusts (see, e.g., Cripe), make it very likely that the statute applies also to inter vivos gifts. See Steven G. Nilsson, Florida’s New Statutory Presumption of Undue Influence — Does It Change the Law or Merely Clarify?, 77 Fla. B. J. 20 (February 2003). If Fla. Stat. §733.107 is determined not to apply, the Carpenter presumption imposes on the donee only a burden of coming forward with a reasonable explanation for his or her actions.
5 See, e.g., Cripe, 442 So. 2d 820 (1982).
6 See, e.g., Williamson v. Kirby, 379 So. 2d 693 (Fla. 2d D.C.A. 1980) (close friend and neighbor who assisted with every day tasks of elderly donor determined to have a confidential relationship).
7 These indicia consist of “(a) presence of the beneficiary at the execution of the will; (b) presence of the beneficiary on those occasions when the testator expressed a desire to make a will; (c) recommendation by the beneficiary of an attorney to draw the will; (d) knowledge of the contents of the will by the beneficiary prior to execution; (e) giving of instructions on preparation of the will by the beneficiary to the attorney drawing the will; (f) securing of witnesses to the will by the beneficiary; and (g) safekeeping of the will by the beneficiary subsequent to execution.”
8 Indeed, some cases ignore the active procurement analysis all together and find a presumption of undue influence based on little more than a confidential relationship. See, e.g., Lilly v. Hutchins, 355 So. 2d 212 (Fla. 2d D.C.A. 1978).
9 See, e.g., Hoffman v. Kohns, 385 So. 2d 1046 (Fla. 2d D.C.A. 1980).
10 If a court determines that there was nothing unnatural or manipulative about the relationship, however, evidence of a donee’s substantial involvement may be interpreted in a favorable manner. Rather than raising an inference of undue influence, such involvement may instead provide an explanation for the donor’s generosity. This conclusion is particularly likely if the donee took care of the donor while the eventual challengers did nothing to help. See, e.g., Mulato v. Mulato, 705 So. 2d 57 (Fla. 4th D.C.A. 1997); Derovanesian v. Derovanesian, 857 So. 2d 240 (Fla. 3d D.C.A. 2003).
11 See, e.g., Hoffman, 385 So. 2d 1046 (1980); Jordan v. Noll, 423 So. 2d 368 (Fla. 1st D.C.A. 1983).
12 See, e.g., Stetzko v. Stetzko, 714 So. 2d 1087 (Fla. 4th D.C.A. 1998) (no undue influence in preference of family friend over donor’s elderly siblings where donor had no children of his own).
13 See Taylor v. Johnson, 581 So. 2d 1333 (Fla. 1st D.C.A. 1991), and cases cited therein. But see Hill v. Hill, 222 So. 2d 454 (Fla. 2d D.C.A. 1969), finding mere fact of meretricious relationship insufficient to prove undue influence where the donor left his wife and set up residence with his mistress and treated her as his wife). In light of Hill, Taylor limited the application of this line of cases to situations where the mistress gains at the expense of the spouse. See also deFuria, Testamentary Gifts Resulting From Meretricious Relationships: Undue Influence or Natural Beneficence?, 64 Notre Dame L. Rev. 200 (1989) (arguing that different treatment of meretricious relationships in undue influence cases can not be justified in light of modern legal and social developments).
14 See, e.g., Hoffman, 385 So. 2d 1046 (1980) (family members not informed of marriage to housekeeper shortly before death); Jordan, 423 So. 2d 368 (1983) (donee knew contents of deed but kept them secret).
15 See, e.g., Hoffman, 385 So. 2d 1046 (1980); Stetzko, 714 So. 2d 1087 (1998).
16 See, e.g., Cripe, 442 So. 2d 820 (1982).
17 See, e.g., Bryant v. Bryant, 379 So. 2d 382 (Fla. 1st D.C.A. 1980) (donor was in poor health, recently in the hospital, and taking “about a dozen” medications which could alter his mental ability at the time of the gift).
18 See Derovanesian v. Derovanesian, 857 So. 2d 240 (Fla. 3d D.C.A. 2003) (testatrix “was an indomitable, fiercely independent individual, who was peculiarly unsusceptible to the influence of others, and who retained that individuality and strength of mind….”). Note that this recent case overturns a Miami-Dade County probate court’s determination that a will was procured by undue influence where the favored daughter was present at the will signing and aware of the contents, but where evidence showed the testatrix clearly intended to disproportionately benefit the daughter.
19 See, e.g., Bernal v. Roncallo, 269 So. 2d 766 (Fla. 3d D.C.A. 1972), a case involving a donor married but living with and taking joint title with his mistress. “The evidence in question showed the decedent appeared to be in full possession of his faculties, knew what he was doing, and that it was his desire and intention to take title to the property in the manner in which it was taken. However, that evidence did not show or tend to show that the decedent’s demonstrated resolve to take title in that form was not unduly influenced.” Id. at 767.
Patrick J. Lannon is of counsel with Goldman Felcoski & Stone, P.A., in Coral Gables. He is board certified in wills, trusts, and estates. His practice involves all aspects of estate planning and administration, including tax-advantaged transfers of assets, multigenerational planning, the federal and state taxation of trusts and estates, charitable giving, prenuptial and post-nuptial planning, the creation and administration of charitable entities, and issues relating to change of residence. He received his J.D. from Harvard Law School and is a member of the Florida and New York bars.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Melissa Murphy, chair, and William P. Sklar and Richard R. Gans, editors.