Woman’s Estate Plan Leaving Funds to Church Can Not Be Subverted by Caregiver’s Undue Influence

Key point 4-03. A gift to a church or minister may be challenged on the ground that the recipient unduly influenced the donor into making the gift. There are several factors the courts will consider in deciding whether or not undue influence occurred, including the age and mental health of the donor, and the presence of independent legal advice. Undue influence generally must be proven by "clear and convincing" evidence.

A Florida court ruled that an elderly woman's estate plan that left her entire estate to her church could not be altered through the undue influence of the woman's caretaker, who attempted to redirect the estate to herself. An elderly woman (the "decedent") and her late husband executed a family trust and pour-over wills in 2009, several months before he died. The trust provided that, if the husband died first, then upon his wife's death, the entire estate would go to their church. When the wife died, the estate was valued at $350,000 consisting of bank accounts. No document existed purporting to take these accounts out of the estate left to the church—until a few days before the wife died.

Mary was the decedent's neighbor, friend, and health-care surrogate. She had hired her former daughter-in-law to help care for the decedent. In contrast to the disinterested witnesses who testified that the entire estate was intended to go to the church, Mary and her former daughter-in-law testified that the decedent told them she did not want the church to have the money from the credit union accounts. They acknowledged that she never expressed this contrary intention in the presence of other people. They said that the decedent had asked Mary to get a "payable on death" (POD) form from the credit union and fill it out to give Mary 75 percent of the credit union accounts, 10 percent each to her son and daughter, and the remaining 5 percent to her former daughter-in-law. Mary obtained the POD form and completed it in this manner, with the beneficiary information appearing only on the first page of the form. She obtained the decedent's signature on the second page.

Mary's former daughter-in-law took the POD form back to the credit union the next day, which was the day the decedent was hospitalized because of her final illness. After the decedent's death, and about a week after Mary was appointed personal representative of the estate, the credit union disbursed the credit union account funds pursuant to the POD designation.

The church filed an Objection to Inventory and petition to remove Mary as personal representative, arguing that Mary had wrongfully failed to include the credit union accounts in the inventory. The trial court evaluated the credibility of the testimony of Mary and her former daughter-in-law on these points and found it unconvincing. The court found that Mary had used her confidential relationship with the decedent and actively procured the diversion of the decedent's estate from the church to her and her relatives. As a result of its findings, the court invalidated the POD designation and removed Mary as personal representative, and ordered her and her family to return their distributions to the court. Mary appealed.

Invalidating a POD for undue influence
The appeals court began its opinion by observing that "contrary to Mary's arguments, Florida law allows a POD designation to be invalidated for undue influence. Florida has a legitimate public policy interest in preventing abuse of fiduciary or confidential relationships … . 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 court concluded:

A POD account, although not in the strictest sense a testamentary device and not subject to the formalities required of wills, functions as a will substitute and partakes of many of the same equitable considerations that apply to testamentary transfers. Florida law and policy against abuse of fiduciary relationships apply to contracts, inter vivos transfers, and testamentary transfers, and are properly applied to determine whether a POD designation has been obtained through undue influence. We affirm the trial court's conclusions that, on the evidence presented, Mary obtained this POD designation through undue influence, and the gift is void.

Ordering Mary to return funds to the estate
Mary claimed that the trial court had no authority to order her and her family to return the credit union funds to the estate. The appeals court disagreed: "Although the trial court could have exercised discretion to enter a money judgment or provide other remedies, the trial court properly entered an order requiring Mary to return to the estate the amount of money improperly disbursed from the credit union accounts."

The court added that Mary and her family members would be responsible for returning any interest earned on the accounts, and that any failure to comply with the court's order would amount to contempt of court, which could result in imprisonment.