The Presumption of Undue Influence By a ‘Fiduciary’

Take-Away: The law of undue influence is subject to a variety of shifting evidentiary rules that can at times be confusing. Sometimes there is a presumption of undue influence, and other times there is no presumption. Where it becomes confusing is when an individual is identified as having a confidential or fiduciary relationship with the person who signed a Will or Trust. The existence of a confidential or fiduciary relationship will cause a legal presumption or inference of undue influence. Some relationships, which are treated as confidential or fiduciary, are obvious, like an attorney or physician. Other situations or relationships are more fact-driven, thus making it difficult to determine if a confidential or fiduciary relationship existed, which may cause the legal presumption of undue influence to arise. Critical facts that courts seems to look for are the testator’s reliance or dependence upon the perpetrator and whether the testator was isolated by the perpetrator demonstrating the undue influence.

Undue Influence: Some basic, albeit complex, rules are applied to determine if a presumption of undue influence arises. Last year, the Michigan Court of Appeals described an undue influence claim in a trust contest in In re Monier Khalil Living Trust, (2019) Docket No. 341142, as: “A presumption of undue influence arises when there is evidence of (1) a confidential or fiduciary relationship between the grantor and a fiduciary, (2) the fiduciary or an interest he represents benefits from a transaction, and (3) the fiduciary had an opportunity to influence the grantor’s decision in that transaction. … When the presumption is established, the party seeking to enforce the trust must offer other evidence to rebut the presumption…. Where the presumption is established, it creates a mandatory inference of undue influence, shifting the burden of going forward with contrary evidence onto the person contesting the claim of undue influence. However, the burden of persuasion remains with the party asserting such. If the defending party fails to present evidence to rebut the presumption, the proponent has satisfied the burden of persuasion.”

Fiduciary Relationship: A fiduciary relationship exists if one acts as an agent for another, i.e. as a person having express or implied authority to represent or act on behalf of another person. Law Offices of Jeffrey Sherbow, PC v Feiger & Feiger, PC, 326 Mich App 684 (2019). Yet another court has defined a fiduciary relationship as: [A] fiduciary relationship arises from the reposing of faith, confidence, and trust and reliance of one upon the judgment and advice of another. Vicencio v Ramirez, 211 Mich App 501 (1995).

Consequently, the professional role or title of an individual alone does not indicate if a confidential or fiduciary relationship exists sufficient trigger the presumption of undue influence- a fiduciary relationship arises through a variety of facts and circumstances.

A fiduciary relationship existed between the decedent and his sons, where one of the sons was a doctor who treated his father and who held a power of attorney when the father was enfeebled by his poor health and incapable of attending to his business affairs. First Nat’l Bank & Trust of Marquette v Albert, 66 Mich App 252 (1975.)
A fiduciary relationship arose when Mr. Jemison took Lucy Meyers into his home prior to her death. Lucy opened a joint bank account with Mr. Jemison. Mr. Jemison then handled all banking transactions for Lucy because she was feeble and unable to go to the bank. In finding a confidential relationship the court observed: Jemison was acting in a capacity of trust and confidence in his dealings with and for Mrs. Meyers. She had the utmost faith in him. He was trusted in handling the bank accounts for her, and acted solely as her agent in these transactions. These acts would come within the definition.” Van’t Hof v Jemison, 291 Mich 385 (1939) Thus, the court found that Mr. Jemison obtained control over the joint bank account through undue influence.
A fiduciary relationship did not arise just because a defendant had for a number of years looked after the decedent’s business and property, collecting rents, dividends and mortgage payments for him, and paying taxes repair bills. The court observed that merely conducting the decedent’s business affairs does not give rise to a fiduciary relationship. “We think the term should be held to mean what the word ‘fiduciary’ implies and that the relationship only exists when there is reposing of faith, confidence and trust in the placing of reliance by one upon the judgment of another. No such situation was established here.” In re Jennings Estate, 335 Mich 241 (1952)

Burden of Proof: This shifting of the of the burden to produce evidence is where undue influence becomes hard to understand. The burden to establish undue influence is on the party who asserts it, i.e. accuses another of exercising undue influence over a decedent. It is a rebuttable presumption that arises from a fiduciary or confidential relationship. However, that proof of a fiduciary or confidential relationship does not shift the ultimate burden of proof; that ultimate burden of proof remains on the party who asserts that undue influence caused the testamentary instrument to be signed, changed or in some manner modified. [See MCL 700.4407(1) (c) and (d).] In other words, the legal presumption itself has no weight as evidence in a courtroom. Instead, the presence of the presumption establishes only what is called a prima facie case in the absence of evidence on the question of undue influence. Regardless of whether the rebuttable presumption of undue influence applies, the ultimate burden of persuasion, or the ultimate burden of proof, remains on the party who challenges the validity of a Will or trust on the basis that it was signed, or changed, due to the undue influence of another. “Where the presumption is established, it creates a ‘mandatory inference’ of undue influence, shifting the burden of going forward with contrary evidence onto the person contesting the claim of undue influence. However, the burden of persuasion remains with the party asserting such. If the defending party fails to present evidence to rebut the presumption, the proponent [of undue influence] has satisfied the burden of persuasion.” In re Peterson Estate, 193 Mich App 257 (1991).

Proving Undue Influence: Sometimes undue influence can be proved by showing that the testator/settlor was subjected to threats, misrepresentation, flattery, fraud or physical or moral coercion that is “sufficient to overpower volition, destroy free agency, and impel the testator/settlor to act against their inclinations and fee will.” In re Erickson Estate, 202 Mich App 329 (1993). Yet courts have also held that “motive, opportunity, or even ability to control, in the absence of affirmative evidence that it was exercised, is not sufficient.” All of these legal principles were on display in a recent Michigan Court of Appeals decision with regard to an undue influence arising from a confidential and fiduciary relationship.

Decision: In re Mary Margaret Chartier Revocable Living Trust v Wagner, Mich Ct. App, No. 344346 (December 19, 2019, Unpublished)
Facts: Shortly before her death, Mary (age 63, and a ‘chronic alcoholic’ according to the trial judge) restated the terms of her Trust, leaving only nominal gifts to her children and grandchildren, with the bulk of her estate left to her boyfriend, Ron, who she had started a relationship with in 2012 after her divorce. Mary named Ron as her patient advocate in May 2015. Mary changed the terms of her Trust in October 2015, just three months before her death from a heart attack. Mary’s three sons filed a petition to set-aside Mary’s Trust on the grounds that Ron had exercised undue influence over Mary in executing her restated trust.
Probate Court: After a 7-day trial, the probate judge found that Mary’s sons had established a presumption of undue influence by Ron, and that Ron did not successfully rebut that presumption. The trial judge relied on the facts that Mary and Ron were in an intimate relationship, Mary was dependent upon Ron for assistance in maintaining her home and her personal health, that Ron had played a ‘significant role’ in Mary’s engaging her estate planning attorney, and that Ron ‘had the opportunity to influence her estate decision.’ While Ron argued that Mary’s decision was because of ‘bad blood’ with her family, and that Mary had felt abandoned by her family after the divorce, the probate judge found that Ron had ‘actively worked to undermine and destroy Mary’s relationships with her family and friends.’
Court of Appeals: The appellate Court found that the probate judge was correct in applying the presumption of undue influence and finding the Ron failed to overcome that legal presumption of undue influence. Of some interest was the probate judge’s findings, reiterated by the Court of Appeals, with regard to Ron’s role in Mary’s estate planning, despite the estate planning attorney’s trial testimony that Mary had provided rational reasons for restating her Trust and that she had provided her reasonable explanation why she left only nominal amounts to her children and grandchildren.
“The court also made extensive findings regarding the process in which Mary’s estate plan changes were made. The court found that Wagner [Ron] was actively involved in the process and had a much more significant role in later contacts, which included initiating the phone calls, dropping off the retainer agreement, writing directions on the agreement, and providing his cell phone number as the point of contact…. Mary initially met with Dubay [the estate planning attorney] in June 2015 to discuss her estate plan, but did not follow up until several months later. Moreover, it was Wagner [Ron] who reinitiated the contacts with Dubay to formalize changes to Mary’s estate plan. The evidence supports that Wagner was ‘driving the process’ to arrange and execute estate plan changes. Moreover, Dubay was not aware of the extent to which Wagner had isolated Mary from family and friends or Wagner’s role in encouraging and enabling Mary’s substance abuse, highly relevant factors affecting Mary’s ability to exercise freely her own will and volition.

Conclusion: In recent years, Michigan Courts have spent a considerable amount of time and ink defining the scope of undue influence, and who has the burden of proof if there is a claim of undue influence, primarily arising from the Supreme Court’s 2018 decision in In re Mardigian Estate, 502 Mich 154 (2018) where the drafting attorney was the principal beneficiary of his client’s multi-million dollar estate, thus raising the inference of undue influence over his client. While shifting evidentiary burdens is confusing in and of itself, equally challenging is how a court determines if a beneficiary acted in a confidential or fiduciary relationship with the decedent, sufficient to trigger the legal presumption of undue influence. Going further, there is now a growing national trend to find attorneys liable for the tort of aiding and abetting their client’s breach of fiduciary duty, which could also make drafting attorneys additional parties to an undue influence claim. See Restatement (Second) of Trust section 874 (comment c.) All undue influence litigation is messy and highly fact specific. Determining if the beneficiary actually had a confidential or fiduciary relationship with the decedent, which, in turn, triggers the legal presumption of undue influence, tends to be an after-the-fact conclusion that appears at the end of the trial in the courtroom, making undue influence litigation very unpredictable.