Take-Away: How society looks at undue influence is rapidly changing, perhaps much faster than how the law rigidly looks at undue influence.

Background: As we await that multiple bills that arise from Michigan’s Elder Abuse Task Force and its activities over the past several years, along with its financial exploitation aspect, it is probably a good time to re-familiarize ourselves with what actually constitutes undue influence in today’s world.

Michigan: Michigan, like many other states, does not attempt to provide a statutory definition of undue influence. Rather, Michigan courts have generally defined undue influence on a testator or settlor on a case-by-case basis. However, undue influence can apply in virtually any donative context. Case law has defined it as ‘influence of such a degree that it overpowered the individual’s free choice and caused the individual to act against his/her free will and to instead act in accordance with the will of the influencer.’ Often this results from an abuse of a confidential or special relationship.

To establish undue influence in Michigan it must be shown that the ‘victim’ was subjected to threats, misrepresentation, undue flattery, fraud, or physical or moral coercion sufficient to overpower volition, destroy free agency and impel the ‘victim’ to act against his/her inclination and free will. Kar v. Hogan, 399 Mich. 529 (1976). As the undue influence cases have progressed over the years it becomes apparent that undue influence can occur by other actions that do not nicely fall within the ‘threats, misrepresentations, undue flattery, fraud or physical or moral coercion’ litany.  Importantly, fraud does not have to be an element of undue influence. Examples might include situations where a caregiver takes advantage of a weak or aged individual (In re Leone Estate, 168 Mich App 321 (1988)), or when a family member poisons the ‘victim’s’ relationship with other family members. (In re Hillman’s Estate, 217 Mich 142 (1921).)

Common Law: A basic summary of the common law on undue influence can be gleaned from the Restatement (Third) of Property (Wills and Donative Transfers, Section 8.3. It provides that a donative transfer is invalid to the extent that it was procured by undue influence, duress, or fraud. A donative transfer is procured by undue influence if the wrongdoer exerted such influence over the ‘victim’ that it overcame the ‘victim’s’ free will and caused the ‘victim’ to make a donative transfer that the ‘victim’ would not otherwise have made.

Circumstantial Evidence: Generally speaking,  the party that raises the claim of undue influence must rely on circumstantial evidence to show the exertion of undue influence. Circumstantial evidence is sufficient to raise an inference of undue influence if the party who claims undue influence, usually known as the contestant, proves: (i) the ‘victim’ was susceptible to undue influence; (ii) the wrongdoer had an opportunity to exert undue influence over the ‘victim’; (iii) the wrongdoer had a disposition to exercise undue influence over the ‘victim’; and (iv) there was a result appearing to be the effect of the undue influence. [Section 8.3, comment e.] While these four elements are identified in the Restatement, and its comments, it mostly focuses on the ‘victim’s’ susceptibility, with reference to the ‘victim’s’ age, inexperience, dependence, physical or mental weakness, or any other factor that makes the ‘victim’ susceptible to undue influence.

Presumption: The Restatement recognizes that a presumption of undue influence can arise if (i) a confidential relationship existed between the ‘victim’ and the wrongdoer, and (ii) there were suspicious circumstances surrounding the preparation, formulation, or execution of the ‘victim’s’ donative transfer.

The concept of a confidential relationship is normally reflected in three different types of relationships: (a) fiduciary, e.g. attorney; (b) reliant, based on a special trust or confidence, e.g., physician; financial advisor; and (c) dominant-subservient, e.g., caregiver or an adult child . As for a fiduciary relationship, the Estates and Protected Individuals Code tersely defines a fiduciary as: “Fiduciary includes, but is not limited to, a personal representative, funeral representative, guardian, conservator, trustee, plenary guardian, partial guardian, and successor fiduciary.” [MCL 700.1104(e)]. Michigan courts have more broadly defined a fiduciary relationship in the following manner:

“A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationship-such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client, require the highest degree of care. Fiduciary relationships usually arise in one of four situations; (1) when one person places trust in the faithful integrity of another, who, as a result, gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer and a client or a stockbroker and a customer.” (In re Karmey Estate, 468 Mich 68 (2003.)

The accompanying suspicious circumstances element that then triggers the presumption of undue influence against the wrongdoer often focuses on other factors. The Restatement identifies several factors to be considered in the search for suspicious circumstances:

  1. Whether the ‘victim’ is  in a weakened condition, physically, mentally, or both;
  2. The extent to which the wrongdoer participated in the preparation or procurement of the transfer instrument;
  3. Whether the ‘victim’ received independent advice from an attorney or other disinterested advisor;
  4. Whether the ‘victim’s’ transfer instrument was prepared in secrecy or haste;
  5. Whether the ‘victim’s’ attitude towards others had changed by reason of his/her relationship with the wrongdoer;
  6. Whether there is a decided discrepancy between the ‘victim’s’ new and previous transfer instruments, e.g., Will or Trust;
  7. Whether there was a continuity of purpose running through the ‘victim’s ‘ former transfer documents and a settled intent in the disposition of their property; and
  8. Whether the ‘victim’s’ disposition of property is such that a reasonable person would regard it as unnatural, unjust, or unfair, e.g.,  whether the ‘victim’s’ disposition abruptly and without apparent reason disinherited a faithful and deserving family member.

Process, not an Event: Despite the Restatement’s enumeration all of these factors that the common law looks to in situations where undue influence might be presumed, social science and numerous studies of human behavior have taken a turn in possibly a different direction. Undue influence is not a one-time act or event. Rather, it involves a pattern of manipulative behaviors to induce the ‘victim’ to do what the wrongdoer wants, even when the ‘victim’s’ actions appear to be voluntary or are contrary to his/her beliefs, actions, or wishes. In 2008 a Psychogeriatric Association study identified several factors that might be identified from a ‘clinical’ perspective that alerts a medical expert to the risk of undue influence, summarizing:

“(i) Social or environmental risk factors such as dependency, isolation, family conflict and recent bereavement; (ii) psychological and physical risk factors such as physical disability, deathbed wills, sexual bargaining, personality disorders, substance abuse and mental disorders including dementia, delirium, mood and paranoid disorders; and (iii) legal risk factors such as unnatural provisions in a will, or a provision not in keeping with previous wishes of the person making the will, and the instigation or procurement of a will by a beneficiary [all impact undue influence.] [Undue influence may be more likely to occur] (i) where there is a special relationship in which the testator invests significant trust or confidence in another; (ii) where there is  relative isolation (whether due to physical factors or communication difficulties) which limit free flow of information and allows subtle distortion of the truth: and (iii) where there is vulnerability to influence through impaired mental capacity or emotional circumstances (such as withholding of affection, or persuasion on grounds of social, cultural or religious convention or obligation.”

In a recent publication Undue Influence and Vulnerable Adults, that study identified even more tactics that wrongdoers may employ to effect undue influence for financial gain. Included in those tactics were: (i) reciprocity, e.g. creating a debt of gratitude through kindness and affection, particularly in family dynamics; (ii) commitment and consistency, by encouraging a decision once made (through undue influence) to be justified and adhered to by the ‘victim’ through stubbornness, i.e., persuading the victim to believe ‘facts’ that justify the conclusion that others are undeserving of an inheritance; (iii) authority, by recruiting others, often professionals, to aid and abet the wrongdoer,  who with authority by such affiliation with the professional, benefits the wrongdoer; and (iv) creation of or taking advantage of ‘false memories’, by inducing older individuals to believe in ‘false memories’ which are inculcated by repetitive efforts of the wrongdoer to reframe the elder’s relationship with family members or other previously favored individuals or institutions, in yet another study called predatory alienation.

Conclusion: We are all cautioned to be alert to the prospect of undue influence of our clients. More may be involved than just the existence of a fiduciary or confidential relationship, and new persuasive tactics that are used to induce an individual to do the will of another surface daily. Undue influence is probably just one more example where the law greatly lagged behind what is understood by social science. Let’s hope the law soon catches up with science.