Capacity and Undue Influence Issues in Estate Planning – Incapacity for One Purpose Does Not Mean Incapacity for Another
In my practice, I am often faced with the difficult issue of evaluating the capacity of an older adult client. In the beginning stages of dementia, does the client have the capacity to make important decisions and sign legal documents? Another challenging situation, which frequently occurs concurrently with capacity issues, is undue influence. Adult children and other family members often exert significant persuasive powers and control over elderly adults. When does the level of influence constitute undue influence and potentially invalidate the actions of the elderly adult? This year, the Virginia Supreme Court addressed both of these topics in the case of Parish v. Parish1 .
In the Parish case, Eugene Parish (“Eugene”) received a head and spinal cord injury in 1982 and the following year was declared incompetent in Florida because he was “incapable of caring for himself or managing his property.” Several years later, Eugene was moved to a facility in Tennessee and his brother, David Wayne Parish (“David Wayne”), took over duties as Eugene’s conservator, asserting to the Tennessee Court that Eugene was a “disabled person . . . in need of partial or full supervision, protection and assistance by reason of mental illness, physical illness or injury, developmental disability or other mental or physical incapacity.”
In 2002, David Wayne facilitated the preparation and execution of a Will by Eugene. During the meeting to discuss the Will, David Wayne acted as the translator for Eugene because Eugene spoke through a voice box as the result of a tracheotomy and was difficult to understand. David Wayne was present in the room when the Will was executed by Eugene. The Will left 25% to David Wayne, 25% to David Wayne’s wife, Diane Parish (“Diane”), 25% to Eugene’s son, David M. Parish (“David”), and 25% to other family members. The Will also named David Wayne as Executor and Diane as successor Executor. If Eugene died without a will, all of his assets would pass to his son, David, who was not told about the Will.
In 2004, the guardianship and conservatorship was transferred to Eugene’s son, David, based upon a petition filed by David and a determination by the Virginia Beach Circuit Court that Eugene was “incapacitated to such an extent that he is unable to care for himself, make medical decisions, manage his estate or understand his debts as they come due.” Eugene died in 2006 and David qualified as the administrator of his estate without a will. Diane petitioned the Court to have Eugene’s Will admitted to probate and to permit her to qualify as Executor2. David claimed that his father did not have the testamentary capacity to execute the Will and that David Wayne and Diane exercised undue influence over Eugene.
The trial court found in favor of Diane and David appealed. The Virginia Supreme Court opined that even though a person has an appointed guardian and conservator, this does not create a presumption of incapacity for purposes of executing estate planning documents. The Virginia Supreme Court has repeatedly held that mental weakness is not inconsistent with testamentary capacity and that less capacity is required to execute a will than to execute a contract or to transact ordinary business. All that is necessary to have the legal capacity to sign a valid will is that, at the time the will is signed, the individual generally must (i) know the assets he owns, (ii) know his immediate family who would typically be beneficiaries of his estate (i.e. the natural objects of his bounty), (iii) know that he is engaged in signing his will and (iv) know how he wishes to dispose of his assets.
The guardianship and conservatorship statutes of the three states in which fiduciaries were appointed for Eugene (Florida, Tennessee and Virginia) do not require a particular factual finding that Eugene was incompetent to such an extent that he was unable to execute a valid will. Acknowledging that the proponent of the Will has the burden of proving testamentary capacity by a preponderance of the evidence, the trial court heard the testimony of several witnesses, including the paralegal who assisted Eugene in drafting the Will, Eugene’s treating physician and Eugene’s social worker. The Supreme Court held that the evidence in favor of Eugene’s testamentary capacity was sufficient to uphold the trial court’s decision and affirmed that Eugene had the required testamentary capacity to execute the Will.
With regard to the undue influence issue, the Supreme Court stated that the general rule is that a presumption of undue influence is created when the testator was old at the time a will was executed, the testator named a beneficiary who was in a position of confidence or dependence and the testator previously had expressed an intention to make a different disposition under his will. In this case, however, the requirement that the testator be “old” did not apply. Eugene was 22 years of age at the time of his brain injury and 41 years old at the time he executed his Will. Additionally, Eugene had not previously expressed a different intention with regard to the disposition of his estate. At 22 years of age he did not have significant assets until after his injury. The Supreme Court agreed that there was insufficient evidence of undue influence to create a presumption which would shift the burden of proof to Diane. However, even if the presumption had been applied, the trial court indicated that the facts would have been insufficient for the court to come to a different conclusion. For example, the trial court noted that “notwithstanding the impairments that he suffered, [Eugene] was a stubborn man . . . if he did not want to do something, he . . . knew how to resist.” As a result, the Supreme Court affirmed the trial court’s ruling that there was no undue influence.
The Parish case is a good reminder that although an estate planner cannot avoid family disputes or will contests in the future, he or she should take steps to ensure that the preparation and execution of wills are handled appropriately. For example, when a client comes to my office accompanied by a family member or friend, I always take the opportunity to meet with the client alone. The client must be given an opportunity to speak openly with me about his or her wishes, outside of the presence of any other person. Engaging a client in a discussion of his or her thoughts and reasoning is better than asking questions that merely require yes or no answers. If I have concern about a client’s competence, or if I anticipate a challenge to the client’s Will after death, I request that the client obtain a current statement of capacity from a physician. Finally, it is always beneficial to prepare a memorandum to my file outlining the estate planning process.
–Lawrence G. Cumming
1 281 Va. 191, 704 S.E.2d 99 (2011).
2 Apparently, David Wayne declined to serve as Executor.