From time to time I field calls in my office from a son, daughter or other loved one who tells me that they fear their elderly relative (mom, dad, uncle or aunt) is being taken advantage of.
Usually the accused is another relative (sister, brother, cousin) who allegedly transferred assets for their own benefit and to the detriment of an elderly relative. The accuser is usually a named beneficiary in the will or trust, and their motivation to call me is the fear that they are losing some (or all) of their future inheritance.
They ask me whether they can level a charge of “undue influence” to reverse whatever has happened. Recent Florida court decisions tell us that the charge of “undue influence” often doesn’t work in the setting where the elderly relative is still alive, but there may be other means available when one fears an elderly relative is being financially taken advantage of.
Case in point is that involving a Ms. Helen Wedrall – who had established and transferred her assets to The Helen M. Wedrall Revocable Living Trust. The terms of the trust provided that upon Mrs. Wedrall’s death, her trust was to be equally divided among her three sisters, Agnes Wedell, Dorothy Ziegler and Liz MacIntyre. Prior to her death, Ms. Wedrall removed her assets from the Trust and transferred them into an account jointly titled with only one of her sisters, Agnes Wedell.
Upon her death, Agnes inherited the account and the other sisters got nothing.
Following Ms. Wedrall’s death, Ms. MacIntyre, the successor trustee of her sister Helen’s trust, filed suit against Ms. Wedell alleging that the transfer of assets and effective termination of the Trust was made at a time when Ms. Wedrall was suffering from physical and mental ailments and were the product of undue influence.
In reliance of a 1984 Florida Supreme Court case, the district court dismissed the complaint. In the prior case, the Florida Supreme Court indicated that the Settlor of a revocable trust has the right to recall assets at any time, and therefore gain absolute ownership over the property. As a result, the “co-trustee could not seek to preclude the Settlor from revoking the trust on the grounds of undue influence.”
“…courts have no place in trying to save persons [who are] otherwise competent [from what may or may not be her own imprudence with her own assets. When she created this trus, she provided a means to save herself from her own incompetence, and the courts can and should zealously protect her from her own mental incapacity. However, when she created this trust, she also reserved the absolute right to revoke if she were not incompetent. In order for this to remain a desirable feature of a trust instrument, the right to revoke should also be absolute.”
In other words, undue influence is a proper means to defeat a provision found in the trust instrument itself, but under Florida law the charge can only be made after the Settlor’s death. A charge of undue influence, however, is apparently not a valid legal means that can be used to undue a transfer out of a revocable living trust.
While I disagree with the court’s rulings in these lines of cases, there remains another means to challenge a transfer of assets that would appear to benefit one person at the detriment of the original account owner. Florida Statutes Section §825.103 was enacted to prosecute those who prey on an “elderly person” or “disabled adult”. A felony charge awaits those who utilize deception or intimidation to obtain or use an elderly person or disabled adult’s funds, assets or property with the intent to deprive them (permanently or temporarily) of the “use, benefit or possession of the funds, assets or property,” or to benefit someone else.
Warning signs include significant withdrawals from the person’s account, sudden changes in financial condition, suspicious changes to their legal documents and additions of names to bank account signature cards. This charge is a criminal matter that can lead to a police investigation, so it should not be taken lightly.
Another possible course of action is to institute a guardianship proceeding with a court. This is an adversarial proceeding where the court determines if a person is competent or incompetent. Again, the court does not take this consideration lightly, and is reluctant to adjudicate incompetency unless there is irrefutable evidence of same.
The best course of prevention is to remain active in the lives of those who you feel may become “prey”. In Ms. Wedrall’s case it was her sister who appeared to take advantage, so even those closest to us might become predators. If you are concerned about yourself or a loved one along these lines, make sure you mention it to the estate planning attorney who can help minimize this possibility.
©2009 Craig R. Hersch