An 87 year old deceased rich man who was never married and had no children had invested wisely and left a non-specific estate of over $7,000,000. His latest will executed left his residuary estate in equal shares to his sister, his brother, two children of his predeceased brother and his sister’s three children — the eldest son, the younger son and a daughter. His sister was named as executor however she died before her brother. His sister’s younger son is the successor executor. His nephew filed a petition to validate the 1988 will and was appointed as preliminary executor. Objections were filed by the deceased man’s brother and the two children of his predeceased brother. The objections alleged lack of authority capacity, fraud and undue influence.
In January, 1989, he was taken to a clinic after becoming dizzy and falling. In April, 1989, he had a stroke. He was seen by the doctors at his clinic, who documented the deterioration of his mental condition. In January, 1990, he established a trust for his sister and her children and ultimately transferred over $1,500,000 to it. In December, 1990, he was found wandering in the Bus Terminal. The nephew arrived at the terminal and returned his uncle to his apartment. However, he was soon discovered walking outside his apartment in his underwear. The police took him to a hospital, where tests showed organic brain syndrome of the Alzheimer’s type. He was placed in the Nursing Home for Adults, an adult care facility. He was hospitalized again where he was diagnosed as having advanced dementia and atrophy of the brain. He was discharged to an adult health care center. The other nephew brought a proceeding to be appointed his uncle’s conservator. He and another uncle were appointed as co-conservators. The rich man’s brother arranged for his brother to be transferred to a facility in California, where he died a few days later.
According to a New York Probate Lawyer, he objections to probate were tried before the Surrogate in a non-jury trial. The trial lasted nine days and was vigorously challenged. Based on the record, the Court found that the deceased rich man lacked the ability to execute a will in 1988. It further found that he was susceptible to undue influence due to his weakened physical condition, that his sister’s relationship with him was motivated by her interest in his money. It is further found that there was a confidential relationship between him and his sister created by her control over his finances. Critical to the finding that his sister had actually exercised undue influence over him in the will contest were the findings made by the Court that prior to 1986, he had given only small gifts to family members but that after his sister began to exert influence over him, he transferred almost $2,000,000 to trusts for the benefit of her children and that she signed checks to each of her children from an account he established. The nephew does not dispute receiving the money, but argues that he had no knowledge of any impropriety.
The Court denied validating the 1988 will on the grounds of lack of capacity to execute the will and undue influence. A Staten Island Probate Lawyer said the nephew appealed but the decision of the Surrogate was affirmed. Significantly, the appellate court considered the creation of the trusts and the 1989 gift checks as the product of undue influence.
A petition to remove the nephew as preliminary executor was filed. It was alleged that he should not be the preliminary executor because he and his mother had improperly transferred monies from his uncle to themselves during the last years of his uncle’s life. A Suffolk County Probate Lawyer said that after a conference with the court, the nephew agreed to file a temporary account of his actions as preliminary executor to which objections were filed.
After the 1988 will was denied validation, letters of administration were issued to the sister-in-law of the deceased man and to his niece from his predeceased brother. The co-administrators reached a settlement with two of his sister’s three children, concerning the non-probate assets they received from their uncle. The co-administrators were not able to reach settlement with his sister’s other son.
The Petitioner seeks an order compelling the nephew to turn over non-probate assets he received from his uncle. This consists of the proceeds of the trust established for him, his share of the trust established for the family, as well as cash taken from the deceased man’s assets which he received from his mother. In addition, the Petitioner seek to have the nephew reimburse the estate for attorneys’ fees he paid from the estate in the effort to validate the 1988 will. Finally, they seek to surcharge the nephew for funds allegedly unaccounted for since the intermediate account was filed.
Where the transfer is by gift, the recipient bears the burden of proving, by clear and convincing evidence, that the gift was voluntary and knowingly made by the donor, uninfluenced by fraud, duress or coercion. Moreover, where the gift is made by an agent, the recipient has the burden of showing that the agent was operating in the interests of the person in making the gifts.
The nephew claims the decision denying validation to the 1988 will has no bearing on the issue of lack of capacity and undue influence in the disputed gifts. He argues that the administrators cannot rely on the prior validation proceeding, under the doctrine of affirmative defense to establish the invalidity of the transfers. He has submitted an affidavit in opposition to the motion stating that he did not exercise undue influence on his uncle.
In the instant case, the Court found that the family members noticed changes in the deceased man’s behavior. At this time, he lost interest in personal hygiene and became unable to keep his apartment in order. Significantly, he was unable to keep his financial records in order. The changes were noted by his relatives and other witnesses.
Prior to this time, his sister had little contact with him, but his nephew had maintained contact with his uncle. His sister used her son to establish a relationship with the deceased uncle. When his mother informed him that she was taking over her brother’s affairs, the nephew ceased his visits with his uncle. By the spring of 1988, the deceased man’s sister was able to exert control over his finances. This was noticed by his tax preparer when he observed the sister bossing her brother. The deceased man set up a trust account for which his sister had authority to write checks. She used her authority to give $9,985 to her children and her brother established trusts for the benefit of her children.
The Court found that the deceased man lacked the capacity to execute a will as of October 1988, when the 1988 will was executed. The element of capacity to execute a will is an understanding that one is making a will, awareness of the nature and extent of one’s property and the objects of one’s bounty. Less mental capacity is required to execute a will than any other legal document. The capacity necessary to create a valid trust, on the other hand, is the same as capacity to make a valid contract. This is the same standard as the capacity to make a valid gift. Therefore, a finding that the deceased man lacked the capacity necessarily disqualifies a finding that he had the capacity to create a valid trust or gift. Once lack of capacity is shown, there is a presumption that it continues until overcome by clear and satisfactory evidence of capacity. There is no evidence that his mental condition ever improved. Indeed, it became progressively worse. Accordingly, the Court’s finding of lack of capacity to contest the will establishes his lack of capacity when the trusts and gifts were made. In addition, the large outright gifts to the children of his sister which his sister made from his accounts, wherein he set up a joint account with right of survivorship in her three children to which he transferred approximately $1.5 million from his other accounts. It is found that there was sufficient evidence not only that his sister had a motive and opportunity to exercise undue influence, but that such influence was actually utilized.
The nephew argues that the burden of proof is different in a contest of will and a proceeding to invalidate a gift or trust. In a contest of will, the burden of establishing capacity is on the proponent of a will. The nephew alleges that the burden of proving lack of capacity to the gifts is on the Petitioner. However, the burden of proving the elements of a valid gift is on the recipient, who must satisfy the burden by clear and convincing evidence. Where undue influence is alleged, the burden is on the party alleging undue influence, whether in a validation proceeding or proceeding challenging the validity of the transfer.
Some courts have declined to apply the doctrine of affirmative defense against a person appearing in his or her individual capacity who had earlier bring into court an issue in a representational capacity as the executor of an estate. However, an exception to this rule is made if the non-party contested or substantially controlled the prior lawsuit. If the non-party’s interests were fully and fairly represented, the doctrine may apply. As a consequence, a person who appears in his or her representative capacity that includes his or her own individual interests will be bound, by virtue of their representative status in the first proceeding.
In the instant case, there is no basis for the court not to apply affirmative defense to void the gift transfers. As noted above, the deceased man’s mental condition from 1988 through 1990 was questioned. This is the time period when the gift transfers were made. The nephew, as the beneficiary under a will that left him over $1,000,000 and as the beneficiary of equally substantial trusts and gifts, had a substantial and direct interest in litigating his uncle’s mental condition and in establishing the validity of the gift transfers to him. He was given a full and fair opportunity to litigate the validity of the gift transfers. Indeed, he litigated these issues aggressively at trial and on appeal. Warren does not allege any facts that would validate the disputed gift transfers which were not already raised in the validation proceeding. His statement that he never saw his mother unduly influence his uncle is not sufficient to create an issue of fact, especially because he testified at trial that he rarely saw his uncle after his mother came into the picture in 1986. Therefore, application of the doctrine of affirmative defense prohibits re-litigation of this finding in the instant accounting proceeding.
Based on the above, there is no basis to re-litigate the issue of capacity and undue influence. The court found the deceased man lacked capacity to execute a will as of October, 1988. In its decision, this court found that the subject transfers were evidence of the deceased man’s sister undue influence on his brother to benefit herself and her children. Based on the above, the gift transfers should be voided. Whereas the doctrine of affirmative defense disproves all issues capable of trial.
When family members start to doubt each other’s genuine interest, it is always better to seek legal opinion before signing anything to avoid getting yourself in a lawsuit. Stephen Bilkis & Associates with their New York Will Contest Lawyers can always give you a wise opinion.