“Any estate plan, even a deed, can be overturned on the basis of undue influence, which is a three-legged stool.”
Let’s consider this example: A couple has a son and a daughter. Both are named beneficiaries on a revocable trust. The parents decide they want to change the revocable trust, naming the daughter as the sole beneficiary. They also want to revoke the son’s power of attorney. The trust is simple, and the assets include a home and some bank accounts.
Anyone has the right to leave their assets to anyone they choose, but the couple (and the daughter) should expect the son to challenge this disinheritance and if that is truly what they wish, they need to plan in advance for litigation.
For starters, the couple needs to meet with their estate planning attorney, privately, with the daughter nowhere in sight. She should not even give them a ride to the attorney’s office. There will be questions about “undue influence” directed at her.
Undue influence is a legitimate reason to challenge an estate plan. The three factors in undue influence are:
“Confidential relationship”—meaning that the parents trust and confide in the daughter;
“Active procurement”—for instance, if the daughter made the appointment, joined in the meeting and spoke on behalf of her parents; and
“Unjust enrichment,” which means that one person is trying to get more than a “fair” share.
If these three conditions are met, the changes in the estate could be found to be invalid. The burden of proof would be on the daughter to prove that this was what her parents wanted and not what she devised. It would not be an easy case.
This couple needs to meet with their estate planning attorney and amend their trust. The attorney and their staff members will be considered “disinterested witnesses” who will be able to speak to the parents’ mental capacity and whether it was truly their intent to favor the daughter. The attorneys in this case need to be extra careful to take thorough notes. If there is a lawsuit, the daughter might have the opportunity to say why the change was made, but her testimony may be disregarded as self-serving.
Another question that comes up when people want to disinherit a child, is whether they should simply change the name on the deed to the home, thinking that this will avoid an estate battle. That becomes problematic on many levels. If they decide they want to sell the home, or borrow against it, or get a reverse mortgage, then the deed must be retitled again. If the daughter gets title to the home and has some kind of legal trouble, a judgement lien could be recorded against the house.
Parents who are thinking of disinheriting a child need to speak with an experienced estate planning attorney to prepare the correct estate planning documents and to prepare for any lawsuits that may result.
Reference: Santa Cruz Sentinel (June 9, 2019) “No shortcuts when planning estate trust.”