55 CHAPTER 3 TESTAMENTARY CAPACITY ChapterScope The traditional method of opting out of intestacy is to execute a will. This chapter examines the first requirement for creating a valid will: testamentary capacity. Even if a testator has testamentary capacity generally, if the will or any part thereof is caused by a defect in capacity (insane delusion, undue influence, or fraud), the court will strike that part of the will. In particular, the chapter examines: • Testamentary capacity: The testator must be 18 years old and of sound mind. Sound mind requires the testator to have the ability to know (1) the nature and extent of his or her property, (2) the natural objects of his or her bounty, (3) the nature of the testamentary act he or she is performing, and (4) how all of these relate to constitute an orderly plan of disposing of his or her property. • Insane delusion: A false perception of reality that the testator adheres to against all reason and evidence to the contrary. A majority of courts hold that if a rational person could not reach the same conclusion under the circumstances, the belief is an insane delusion. A minority of courts holds that if there is any factual basis to support the belief, the belief is not an insane delusion. • Undue influence: Where another substitutes their intent for the testator's intent. Plaintiff bears burden of proving (1) the testator was susceptible, (2) the defendant had the opportunity, (3) the defendant had a motive, and (4) causation. • A presumption of undue influence arises in many jurisdictions and shifts the burden of proof to the defendant if the plaintiff can prove (1) the defendant and the testator were in a con fidential relationship, (2) the testator was of weakened intellect, and (3) the defendant takes the bulk of the testator's estate. • Fraud: An intentional misrepresentation, made purposely to influence the testator's testamentary scheme, which causes the testator to dispose of his or her property in a way which he or she otherwise would not have (causation). • Fraud in the execution occurs if a person intentionally misrepresents the nature of the docu ment that the testator is signing (either completely or in part). Fraud in the inducement occurs if a person intentionally misrepresents a fact to the testator to induce the testator to execute a will (or amend a provision in a will or revoke a will) in reliance upon the misrepresentation. • No contest clauses: A testator may include a clause in the will that provides that if the beneficiary challenges the will or any provision in the will, the beneficiary is barred from taking under the will. No contest clauses are generally valid but narrowly construed, and they may not be enforced, depending on the jurisdiction, if (1) there is probable cause to support the challenge, or (2) the challenge is based on forgery, revocation, or misconduct by a witness or the drafter. GENERAL TESTAMENTARY CAPACITY 57 c. Example: In In re Estate of Wright, 60 P.2d 434 (Cal. 1936), the testator died at the age of 69, survived by one daughter. He owned three parcels of land and miscellaneous personal property. His will, executed one year and four months before his death, left one parcel of land to a friend (along with the bulk of his personal property), one parcel of land to his daughter, and the third parcel of land to his granddaughter. In addition, he left one dollar to a number of other individuals (including his grandson). His daughter attacked the will, claimiin the testator lacked capacity. A string of witnesses, including the nonlawyer who drafted the will, testified that they thought the testator to be of unsound mind on the day he executed the will. The court started by noting the legal presumption of capacity, especially after the will had been signed and witnessed. The court also noted that the witnesses (and drafter where he or she is an attorney) have a legal duty to satisfy themselves of the testator's capacity before signing the will. Any attempts by such individuals to later claim that the testator lacked capacity will be viewed with great suspicion. The court then discounted the testimony of the other witnesses as simply (1) conclusory statements that the testator was unusual, or (2) isolated incidents of irregular behavior that did not go to the issue of sound mind. The burden to overcome the presumption of capacity is on the contestants, and they failed to meet their burden. The court upheld the will. 2. Testamentary capacity vs. contractual capacity: One must have contractual capacity to enter into a valid and binding contract. Contractual capacity is higher than testamentary capacity. a. Rationale: Contractual capacity is concerned with one improvidently disposing of one's assets during one's lifetime. The risk is that the person may become destitute and therefore dependent on the state for support. The state has a legitimate interest in not wanting to pay the cost of caring for those who could have cared for themselves. Testamentary capa city, on the other hand, is concerned with the level of capacity necessary to transfer one's assets at time of death. The state has less of an interest in the possible consequences of testamentary transfers. If one improvidently transfers his or her assets at death, there is no risk that the state will have to care for the transferor because he or she is dead. Hence, the level of capacity necessary for testamentary capacity is lower than the level of capacity necessary for contractual capacity. b. Appointment of conservator: If a person lacks contractual capacity, a conservator is appointed to handle the person's affairs. Because testamentary capacity is lower than con tractual capacity, the mere appointment of a conservator does not mean that the person necessarily lacks testamentary capacity. More facts would be necessary to determine if the person lacked testamentary capacity. 3. Testamentary capacity vs. marriage capacity: Testamentary capacity is higher than the capacity necessary to marry. The right to marry is a fundamental right. It is accorded special status that limits the state's ability to regulate it. Accordingly, the level of capacity necessary for a valid marriage is below testamentary capacity. Summary: Contractual capacity > testamentary capacity > capacity to marry INSANE DELUSION 59 world, the contestant has a better chance of convincing the court that the testator suffered from an insane delusion. The doctrine is extremely fact sensitive. Courts and juries appear more likely to conclude that an insane delusion was caused by something traumatic that happened to a testator during his or her life than that an insane delusion just occurred. 6. Protection of testator's intent: The any factual basis approach is more protective of testator's intent. If there is any factual basis that supports testator's belief, no room exists for a jury to substitute its belief. Under the rational person approach, even if some factual basis supports the testator's belief, if the jury thinks the belief is too bizarre, the jury can substitute its belief. 7. Example: In In re Honigman, 168 N.E.2d 676 (N.Y. App. 1960), testator and his wife were faithfully married for 40 years. At the age of 70, after undergoing surgery for prostate cancer, he became obsessed with the belief that his wife was being unfaithful. He told anyone who would listen that she was having sex with every man she met, that she hid men in the closet and under the bed, and that she hauled men up into their second-floor bedroom window by tying bedsheets together and pulling them up. Testator executed a will that left his wife the bare minimum permitted under the law and the rest to his siblings. He told his attorney that his wife was independently wealthy and he wanted to take care of his siblings. After his death, his wife challenged the will claiming that his belief that she was being unfaithful was an insane delusion. In support of the belief, the siblings presented evidence that the wife always answered the phone; that she received a sentimental anniversary card addressed only to her from a male friend on a day that was not the testator and his wife's anniversary; and one day when the testator was leaving, the wife asked when he would be back. The testator became suspicious, so he hid near the house and watched the same male friend of theirs who sent the anniversary card enter the house. a. Rational person analysis: The question is whether a rational person in the testator's position could reach the same conclusion. After 40 years of faithful marriage, the testator's belief appears to be the result of his coming out of the surgery not quite the same man. While it is theoretically possible that his wife may suddenly have begun a life of promiscuous and wild sex, the testator's claims seem rather preposterous under the circumstances. b. Any factual basis analysis: The question is whether there is any factual basis to support the testator's belief. The key here is how much nexus there must be between the belief and the allegedly supportive evidence. The testator's siblings offered three bits of evidence that arguably support the belief, but only indirectly at best. The siblings have an argument, though. c. Court's holding: Applying the rational person test, the court held that the contestants had presented sufficient evidence from which the jury could conclude that the testator suffered from an insane delusion. C. Causation: Even if the testator suffers from an insane delusion, the insane delusion is irrelevant unless it is shown that the belief caused the testator to dispose of his or her property in a way that the testator would not have otherwise. 1. Majority: Most jurisdictions require "but for" causation: But for the insane delusion, the testator would not have disposed of his or her property as he or she did. 2. Minority: A minority of jurisdictions requires only that the insane delusion might have affected the disposition of the testator's property. UNDUE INFLUENCE 61 defeat a will contest on a motion for summary judgment. At a minimum, the beneficiaries under the will are looking at the costs of trial, the potential embarrassment of the testator's eccentric beliefs being made public, and, in light of jury's natural sympathy with the contestants, the possible costs of an appeal. In light of the inevitable costs of defending the will, most beneficiaries will agree to settle for a percent of the gift under the will (the percentage varies with the facts) under the cost-benefit analysis that even if they were to prevail, the costs of defending the will would be greater. c. Family protection: In light of the jury's sympathy for family members where there is an unnatural disposition in the testator's will, many argue for a stronger approach to family protection doctrines. Many European countries grant children a right to take from a parent's probate estate. III. UNDUE INFLUENCE A. Introduction: The second defect in testamentary capacity that may render a will invalid is undue influence. B. Definition: Undue influence is difficult to define. It is "substituted intent"—when one influences the testator to the extent that the will expresses the influencer's intent, not the testator's intent. Others have defined it as coercion, though not necessarily coercion of a physical nature, but more of a mental, emotional nature. Proof: Rarely is there direct evidence of undue influence. At best, there is circumstantial evidence. C. Traditional rule statement: The prevailing view is that the traditional undue influence doctrine has four elements: • Susceptibility: Was the testator susceptible to the undue influence? • Opportunity: Did the defendant have the opportunity to exert undue influence? • Motive: Did the defendant have a motive for exerting undue influence? • Causation: Did the undue influence cause the testator to dispose of his or her property in a way that the testator would not have otherwise? 1. Burden of proof: Under this approach, the party challenging the will bears the burden of proof. 2. Causation: Note the nature of the four elements. The first three are, by nature, factual. It is relatively easy to marshal facts that reflect directly upon them. Invariably, the analysis comes down to the final requirement—causation. It is the toughest to prove. Rarely are there facts that go directly to it. The issue is whether the alleged facts combined to cause the testator to dispose of his or her property in a way that the testator would not have otherwise. That is more of a legal conclusion than a question of fact. It is usually the determining element. 3. Example: In Upper v. Weslow, 369 S.W.2d 698 (Tex. App. 1963), testatrix's will left her estate to her two surviving children and disinherited the issue of her predeceased son. The issue of the predeceased son sued claiming undue influence on the part of the surviving son, Frank. UNDUE INFLUENCE 63 evidence that for years the testatrix had told a number of different people that she intended to disinherit her grandchildren arguably overcomes the presumption. 6. Comparison: In essence, the presumption doctrine provides that where the plaintiff can prove the first three elements of the traditional doctrine by this particular evidence, then a presump tion of causation arises, and the burden shifts to the defendant to show no undue influence. 7. Fact sensitive: Just as with insane delusion, undue influence is an extremely soft, fact-sensi tive doctrine. Often the analysis is more about marshaling the facts and making the arguments pro and con than it is about the conclusion one reaches because it is so difficult to predict with much certainty how a court would rule. 8. Nontraditional relationships: Because undue influence is such a soft, fact-sensitive doctrine, there is the potential for abuse. In applying the doctrine, juries may be affected by how they perceive the testator's relationship with the party alleged to have committed undue influence. The more nontraditional the relationship, the more potential the jury will impose its own values in assessing the nature of the relationship. Just as with insane delusion, a fairly high percentage of jury findings of undue influence are reversed on appeal. E. Deterring challenges: Alleged defects in capacity are among the most common grounds for challenging a will (or trust). Assuming one were anticipating a challenge, there are a number of estate planning tools that one might consider using to reduce the likelihood of such a suit and to decrease the chances that such a suit would be successful. 1. No contest clause: A no contest clause is a clause that says if a beneficiary under the instrumeen sues contesting the instrument, the beneficiary loses whatever he or she is taking under the instrument. a. Public policy considerations: No contest clauses are something of a double-edged sword. No contest clauses may deter strike suits and protect testator's intent, which are good. But no contest clauses may actually be shielding a party's wrongful conduct, which is bad. b. Construction: Because of the mixed public policy concerns, the general rule is that no contest clauses are valid but are construed narrowly and are not enforceable in certain situations. An action to construe a will is not considered a will contest. c. Enforceability: To say that a no contest clause is unenforceable means that even if a beneficiary contests and loses, the beneficiary still takes his or her original gift under the will. The jurisdictions are split as to when no contest clauses are unenforceable. i. Majority/UPC approach: A majority of jurisdictions and the UPC refuse to enforce a no contest clause if there is probable cause to support the will contest, whatever the nature of the contest. UPC §§2-517 and 3-905. Rationale: If there is probable cause to support the claim, the risk that the no contest clause is being used to shield wrongful conduct is too great to ignore. The legal system wants such contests brought and investigated to ensure that the will is not the product of wrongful conduct. ii. Minority approach: In a minority of jurisdictions, a no contest clause is unenforceable, regardless of the amount of evidence supporting the claim, if the claim is one of forgery, revocation, or misconduct by one active in the procurement or execution of the will. This UNDUE INFLUENCE 65 2. Minority approach: Some jurisdictions are so concerned about gifts to the drafting attorney that they create an irrebuttable presumption of undue influence. Exceptions: The irrebuttable presumption of undue influence generally cannot be overcome by evidence that the client freely and independently wanted to make the gift. The presumption can only be avoided. The attorney must come within one of two exceptions to the presumption: (1) the attorney is related to or married to the testator, or (2) the will was reviewed by an independent attorney who advised the testator about the potential for undue influence to make sure the gift was the free and voluntary act of the testator. 3. Example: In In re Will of Moses, 227 So. 2d 829 (Miss. 1969), the testatrix, an older woman, was having sexual relations with her younger male attorney. The testatrix decided to change her will to leave the bulk of her estate to her attorney. She went to an independent attorney, who drafted a will that she properly executed that expressed her wishes, but the attorney failed to investigate the nature of her relationship with the beneficiary or to advise her about the appear ance of undue influence. The court held that due to the attorney-client relationship between the testatrix and the beneficiary, a special presumption of undue influence arose even though he did not draft the will. Moreover, the presumption was not overcome because although the testatrix went to an independent attorney, the attorney did not advise her about the potential for undue influence to make sure the gift was her free and voluntary act. Criticism: Critics have argued that in Moses, the court was more concerned with the nontradiitiona sexual relationship than it was with the attorney abusing his fiduciary relationship with a client by receiving a gift. Note again the potential for improper use of the doctrine due to its soft, fact-sensitive nature. 4. Rationale: Most jurisdictions found it necessary to create a special presumption of undue influence for the attorney who takes because the existing doctrines (the basic four-element approach to undue influence, and the basic burden shifting, presumption of undue influence) did not do a good job of covering the problem. a. Presumption of undue influence doctrine: Under the general presumption of undue influence doctrine, the attorney-client relationship constitutes a confidential relationship. It is easy to argue that the testator is of weakened intellect, relative to the attorney, partic ularly if the client is elderly or physically debilitated. But the gift must constitute the bulk of the testator's estate. A shrewd attorney could avoid application of the presumption of undue influence doctrine by making sure he or she did not get too greedy—that is, by making sure that the gift, while substantial, did not constitute the bulk of the testator's estate. b. Basic undue influence doctrine: Under the basic undue influence doctrine, where the attorney who drafts a will takes under it, it is relatively easy to prove susceptibility (testator confided in attorney and relied upon attorney's advice in drawing up will), opportunity (attorney had access to client's innermost thoughts about estate plans and finances, had a fiduciary relationship with client, and had the ability to influence testator's thinking), and motive (money). As usual, however, the difficult element is causation. The attorney would argue there was no substituted intent—that the gift was the client's true intent in apprecia tion of years of service. 5. Ethical considerations: In addition to invalidating the gift, the interested drafter may be subject to ethical discipline. Rule 1.8(c) of the Model Rules of Professional Conduct provides FRAUD 67 c. Fraudulent failure to execute: If the fraud causes the decedent not to execute a will that he or she otherwise would have, although the court will not execute the will for the decedent, the court can impose a constructive trust on the parties who take the decedent's probate property and order the property distributed to the parties who would have taken the property had the decedent executed the will that the misconduct prevented the decedent from executing. i. Constructive trust: The practical effect of this remedy is to give effect to the will that the decedent did not execute. The constructive trust remedy is rare, but courts have imposed it, where appropriate, to prevent unjust enrichment by those who would otherwiis receive the decedent's property. As a general rule, the unjust enrichment must result from some party's misconduct. ii. Example: In Latham v. Father Divine, 85 N.E.2d 168 (N.Y. App. 1949), testatrix's will left almost all of her estate to Father Divine. The plaintiffs alleged that the testatrix intended to revoke that will and execute a new will leaving her estate to them, but the testatrix was prevented due to Father Divine and his followers' fraud, undue influence, and physical force. The court ruled that the plaintiffs' complaint stated a case for relief in equity and, if proved, entitled the plaintiffs to a constructive trust ordering the beneficiiarie under the testatrix's will to transfer the property to the plaintiffs. iii. Duress: The Father Divine case can also be characterized as an example of duress. Duress is a subset of (and extreme example of) undue influence. The Restatement (Third) of Property, Donative Transfers, provides that duress occurs where a wrongdoer performs, or threatens to perform, a wrongful act that coerces the donor into making a donative transfer he or she would not have otherwise made. Transfers procured by duress are invalid. D. Tortious interference with an expectancy: Where a third party has committed misconduct in the testamentary process, those who would have taken but for the misconduct can also sue the third party for tortious interference with an expectancy. 1. Misconduct: The plaintiffs have to prove that the third party committed fraud or undue influence. 2. Advantages: Inasmuch as the plaintiff must prove fraud or undue influence, the plaintiff could just sue under those doctrines, but the tort action has advantages over a suit in probate for fraud or undue influence. a. Not a will contest: If a will contains a no contest clause and a beneficiary sues for fraud or undue influence, the challenge would come within the scope of the no contest clause, and the beneficiary may lose his or her gift under the will if he or she were to lose the challenge. If, however, the beneficiary sues claiming tortious interference with an expectancy, that tort action does not challenge the validity of the will or any provision of the will and thus does not trigger the no contest clause. By suing in tort, even if the plaintiff were to lose, he or she could still take under the will as a beneficiary despite a no contest clause. b. Punitive damages: By suing in tort, the plaintiff is eligible to claim punitive damages. If the plaintiff sues for fraud or undue influence, the typical remedy is simply to strike those parts of the will affected by the fraud or misconduct. Punitive damages are not available when challenging a testamentary scheme affected by fraud or undue influence.