As a follow-up to Tiffany’s blog on the basics of undue influence, this blog focuses on a subset of undue influence cases involving a fiduciary relationship. What is a fiduciary relationship and why is it important? The clear fiduciary relationship is based upon a “per se” fiduciary relationship, such as a lawyer-client relationship, trustee-beneficiary relationship, or attorney-in-fact (a type of principal-agent relationship). But a fiduciary relationship also can arise out of the specific circumstances of the relationship. These include situations where there is a high level of trust placed on or discretion given to someone, such as through bill paying, managing investments, overseeing day-to-day life for someone, etc.
Whether or not a fiduciary relationship exists is important from a legal perspective because it could impact which party has the burden of proof at trial. Typically the party alleging undue influence has the burden of proof at trial. In cases involving a fiduciary relationship, however, the burden of proof could shift to the fiduciary to prove the absence of undue influence, by establishing that the transaction at issue did not violate their fiduciary obligations. Such burden-shifting occurs only where the fiduciary has actually taken part in the transaction at issue. An obvious example is where a trusted daughter, who serves as attorney-in-fact for her elderly parent, arranges for a new estate planning attorney to prepare a new estate plan; actively participates in the meetings with the new attorney and her parent; winds up as the sole beneficiary of her parent’s estate to the exclusion of siblings. Questions arise whether the parent received independent legal counsel or made the bequests with full knowledge and intent. It certainly could be argued that the daughter orchestrated this new estate plan and the elderly parent merely acquiesced to their daughter’s recommendations.
These are my favorite type of probate litigation cases because of their factual and legal complexity. It is important to pursue discovery from relevant witnesses and to analyze the facts with an eye on potential burden-shifting, as this type of legal argument could impact settlement discussions and the burden of proof during trial. As always, if you face a legal issue involving undue influence claims, it is important to consult an attorney who specializes in this area of the law.
Until next time, and stay healthy!