By Kent Berk on October 30th, 2024 in PROBATE LITIGATION
When someone signs estate planning documents like a will or trust, it is crucial that they do so voluntarily and with a clear understanding of the consequences. Unfortunately, not all estate planning documents reflect the true intentions of the person who signed them. There are situations where people are manipulated or deceived into signing documents that benefit others unfairly.
According to the Restatement (Second) of Property, Don. Trans. § 34.7 (1992), which Arizona generally follows: “If a donor is induced to make a donative transfer that the donor would not otherwise have made, (1) by undue influence; or (2) by duress; or (3) by fraudulent representations, the donative transfer may be set aside by the donor, or, if the donor is deceased, by the person to whom the transferred property would have gone if the transfer had not been made. A similar result may obtain in some circumstances if a mistake as to a relevant fact induces the donor to make a donative transfer.”
In this post, we will explore the differences between fraud and undue influence under Arizona law. While these concepts are often conflated, they are distinct, each with specific legal elements that must be proven to successfully challenge a document. Like many other probate rules, they share a common goal – to ascertain and fulfill the person’s true wishes. Check out the case of Estate of Rivenburg, 539 P.3d 1262 (Oklahoma 2023) for a concrete example of how these principles are applied in real life.
Fraud in Estate Planning
Fraud involves intentional deceit aimed at convincing someone to execute estate planning documents (or any document) based on false information or false pretenses. Fraud can take many forms and includes every form of deceit, either from misrepresentation or suppression of the truth under circumstances where disclosure should be made.
The fraudulent conduct must directly influence the creation, modification, or revocation of estate planning documents, such as wills, trusts, or powers of attorney. In other words, the party challenging the document must generally prove that the person would not have signed a particular document or included a particular provision “but for” the fraud.
Under Arizona law, there are two primary forms of fraud that can invalidate an estate document: fraud in the inducement and fraud in the execution.
- Fraud in the Inducement: This type of fraud occurs when someone is persuaded to sign estate planning documents due to false representations about why they should do so. For example, a family member might falsely tell an elderly person that other relatives are planning to abandon them, thus encouraging the elderly person to change their will in favor of that family member. If the misrepresentation changes the testator’s motivations for how they dispose of their assets (induces them to do something different), it would likely qualify as fraud in the inducement.
- Fraud in the Execution: Fraud in the execution occurs when someone is deceived about the nature of the document they are signing. For instance, an individual might be told that they are signing a power of attorney to allow a family member to help with finances, but the document is actually a will naming the family member as the sole beneficiary. Here, the person signing does not even understand the true nature of the document. The omitted beneficiary could challenge the new document based on fraud in the execution.
To successfully prove a claim of fraud in Arizona probate proceedings, the challenger must establish that the deception was relied upon by the testator or settlor, and that this reliance directly resulted in a testamentary or fiduciary decision that would not have otherwise been made. The burden of proof lies with the person alleging fraud, and they must present clear and convincing evidence of deceit, intent, and resulting harm.
Undue Influence in Estate Planning
Undue influence involves using improper pressure to overpower the free will of the individual creating the estate plan. Unlike fraud, undue influence does not necessarily involve deceit; instead, it refers to excessive persuasion by someone in a position of power or trust over the testator or settlor. Under Arizona law, undue influence can arise when someone in a confidential relationship with the testator uses that relationship to manipulate the testator’s decisions regarding the distribution of their estate.
Arizona courts examine several factors to determine whether undue influence occurred. These factors help determine whether the testator’s free will was overpowered by the influencer’s actions. These include:
- Vulnerability of the Testator: Was the individual physically or mentally vulnerable? Factors like age, isolation, or illness can increase susceptibility to undue influence.
- Authority of the Influencer: Was the influencer in a close relationship or did the person have a position of authority or trust over the testator? Examples include caregivers, family members, or even financial advisors. A confidential or fiduciary relationship can trigger closer scrutiny by the court.
- Actions or Tactics of the Influencer: Did the influencer actively participate in drafting the document? Did they find and hire the attorney who drafted the document? Were they present for and involved in the signing? Did the influencer deceive or lie to the person? These are all key questions.
- Unnatural or Unexpected Dispositions: Does the resulting estate plan significantly deviate from prior plans or what would be expected under the circumstances? For example, if a person who always intended to split their estate evenly among their children suddenly leaves everything to one caregiver, that change may be scrutinized as the product of undue influence.
- Secrecy/Isolation: Was the testator isolated from friends, family, or advisors? Influencers often try to prevent others from communicating with the testator in order to dominate their decision-making.
- Dependency: Was the testator dependent on the influencer for physical, emotional, or financial support? If the influencer provided daily care or otherwise played an essential role in the testator’s life, the court might scrutinize the situation for undue influence.
- Haste in the Execution of Documents: Was there a rush to execute the documents? Did the person have time to deliberate and consider the decision? Efforts to execute them quickly without usual safeguards can point to undue influence.
In undue influence cases, the burden of proof may shift under certain conditions. If it is shown that the person accused of undue influence had a confidential relationship with the testator, was active in the drafting and execution of the documents and received a disproportionate benefit, the burden may shift to the alleged influencer to prove that they did not exert undue influence. This burden-shifting mechanism is significant in Arizona probate litigation, as it helps balance the scales where there is already an apparent imbalance of power or control. However, this special rule does not apply challenges based on fraud.
Understanding all these factors is crucial in assessing whether undue influence may have occurred. Courts do not need direct evidence but can infer undue influence from the circumstances surrounding the relationship and the estate planning process.
Practical Implications for Arizona Residents
The Estate of Rivenburg case is a reminder that courts take allegations of undue influence and fraud seriously, especially when there is evidence of vulnerability and manipulation. Under Arizona law, the distinctions between fraud and undue influence are important because they determine the strategy and burden of proof in litigation.
- If you suspect fraud, you need to gather evidence of intentional deceit, such as false statements made to the testator.
- If you suspect undue influence, you need to focus on the relationship dynamics and evidence of improper pressure or coercion.
Whether you are contesting or defending an estate plan, understanding these distinctions will help you navigate the probate process more effectively. Consulting with a probate attorney can ensure you fully understand your rights and obligations.
How We Can Help
At Berk Law Group, we specialize in probate, trust, and estate litigation, including cases involving allegations of fraud and undue influence. We understand how emotional and complex these disputes can be, and we have the experience to help you determine whether a will or trust was executed under improper circumstances.
If you are concerned that a loved one’s estate plan was the result of fraud or undue influence, contact us today. Our knowledgeable team is ready to provide the guidance you need to protect your rights and ensure that your loved one’s true wishes are honored.
