In a decision by Honorable Robert P. Contillo, P.J.Ch. that was affirmed by our Appellate Division, the court analyzed complex family relationships to determine if gifts were made in good faith or the result of undue influence.

The decedent had two children. Her daughter (the plaintiff) was the executrix and a beneficiary of her estate. Her son (the defendant) was also a beneficiary of her estate. When the plaintiff filed an action for approval of the estate accounting, the defendant challenged the accounting.

First, he claimed that certain savings bonds should have been included in the estate. The plaintiff claimed that those bonds had been gifted to her two years prior to the decedent’s death, so they were not part of the estate.

Second, the defendant claimed that certain bank and brokerage accounts should have been included in the estate. Again, the plaintiff claimed that, during roughly the same time period, those accounts had been effectively gifted to her when the decedent added her as a joint account holder, so they were not part of the estate.

After a four day bench trial, the court found that the alleged gift of the bonds was not effective, because it was the result of undue influence. However, with regard to the bank/brokerage accounts, the court found that the pre-death transfers of those accounts were valid gifts.

With regard to the savings bonds, the transfer had been made by the plaintiff acting as agent under the decedent’s power of attorney, and was implemented with the help of the plaintiff’s son, who was a financial advisor. The court found that, although there was written evidence of the decedent’s intent to gift the bonds, that evidence was created by the attorney for the plaintiff, rather than by the decedent’s attorney. It occurred when the decedent was elderly and infirm, and shortly after the loss of her husband. The court found that the plaintiff had “a confidential relationship with decedent beyond that which was characteristic or typical of parents and adult children who are close.” The decedent lived in the plaintiff’s home, was dependent on her for food, shelter, transportation to medical care, and assistance with finances and medications. The relationship was “one of complete trust, and intimate dependence and reliance by an aged, ailing parent.” Moreover, the court found that several “hallmarks of undue influence” had been established: the decedent was living with and dependent on the plaintiff; the attorney who had drafted a codicil removing the defendant as an executor was not the attorney who drafted the will, but was someone recommended by the plaintiff’s son; the power of attorney was drafted by plaintiff’s son and witnessed by plaintiff’s fiancé. Although there was no evidence that plaintiff engaged in trickery or improper conduct, the trial court concluded that the plaintiff had failed to present clear and convincing evidence that the decedent had not been unduly influenced. Accordingly, the judge found that the alleged gift of bonds was invalid.

However, the trial court upheld the gifts of the brokerage and bank accounts. The court determined that the plaintiff had clearly demonstrated that the idea to add her as a joint account holder, to reward plaintiff for her caregiving, was suggested to the decedent by the decedent’s close friend. The idea, which was prompted by the decedent’s friend, was the product of the decedent’s own free will.

On appeal of the court’s decision regarding the bonds, the appellate court rejected plaintiff’s claim that the court had erred in finding a confidential relationship and shifting the burden of proof to the plaintiff. The Appellate Division agreed with the trial court and affirmed the decision:

A party contesting an inter vivos transfer must prove the gift was induced by the undue influence of the beneficiary; however, where the gift benefits one who stood in a confidential relationship to the testator and if there are additional [even slightly] “suspicious” circumstances, the burden shifts to the party who stood in that relationship.

The appeals court addressed the concept of a “confidential relationship.” Although it does not automatically exist between a parent and child, a confidential relationship exists “where the circumstances make it certain that the parties do not deal on equal terms, but on the one side there is overmastering influence, or, on the other, weakness, dependence or trust, justifiably reposed.” The appeals court accepted the trial court’s findings that a confidential relationship had been established; that, accordingly, the burden shifted to the plaintiff to establish by clear and convincing evidence that the transfer was voluntary; and that the plaintiff had failed to sustain that burden.

As to the brokerage and bank accounts, the defendant claimed on appeal that the court’s upholding of those transfers was inconsistent with the court’s determination that the bond transfer was invalid, because they both occurred during the same approximate time period. The appeals court rejected this argument. Although there was evidence supporting a contrary conclusion, there was substantial credible evidence supporting the trial court’s conclusion that those accounts were transferred by the decedent freely and intentionally, based on the recommendation of her close friend.

The trial court’s decision is attached here – Estate of Porto

The decision of the Appellate Division is annexed here – In the Matter of the Estate of Susan Porto

For additional information concerning probate litigation and will contests, visit:

Will Contests and Probate Litigation

_______________________________________________