Undue Influence Defined: New Statutory Definition and Recent Case Law

undue_influenceEffective January 1, 2014, California adopted statutes that provide a new definition for undue influence that incorporates modern knowledge of how elders are unduly influenced and taken advantage of by those they trust. AB 140 was signed into law and is codified in new California Probate Code section 86 and California Welfare and Institutions Code section 15610.70. The prior definition of undue influence was enacted in 1872 and had never been revised. That definition was set forth in California Civil Code section 1575, [1] which was in the context of contract law. There has been a longstanding need for a clear definition of undue influence for California probate courts.

California Probate Code Section 86 and California Welfare and Institutions Code Section 15610.70

New California Probate Code section 86 now states that “undue influence” has the same meaning as in California Welfare and Institutions Code section 15610.70 and that “the intent of the Legislature is that this section supplement the common law meaning of undue influence without superseding or interfering with the operation of that law.”

California Welfare and Institutions Code section 15610.70(a) defines undue influence generally as “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” California Welfare and Institutions Code sections 15610.70(a)(1)-(4) go on to enumerate factors to be considered. They include:

  1. The victim’s vulnerability, evidence of which may include “incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.”
  2. The influencer’s apparent authority, evidence of which may include “status as a fiduciary, family member, care provider, healthcare professional, legal professional, spiritual advisor, expert, or other qualification.”
  3. The influencer’s conduct, evidence of which may include “(a) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep; (b) Use of affection, intimidation, or coercion; (c) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.”
  4. The equity of the challenged result, evidence of which may include “the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.”

The foregoing are factors that the trier of fact must consider when determining whether a decision was obtained by undue influence. An inequitable result alone is not sufficient. Circumstantial evidence may be used to prove undue influence, as it can be difficult to prove undue influence by direct evidence because it often occurs behind closed doors and without witnesses.

Steven Riess, an attorney in San Francisco whose practice specializes in elder financial abuse and related matters, sponsored and wrote the text of the legislation for the new definition of undue influence. In discussing the origin of the term “excessive persuasion,” Mr. Riess stated, “The courts have long recognized that influence is commonplace in interpersonal relations. However at some point, influence may become ‘undue.’ In two leading cases, the [California] Court of Appeal characterized influence that crosses this line as ‘over persuasion’ or resulting from ‘excessive pressure.’ The new statute echoes these case law phrases by combining them into the new term ‘excessive persuasion.’”

Mr. Riess mentioned that when a colleague first heard the term, he commented that “it sounds like a perfume.” (If it were a perfume, it would be a bad smelling one). Excessive persuasion appears to be an excellent broad term for assessing undue influence.

Undue influence is a particularly insidious form of financial elder abuse. Significantly, undue influence doesn’t necessarily go hand in hand with lack of mental capacity; one can be unduly influenced while still retaining capacity. Historically, this situation was insufficiently recognized by statute. The new definition decouples the concept of undue influence from cognitive impairment. The vulnerability of the victim is central to undue influence, as well as the apparent authority of the influencer and the use of manipulation.

Many elders do not have significant cognitive impairment, yet are still highly susceptible to undue influence and being taken advantage of by someone they trust. Some common examples of undue influence are when a family member, friend or caregiver convinces an elderly adult to change a trust or will in his/her favor or when a financial power of attorney mishandles the financial affairs of a senior, taking assets out of the elder’s estate and putting them in the individual’s own name.

The new contemporary definition of undue influence that is now set forth in the probate code will bring greater clarity to the determination of when excessive persuasion has become exploitive.

 Lintz v. Lintz

The recent case of Lintz v. Lintz (2014) 222 Cal.App.4th 1346 is an action that was brought by the decedent’s daughters against defendant, the decedent’s third wife. The decedent was an elderly multi-millionaire retired developer. The decedent amended his trust several times after his marriage to the defendant, first naming her as a 50 percent beneficiary, then repeatedly amending the trust each time, giving defendant a larger share of the decedent’s estate while increasingly disinheriting decedent’s children.

Finally, decedent and defendant, as joint settlors and trustees, executed a new trust, prepared at the defendant’s direction by defendant’s attorney. In the new trust, all of decedent’s property was characterized as community property, defendant was given an exclusive life interest in decedent’s estate, and given the right to disinherit decedent’s youngest child and leave any unspent residue to decedent’s two children from a prior marriage. Decedent died a year later. Decedent’s children filed a lawsuit against defendant alleging financial elder abuse and undue influence, among other causes of action.

The probate court at trial found defendant liable and ruled that, while decedent had testamentary capacity to execute the trust documents, defendant had procured them by undue influence and the court invalidated them. The court of appeal, in affirming the probate court’s decision, considered the requirements for undue influence as to both financial elder abuse and the invalidation of testamentary instruments.

The court of appeal also found that, although the probate court applied the incorrect standard for legal capacity and failed to apply a presumption of undue influence to the inter-spousal transactions at issue, the judgment was amply supported by the evidence. In doing so, the court of appeal found that there was sufficient circumstantial evidence to support a finding that the execution of the testamentary instruments had been obtained by undue influence. The court found that the widow exerted undue influence specifically “to procure estate plans and control over assets, according to her wishes and contrary to the wishes of decedent.”

While the Lintz decision applies to pre-January 1, 2014, matters, the court looks at undue influence in the context of financial elder abuse and sets forth a wider encompassing view of the case law definitions in the testamentary context.

Interestingly, in a footnote to the case, the court notes that during the pendency of the appeal, the Legislature added new Section 15610.70 to the California Welfare and Institutions Code with the new definition of undue influence, as well as adding Section 86 to the California Probate Code. They stated that while the new legislation does not affect their analysis, “it eliminates any doubt that the two standards are now the same.” Therefore, the Lintz case is a significant bridge from what the law has been in the past to the law under the new definition.

Attorneys need to determine if their clients are free of undue influence in matters such as powers of attorney, trusts, wills, testamentary gifts and validity of deeds, all of which, when contested, may involve allegations of undue influence. These should be important considerations for both litigation attorneys and drafting attorneys.

The new more expansive statutory definition and recent case law, including the Lintz case, should lead to greater protection for elders who are taken advantage of by undue influence.

Michael LaMay, an attorney in Walnut Creek, specializes in trust and estate litigation, financial elder abuse litigation, contested conservatorship litigation, trust administration, probate, conservatorships and estate planning, and serves as Vice-Chairman of the Board of Directors of the CCCBA Elder Law Section. You can contact the author at michaellamay@msn.com.

Other articles you may be interested in:

Capacity and Undue Influence – Janet Li and Timothy Mahi’ai White

[1] California Civil Code section 1575: Undue influence consists: 1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him; 2. In taking an unfair advantage of another’s weakness of mind; or, 3. In taking a grossly oppressive and unfair advantage of another’ s necessities or distress.

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