Changes in a person’s will and estate plan that vary from equal distribution of assets among heirs, as favored by law, should raise red flags, elder law attorneys say.
State law carries a presumption of the exercise of undue influence in such cases. In instances where a dispute among rightful heirs may result in litigation, practitioners say attorneys have a duty to ensure that their client hasn’t exerted undue influence.
“You have to establish to your own satisfaction that the individual is competent and capable of handling their own affairs,” Marion attorney Joseph Certain said of the grantor in such cases. “You have to look at the relationship between the individuals and why they’re doing what they’re doing.”
Certain represented the prevailing party at the trial court level in a case recently affirmed by the Indiana Court of Appeals, largely due to precautions counsel took in a guardianship case with an unusual set of circumstances.
Phyllis Hayes agreed in 2005 to execute a promissory note, mortgage, will and option contract that gave her son, Kenneth, the right to purchase the family’s 200-acre farm in southern Miami County for $500,000.
Kenneth Hayes had loaned his parents $180,000 several years earlier, and the record revealed this helped save the family farm. But when Kenneth Hayes said he planned to purchase the farm in 2010 by exercising the option agreement his mother signed, his sisters Jo Ann Hayes and Diane Hale objected, particularly because the value of farmland had more than tripled since the contract was signed.
Though Kenneth Hayes had power of attorney over his mother, he hadn’t used it to facilitate the land sale, the record says. Lawyers who represented him at the trial court and on appeal said they made sure that had been the case.
Certain said the case circumstances were very unusual, “which is why we took extra steps to document the whole process.”
Certain represented Kenneth Hayes when the trial court allowed him to purchase the farm under the 2005 contract. The Court of Appeals affirmed May 29 in Guardianship of Phyllis D. Hayes, an Adult, Joann Hayes and Dianna Hale v. Kenneth J. Hayes, 52A02-1308-GU-751.
In representing Kenneth Hayes, Certain said he visited with Phyllis Hayes independently in 2005, as did his office manager. They wanted to see for themselves, individually, that Phyllis Hayes was competent. They also got a doctor’s statement saying she was capable of making decisions regarding her estate.
Certain said Phyllis Hayes “was very well-spoken and comported herself very well” and continued to handle her own affairs and take an active role in managing the farm. He asked her why she was changing her estate plan, and she explained that not only had her son helped out in hard times, he also helped run the farm until his father died a few years earlier and had continued to assist.
“Our sole interest was to do the best we could to demonstrate that (Phyllis Hayes) was capable and to see what we could do to get her wishes carried out,” Certain said.
“She wanted the son to get repaid with interest for the money he put into the farm to save it for the family, and, if he was so desirous, to keep the farm in the family,” he said.
Certain was so sure of Phyllis Hayes’ competence that he chose to videotape her talking about why she changed the estate plan – a move he admits could have backfired. In this case, though, “It’s hard to look at that tape and suggest she was anything other than fully competent or there was any evidence of anyone trying to influence her.”
That was a concern when he chose to turn on the camera, though. “What I was concerned about was it would look like I was influencing her,” Certain said. “I tried to be very careful. … I just asked her two questions and let her explain.”
That concern is a legitimate one, said Indianapolis attorney John Cremer. He has never used a video record in the thousands of estate matters he has handled. He believes elderly people may become anxious when the camera is introduced and they consider the gravity of what they say. “The lawyer ends up cueing the client and making it look unnatural,” Cremer said.
If he were to use a video, Cremer said he might opt for something closer to a “day in the life” scenario, following the client and allowing her to discuss why one family member is being favored over another. But video may present another danger. If a video statement is taken in one case and it’s not a common practice, the motivation for recording a particular client could come into play, he said.
“I think there are better ways to protect the plan than to videotape,” Cremer said. “I’m a big proponent of clinical capacity assessments.” Those assessments are done by a health care practitioner who’s instructed on the legal standards for capacity, so “the clinician knows exactly what to test for.”
Anderson attorney Thomas Beeman argued the Hayes case successfully before the Court of Appeals and said the record was replete with evidence of the mother’s competence. Crucial to overcoming the presumption of undue influence, Beeman said, Kenneth Hayes was never involved in drafting the contract giving him the option to buy the farm, and his mother was represented by counsel during that time.
“When an attorney allows one of the children to be involved in the process itself, it brings into the picture all kinds of inferences,” Beeman said, noting the care taken in this case to keep Kenneth Hayes and his counsel from advising Phyllis Hayes.
“You see a lot of cases where that’s not the way it was done,” Beeman said. “Attorneys seem to have a blind spot where that’s concerned.”
Beeman said he might have done one thing differently in this case back in 2005: obtain an appraisal of the farmland. But attorneys did the next-best thing, offering testimony from an appraiser that the agreement had been based on fair-market value per acre of farmland at the time the contract was drawn.
Indianapolis attorney Claire Lewis said it’s imperative for lawyers to do a little detective work when an heir or grantor attempts to change estate plans in their favor. Lewis is a board member for the Indiana Chapter of the National Academy of Elder Law Attorneys.
“If you’ve got a parent with six children and all of a sudden they’re deciding to leave everything to one child, I’m going to ask some really tough questions,” Lewis said. “Why are you changing it? Why now?”
It’s also important that attorneys document what’s said and their impressions of the person’s competence, Lewis explained.
“One of the things I always caution – especially younger attorneys – you have to make sure you know who your client is,” Lewis said. “If there’s any question of capacity … meeting with the client outside the presence of any family members is paramount.”
Lewis also tries to make sure questions of competency are addressed before any changes are made. “When in doubt, you can always ask for a doctor’s certificate of capacity,” she said.
There are legitimate reasons why an older adult, particularly one subject to a guardianship, might chose to amend a will, Lewis said. Perhaps one sibling has sacrificed to provide care, for example, and the parent decides a greater share of the estate is warranted.
Certain summed up his advice this way: “When a client treats a legal heir either more favorably than others or less favorably than others, that to me is a signal that I want to make an inquiry into the thought process that the individual is going through.”•