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No Undue Influence by Heir Who Benefitted from Revocable Trust, Holds Tennessee Court of Appeals
Posted by Martin Heller Potempa & Sheppard, PLLC on March 20, 2015
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The Tennessee Court of Appeals examined a case in which heirs alleged undue influence by the decedent’s brother. In Re Estate of Linda A. Farmer, the decedent, a woman who had suffered from an uncommon medical condition, died with a sizeable estate. Prior to her death, the decedent worked for the majority of her adult life while saving nearly all of her income. As a result, she had accumulated nearly one million dollars in assets by the time of her death.
Several years prior to her death, the decedent created a revocable living trust, naming her brother as the trustee and the sole beneficiary of the trust residuary. Moreover, the decedent executed a power of attorney, naming her brother as attorney-in-fact.
After the decedent passed away at the age of 64, her sister brought a legal action on behalf of the estate to challenge the validity of the trust. Specifically, the plaintiffs alleged that the decedent’s brother had unduly influenced her into amending the trust and breached his fiduciary duties by converting the decedent’s assets. At the trial level, a jury returned a verdict for the defendant. The jury found that undue influence had not been proved. The verdict was appealed, and the plaintiffs argued that the amendments made to the trust instrument were not fair to the decedent.
The facts presented to the jury showed that the decedent had amended her trust only two years after its creation. The decedent initially appointed herself trustee, divided her assets uniformly among family members, and named one of her nieces as attorney-in-fact. After the amendment, however, the decedent’s brother was appointed the sole trustee and majority beneficiary. The amendment provided an explanation that the decedent was now leaving only $5,000 to her sister because she had been well taken care of by her husband. Subsequent to the trust revisions, the brother began managing the trust assets and day-trading. The evidence also showed that he obtained a debit card linked with the decedent’s trading account and used it to pay for his personal expenses. Additionally, the decedent’s brother transferred a sum of $167,000 out of the decedent’s account into either his own or his daughter’s accounts.
While the trust underwent several additional revisions and revocations, the terms of the trust ultimately entrusted power and assets to the decedent’s brother. After the decedent passed away, her will was admitted to probate. At the same time, the other heirs filed the action alleging undue influence, conversion, and breach of fiduciary duty.
After hearing evidence that the decedent’s brother exercised dominance over the decedent, a jury nonetheless found that the brother was not liable on any of the claims. The plaintiffs filed an appeal. On appeal, the appellate court examined the transactions carried out by the brother with regard to the decedent’s estate. The Court of Appeals noted that the decedent had received independent financial advice from an attorney and that evidence indicated the decedent knew and understood the decisions she was making with regard to her trust. Since the appellate court held that the trust was valid, it found that the plaintiffs did not have the standing to assert any of their remaining claims. The judgment of the trial court was affirmed.
If you or someone you love has concerns with regard to a trust, a will, power of attorney, or any other estate planning issue, the probate attorneys at Martin Heller Potempa & Sheppard are well-versed in the law and technicalities associated with this area of the law. For an initial consultation, contact us online or call (615) 800-7096.
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