Often estate and trust litigation revolves not around the will or trust itself, but rather changes to those instruments (a codicil to the will, an amendment to the trust, etc.). That was the case in the recent appeal of Harbur v. O’Neal, et al., 2014 Ark. App. 119 (February 19, 2014). The matter involved numerous issues, but one of them entailed the question of whether or not certain amendments to a trust were valid.
Frequently the settlor of a trust has a legitimate reason for wanting to amend their trust. Perhaps they want to change a successor trustee, remove or add a beneficiary, alter the trust’s assets, or there could be any number of other reasons why the trust may need to be amended. However, it is important that the settlor of the trust amend their instrument with the competence to do so, of their own free will and volition, without being coerced, and without undue influence by someone else. That was one of the disputes in the Harbur case.
Specifically, like so many cases that I handle and so many estate and trust litigation matters in general, this lawsuit involved battling siblings and children of the trust settlor. One of the litigants, Jeanne, was found to have performed every step of obtaining information regarding a first trust amendment, she actually prepared the amendment, she produced and finalized the document, and she also benefitted from the amendment.
The trial court held that because these facts supported a conclusion that Jeanne procured the trust amendment, a rebuttable presumption of undue influence arose and the burden of proof shifted to Jeanne to prove beyond a reasonable doubt that her mother had both the mental capacity and freedom of will at the time she executed the trust amendment.
Likewise, Jeanne also testified that she prepared a second trust amendment for her mother’s signature as well. This amendment made Jeanne the sole beneficiary of the trust upon her mother’s death, and made Jeanne’s children sole beneficiaries of the trust if Jeanne did not survive her mother.
Similar to the reasons stated for finding procurement with regard to the first trust amendment, the trial court also found that Jeanne had procured the second amendment. The appellate court affirmed these rulings holding that there was overwhelming evidence of procurement, including but not limited to Jeanne’s own testimony.
A number of lessons can be learned from this case. For example, this appeal demonstrates that the settlor’s intent should control and they should be able to dispose of their property as they wish, without coercion or undue influence from anyone. If and when they do want to amend the trust, they either need to do it by themselves or preferably with the assistance of a trusted attorney who is acting solely in their interest and whom is independent from the beneficiaries.
Further, a beneficiary should consider not preparing the trust amendment, even at the request of a settlor, because that beneficiary may be risking the validity of the very amendment from which they would benefit if someone attempts to set aside the trust amendment based upon procurement, undue influence, coercion, and the like.
In sum, amendments to wills and trusts are fertile ground for estate and trust litigation because frequently the changes are executed many years after the original documents are signed. Amendments can, in a very short and sweeping document, fundamentally change the intent of the original estate planning documents and the assets disposed of by those documents. Such amendments are sometimes signed in haste or at a point in the deceased person’s life when they may not fully understand or appreciate the nature of what they are doing (assuming the settlor signed the amendment(s) at all).
With the stroke of a pen, millions of dollars and valuable real or personal property can be inherited by or administered by persons other than those initially envisioned by the original instruments. For these reasons, as much or even more care should go into the preparation and execution of the amendments as go into the original versions. Similarly, as much or more scrutiny should be paid to the preparation and execution of these amendments as was paid to the initial documents.
Matt House can be contacted by telephone at 501-372-6555, by e-mail at firstname.lastname@example.org, by facsimile at 501-372-6333, or by regular mail at James, House & Downing, P.A., Post Office Box 3585, Little Rock, Arkansas 72203.