The Decedent had a life insurance policy which named his mother as the beneficiary.  Subsequently the decedent met and dated his girlfriend. They eventually moved in together and had a baby girl together in 2003.  While his girlfriend was pregnant, they discussed decedent changing the beneficiary of the policy.  In 2005 decedent began having serious medical problems. In August 2006 he had surgery, but it was not successful and he was thereafter confined to a hospital bed.  After the surgery he was unable to speak but he could nod, move his lips, and gesture.   Then, one week before he died, decedent told his girlfriend that he wanted her and their daughter to share the life insurance proceeds equally, and instructed her to  fill out the appropriate  change forms, which she did.   The decedent signed the change of beneficiary forms at the hospital.  The girlfriend was not present when he signed them, but a hospital social worker and a notary were present.  They testified that the decedent could communicate, that he understood the document and that he intended to execute it.

            Decedent’s mother testified that on the way to the hospital before his surgery, decedent said he wanted her (the mother) to have his life insurance benefits.  

             After decedent died, there was a dispute between decedent’s mother and his girlfriend as to who should get the life insurance proceeds. The mother claimed that decedent’s changing the beneficiary was the result of undue influence on the part of the girlfriend.  The insurance company filed an interpleader action to get the court’s ruling on who was entitled to the proceeds.   The trial court ruled that the mother did not meet the burden of a presumption of undue influence.  The Court of Appeals reversed.  Upon remand, the trial court ruled that although the mother established the presumption, the girlfriend had successfully rebutted the presumption of undue influence.   Thus, the girlfriend was entitled to the proceeds.  The mother appealed.   The Court of Appeals affirmed, finding that the trial court did not err in finding that the presumption was rebutted.  

            Under the law, undue influence will presumed if evidence establishes the following three things: 1) the existence of a confidential relationship between the decedent and a fiduciary, i.e, the girlfriend; 2) the fiduciary benefits from the transaction; 3) the fiduciary had an opportunity to influence the grantor.   The party opposing the claim of undue influence then has the burden, by competent and credible evidence, of providing evidence to rebut the presumption.   The Court of Appeals held that although all three of the criteria for a presumption were met in this case, the girlfriend satisfactorily rebutted the presumption by the following evidence:  Decedent could communicate by moving his lips and gesturing.  He was medically cleared before signing the forms. The social worker and notary testified they believed he understood what he was doing.  The girlfriend was not present in the room when decedent signed the forms, and the only contra testimony indicating coercion was from the girlfriend’s sister, from whom she was estranged and whose testimony the trial court found not credible.   The Court of Appeals held that the trial court did not err in concluding that the girlfriend rebutted the presumption.  The Court of Appeals also held that the fact that the girlfriend’s testimony was self-serving did not change the conclusion, nor did the fact that the decedent was in a weakened and vulnerable physical state.

  What this means for beneficiaries:   A claim of undue influence can be made if a fiduciary to the decedent receives more from the estate than other heirs.  The girlfriend in this case was found to be a fiduciary because she was decedent’s appointed agent in his durable powers of attorney.  Fiduciaries are more vulnerable to a claim of undue influence because of the presumption mentioned in the case.   If you are a fiduciary (agent appointed in a durable power of attorney, executor, or trustee), you should take care not to take actions which could be construed as trying to exert influence on the decedent to leave more of his estate to you, especially if the grantor is elderly, frail, or in poor health.   Fortunately for the girlfriend in this case, there was enough evidence that the decedent was not unduly influenced so that the courts  denied the mother’s claim of undue influence and upheld the change in beneficiary.

You can read the entire opinion here.

Authored by Barbara A. Assendelft