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Bequest Management

Undue Influence and Estate Planning Referrals

February 8, 2021
Undue Influence and Estate Planning Referrals

Imagining the Next Case

Conflict of interest issues are relevant to estate planning.  If the drafting lawyer (DL) has some kind of a relationship with a beneficiary, the seeds of an undue influence claim are already in the mix.

A decades-old New Jersey appellate opinion makes this point nicely.  There, the testator suddenly made a radical change in her estate plan to benefit dramatically one of her daughters, who had previously stood to receive a share equal to her sibling’s.  The daughter just happened to be the client of – guess who?—DL.  The court on that basis found a presumption of undue influence.  Haynes v. First National State Bank of New Jersey, 87 N.J. 163 (1981). 

The Haynes case arose in the context of a will contest, but analogous fact patterns have emerged in lawyer ethics determinations.  Of interest here are cases where a lawyer with a special relationship to a charity engages in estate planning for a client who benefits the charity.  These cases have arisen from time to time in bar association opinions dealing with attorney ethics.

In one opinion, the Maryland Bar suggested that an attorney serving on his church’s fundraising committee could not ethically offer free estate planning to a fellow churchgoer who agreed to make a testamentary gift to the parish.  The Bar viewed the inherent conflict of interest in such an arrangement as unresolvable.  It is also quite easy to see that a will drafted under such circumstances would be begging for a challenge on grounds of duress.

The Nevada Bar bar has agreed that a similar fact pattern evidences a conflict of interest, but suggests that it might be resolved by a series of waivers.   The pertinent ethics opinion clearly discouraged such a fix.

For a long time, charities were viewed with considerable suspicion in the estate planning arena and depicted, not always inaccurately, as deathbed scriveners ready to pounce upon the compromised emotional state of an in extremis potential benefactor.  Indeed, the adoption of mortmain statutes in the United States was in some way influenced by this perception.  Mortmain statues greatly restricted the ability of testators (especially those near death) to make charitable bequests.

Happily, that situation has largely resolved.  Mortmain statutes have been repealed in every state that had them and charities are, for the most part, quite sensitive to the necessity of staying out of the estate planning game, or at least to avoid any conduct that might reasonably be construed as duress.  It would almost certainly be the exception, and not the rule, for an exempt organization to furnish a free estate lawyer to a donor.  A significant number of charities are loathe even to recommend such a professional.

Enter the do-it-yourself estate planning alternatives.  These come in several flavors.  The original recipe, of course, was the tried-and-true handwritten, unwitnessed (“holographic”) will, still a viable option in about half of the states.  Some years ago, a variant of that approach emerged with the advent of “fill in the blank” legal will forms.  The forms themselves gave birth to still another cottage industry, this time in the form of nonlawyers willing to facilitate estate planning by helping would-be testators in filling out the forms!  From the beginning, some of these services have been the subject of state enforcement actions alleging the unauthorized practice of law, or something similar.

Undue Influence and DIY Estate Planning Websites

Now we have the DIY estate planning websites.  We believe that, in general, the well-known players in that industry have been a “plus” to the cause of encouraging charitable bequests. The basic wills produced by many of these operations are far superior to the inscrutable holographic wills or the “fill-in-the-blank” forms, both of which have put many dollars in the pockets of probate litigators.

To be frank, the DIY wills are often better than those produced by some lawyers who merely dabble in estate planning.  Even more impressive is that fact that some of the DIY websites are admirably clear about the limitations of the documents they produce.

So what is the problem?  We believe that charities need to be sensitive to the perception that referral of donors to a DIY website could, in the right circumstances, lead to a subsequent will challenge on the grounds of undue influence.  For example, some of the DIY estate planning websites are connected to individual charities.

Understandably, the charities market access to these websites as a donor service.  An aggressive plaintiff could assert that a testator felt “guilted” into a bequest to a charity that facilitates free estate planning.  This is not unlike the reaction of some people to the “tokens” that accompany mailed charitable solicitations, i.e., the feeling that “I have to give something because they sent this cute little calculator.”

Undue Influence in Action

We predict that it is only a matter of time before the following lawsuit is filed against some charity and, possibly, against a DIY-estate-planning website:

  1. Uncle Jonas left his entire estate to Charity X.
  2. Uncle Jonas prepared his will on the E-Z Will website.
  3. Charity is in a business relationship with E-Z Will.
  4. Charity suggested and facilitated Uncle Jonas’s use of E-Z Will.
  5. The E-Z Will template that Uncle Jonas accessed suggested a bequest to Charity.
  6. Uncle Jonas left his entire estate to Charity. Even the chickens.
  7. Because of Uncle Jonas’ delicate condition, and unfamiliarity with websites, the suggestion amounted to undue influence, thereby warranting the voiding of the bequest to Charity.

Whether or not the lawsuit would have any merit depends, of course, on the facts of the particular case.  We certainly do not recommend that charities stop using these websites, or that they hide or sever their connection with them.  We believe that an ounce of prevention will go a long way toward mitigating this risk.

A charity may wish to consider a simple prophylactic measure.  This might be something like the following:  When and if a website suggests a specific charitable bequest, perhaps it could be accompanied by a pop-up stating that the right to use the template is in no way dependent upon a particular, or any, charitable bequest.  For a “belt and suspenders” approach, the user might be required to “check” the pop-up for acknowledgement.  A measure as simple as that could well take the wind out of a plaintiff’s sails.