Probate and Trust Law

Bhavik R. Patel, Esquire
Mara Lahnar, Esquire
Erin Kolb, Esquire

A determination of undue influence requires a review of the settlor’s mental and physical condition to determine whether the settlor is vulnerable to undue influence. Additionally, one must show facts and circumstances tending to show that undue influence was an active factor in the underlying transaction in that it was so coercive as to deprive the settlor of his or her free will. Watermann v. Fitzpatrick, et al., No. No. 96541 (Mo. App. E.D., June 19, 2012), Crane, P.J.

Plaintiff, as beneficiary of a trust, filed a lawsuit against the trust, trustee, trustee’s wife, and remaining beneficiaries, alleging that settlor was under the undue influence of her son and his wife where they accompanied settlor to her attorney’s office to discuss her estate plan. The court found the testimony of settlor’s lawyer, internist, home healthcare worker, and bank customer service representative, that settlor was competent, to be credible and that the facts demonstrate a lack of undue influence.

Held: Affirmed.
The court of appeals agreed that “a settlor’s mental and physical condition is highly material to the issue of undue influence because it would indicate whether the settlor was susceptible to undue influence.” Even if settlor was susceptible, however, plaintiff failed to establish undue influence. “To warrant imposition of a constructive trust on the ground of undue influence, the evidence of fraud must be so clear cogent, and convincing as to exclude every reasonable doubt in the mind of the trial court.” In other words, plaintiff must show more than a confidential relationship. Plaintiff must show that there was an exercise of undue influence that was so coercive as to deprive the settlor of his or her free will.

Due process requires that the personal representative of an estate has a duty to provide actual notice of the probate proceeding to all reasonably ascertainable creditors of the estate who may have more than a merely conjectural claim against the estate without making a unilateral determination about the merits of their claim. Nolan v. Snead, No. 92388 (Mo. banc, January 29, 2013), Russell, J.

Children’s father, their sole custodian and guardian, appealed the trial court’s judgment granting a personal representative’s motion to dismiss finding that dismissal was warranted because the children’s claims were tardy, the claims did not fall within an exception to § 473.360, and the children were not “known or reasonably ascertainable creditors.”

Held: Reversed and Remanded.
The appellate court concluded that while a personal representative is not required to take extraordinary steps to locate creditors of the estate, she must “make ‘reasonably diligent efforts’ ” to identify creditors. Here, the children’s identity was known or reasonably ascertainable to the personal representative because she was aware of the underlying events that led to the potential claims, she had performed her own investigation of the potential claims, and she had the ability to locate the children’s father to provide him notice. A personal representative is likewise not required to provide actual notice to every reasonable ascertainable claimant, only those with claims that are more than merely conjectural. A conjectural claim is one that is based on inferences from uncertain evidence or conclusions rooted in guesswork. The children’s claims were not based on inferences from uncertain evidence or conclusions rooted in guesswork where they were supported by a DFS determination that the allegations of abuse were substantiated by the preponderance of the evidence. Due process required the personal representative provide actual notice of the opening of the probate estate to the children because they were reasonably ascertainable creditors and their claims were more than merely conjectural. Whether the children’s claims had legal merit was not for the personal representative to determine.

The court-ordered sale of property by a conservator to support his incompetent ward adeems a bequest or devise only to the extent the sale proceeds are used to support the ward or pay estate expenses and, after the ward’s death, the balance of the identifiable proceeds passes to the beneficiary. In the Interest of Mildred M. Honse, No. 31853 (Mo. App. S.D., February 1, 2013), Bates, J.

Beneficiary appealed trial court’s judgment that the specific bequests and devises in his late parents’ joint trust had lapsed because those assets had been sold in order to pay for his mother’s care during her incapacitation as a ward of the state.

Held: Reversed and Remanded.
The appellate court found that the paramount rule of construction in determining the meaning of a trust provision is that the grantor’s intent is controlling. The record here contained nothing to indicate the settlor’s stated intent changed before the beneficiary’s father died, and the mother became incompetent. Further, an ademption generally requires some act by the testator equivalent to revocation or indicative of an intent to revoke, and in the case of the dealings of a guardian of an insane or incompetent testator with his ward’s property, can only occur when the bequeathed or devised property, and everything received for it, has completely disappeared from the testator’s estate before his death. Accordingly, the court-ordered sale by the conservator of the real and personal property specifically bequeathed and devised to the beneficiary pursuant to the trust were adeemed only to the extent that the sale proceeds were used to support the beneficiary’s mother and pay the conservatorship expenses.

Where a separation judgment unequivocally alters the manner in which a husband and wife hold title to real estate, thus severing tenancy by the entirety status without need for further action by the parties, the non-holder of the real estate is divested of any and all interest in the real estate upon entry of such judgment. Further, a “waiver” of marital inheritance rights is not required, as upon entry of the separation judgment, the marital property is divided, and no longer jointly owned. Bakewell v. Breitenstein, et al., No. 75341 (Mo. App. W.D., March 5, 2013), Martin, P.J.

John Bakewell, surviving husband of Janice M. Bakewell, appealed the trial courts’ grant of summary judgment finding he possessed no rights in the real estate his late wife was awarded pursuant to their separation agreement prior to her death.

Held: Affirmed.
The legislature has empowered courts to destroy tenancy by the entirety estates as a part of marital property divisions. Here, Mr. Bakewell was divested of his title and interest in the relevant real estate as a result of the separation agreement entered which stated, in pertinent part, “There is a compelling need based upon the circumstances of the parties and their marriage that all marital property be fully and finally divided and that a Judgment and Decree of Legal Separation be entered.” The appellate court agreed that the separation agreement clearly operated to convey the real estate to Ms. Bakewell without the requirement of additional action by the parties and extinguished the tenancy by the entirety in the real estate. The order to exchange deeds and titling documents was superfluous to the separation agreement’s legally effective award of the title to the real estate without further action by the parties.

Under Missouri law, a power of attorney must specifically give written authorization for an attorney-in-fact to engage in self-dealing and/or make gifts to himself of the principal’s property. In the Estate of Irene Lambur, et al. v. Stidham, et al., No. 31910 (Mo. App. S.D., April 23, 2013), Francis, Jr., J.

Wife, attorney-in-fact, and husband, appeal from the judgment of the trial court granting respondents’ motion for summary judgment.

Affirmed as to wife, Reversed and Remanded as to husband. This court has previously found that a deposit of a principal’s proceeds into a joint bank account in which the attorney-in-fact had a right of survivorship is a gift to the attorney-in-fact. Under Missouri law, an attorney-in-fact is prohibited from making a gift of the principal’s property to the attorney-in-fact, unless expressly authorized to do so through written authorization in the power of attorney. Here, wife, as attorney-in-fact, was only expressly authorized in the principal’s power of attorney to make a gift to herself up to the annual gift tax exclusion amount, which was a maximum of $11,000 in the relevant year. Wife, however, opened two accounts in the principal’s name, deposited the principal’s money in the amount of $129,134.46 between the two accounts, and gave herself and another power of attorney holder right of survivorship on each account. The court held that the power of attorney did not authorize wife to gift herself the entire proceeds of the two joint bank accounts upon the principal’s death, and as such, wife was not entitled to possession of the proceeds of the two bank accounts. Whether her husband possessed, transferred, disposed of, or benefitted from the proceeds in the two accounts creates a genuine question of fact on the issue of husband’s benefit from the funds, therefore this court reversed as to the husband.     

The small estate statutes contemplate that creditors whose claims are unresolved will initiate formal administration of the decedent’s estate within the one-year period specified in § 473.020.2, or be barred from proceeding under the estate statutes, as there are no procedures for litigating disputed claims within the small estate statutes. In the Matter of Lloyd Fowler, et al. v. Corn, No. 75394 (Mo. App. W.D., April 16, 2013), Ahuja, J.

Beneficiary appeals the circuit court’s dismissal of his motion to enforce the purported settlement of a claim, finding that no procedures exist within the small estate statutes to litigate and dispose of contested claims.

Held: Affirmed.
The small estate statutes contain no procedures for the litigation or resolution of disputes over claims. This court, citing a previous decision, held that where a claim is disputed, or where the creditor and the estate are unable to reach a mutually agreeable settlement, creditors must petition to have the estate opened for full administration within one year of the decedent’s death in order to preserve their rights against the estate. Accordingly, because the beneficiary had ample opportunity to seek full administration of his claim, yet failed to do so, he cannot seek to litigate his disputed claim, or the purported settlement of that claim, in the initiated small estate proceeding.

In court-tried cases, as opposed to jury-tried cases, the court need not specifically evaluate whether the contestant met the elements giving rise to a presumption of undue influence, but rather must only determine the ultimate question of fact: whether the trust was the result of undue influence that deprived the settlor of his or her free agency. Cima, et al. v. Rhoades, et al., No. 97813 (Mo. App. E.D., June 4, 2013), Gaertner, Jr., P.J.

Deceased’s disinherited children appealed the trial court’s judgment denying their request for relief and granting respondent’s reasonable attorney’s fees, arguing that the trial court erred by failing to apply a presumption of undue influence and therefore issuing a judgment that was against the overwhelming weight of the evidence.

Held: Affirmed.
The appellate court concluded that the trial court must only determine the ultimate question of fact: whether the trust was the result of undue influence that deprived the settlor of his or her free agency, and therefore, the fact that appellants’ evidence here, if believed by the trial court, would have required a presumption of undue influence is not determinative on appeal. Accordingly, the trial court did not misapply the law in failing to recognize a presumption of undue influence in a court-tried case because it did hear all of the evidence and make a finding on the ultimate question of undue influence.

A descendant of a biological child of decedent, who was legally adopted by his or her adoptive parents prior to decedent’s death, is not entitled to inherit from decedent under Missouri’s intestacy statute. In re Brockmire, No. 99103 (Mo. App. E.D., June 11, 2013), Richter, J.

Decedent’s daughter was legally adopted by her stepfather prior to decedent’s death and decedent’s daughter’s child sought to inherit from decedent under Missouri’s intestacy statute. Probate court initially granted granddaughter’s petition for partial distribution.

Held: Reversed and Remanded.
The appellate court concluded that while granddaughter remained a biological descendant of decedent, she is no longer a “lawful” lineal descendant or issue of decedent and thus, may not inherit from decedent under Missouri’s intestacy statutes. This conclusion is in line with Missouri’s adoption laws which recognize that an adopted individual becomes the lineal descendant of his or her adopting parents, and for the purposes of inheritance, becomes the child and heir of the adoptive parents as well. The appellate court further disagreed with the argument that its decision deprived granddaughter of her right to a legal relationship with decedent. The court recognized that there is no such vested right to remain lawfully or legally within a certain bloodline for purposes of intestate succession. (See also: Summary published under Family Law, supra).