The care of an elderly parent can present an existential threat to family harmony and unity even in the closest of families. Even in large families where caregiving responsibilities can ostensibly be shared equitably, it is not uncommon for one or more children to shoulder much more of the burden than the others. That paradigm can breed resentment, a sense of entitlement, and ultimately, litigation.
Previous blog posts, “In Undue Influence Cases, Shifting the Burden Does Not Always Mean Winning the Case” and “Can I Contest A Will?,” have addressed both Will Contests on the basis of undue influence and challenges to lifetime transfers on the basis of undue influence (“Does Undue Influence Apply To Lifetime Transfers?”). A recent decision by the New Jersey Superior Court in Andrade v. Andrade, while not resulting in a successful challenge to a mother’s transfer of her home to one of her children, is instructive for beneficiaries seeking to challenge lifetime transfers.
Mrs. Andrade was 79 years old and had four children. By all accounts, she was in possession of all her faculties. She owned a three-family home in which she lived. Her son lived in the basement and tenants occupied the other two floors. In 2012 she conveyed title to the home to her son but retained a life estate. Six years later she brought an action in court to unwind the transfer as the product of undue influence.
While all adults are generally presumed to be competent to make a gift, the law will shift the burden to the recipient of a lifetime gift to prove it was not the product of undue influence if it can be shown that the gift recipient maintained a “confidential relationship” with the donor. As discussed in the previous posts mentioned above, a confidential relationship is one of trust and reliance, that typically, but not always, exists in a parent-child relationship. So-called “improvident gifts,” which are gifts that leave the donor without adequate means of support, are particularly suspect.
In this case, the court found that a confidential relationship did not exist between Mrs. Andrade and her son, given the extent to which she continued to maintain her independence without reliance upon him. Therefore, the burden was on her to prove that the transfer was the product of undue influence exerted upon her by her son and should be unwound. The court found her son’s testimony as to the lack of any undue influence to be credible and denied Mrs. Andrade’s claim. Accordingly, the transfer stood.
It’s rare for a parent to challenge a gift made to a child after the fact; the more common scenario would be for one of the other three children to challenge the transfer after Mrs. Andrade’s death. Nevertheless, the legal analysis would be the same. The children would need to prove that their brother stood in a position of trust and reliance with their mother such that they did not deal on equal footing, i.e., that a confidential relationship existed. Otherwise, they would need to overcome the presumption that their mother was competent to make the gift.
However, the existence of a confidential relationship does not, alone, invalidate a gift. It merely shifts the burden to the recipient to prove that the transfer was not the product of undue influence. That is precisely what occurred recently in the case of In the Matter of Estate of Anthony F. Cordasco. In that case, the decedent had two children, a son and a daughter. The decedent transferred title to his home to his daughter. The home was then sold, and the daughter kept the money. The decedent moved in with the daughter and her husband and they paid for all the decedent’s living expenses. The court found that a confidential relationship existed between the father and daughter, given the extent to which he relied upon her to meet his basic living needs, but the daughter was able to demonstrate, primarily through the testimony of her father’s attorney, that she had exerted undue influence upon her father and that the transfer of the home reflected his true intention.
It is not enough to accept the assets of a decedent’s estate at face value. Beneficiaries need to be vigilant about uncovering and scrutinizing lifetime transfers. Not all such transfers can or should be unwound, but beneficiaries must always conduct a thorough examination of the circumstances in which the transfers occurred.