By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Planning & Estate Litigation Attorney
Imagine there is daughter who takes care of her mother and is actively involved in the family business as a medical manager. She is also the power of attorney and the trustee of her mother’s revocable trust. Now imagine that the mother tells the daughter, “Go ahead sweetheart, I love you so much and you’ve been doing such a great job taking care of me and all my money and the affairs of my business that I want you to write a $1,000 check to yourself. Go buy yourself a Gucci wallet!” Sounds reasonable, doesn’t it? Should the daughter simply write the check and go to the Short Hills mall and buy herself that new fancy wallet? Not necessarily. Here’s why…
As we know there are often siblings that come into the picture once a parent passes and they often believe that the caregiver child of the century – usually, the power of attorney and trustee of the living trust – took advantage of mom or dad’s bank account. They’ll allege all sort of things – and like our hypothetical example above – they’ll probably say that mom didn’t tell the daughter of the year to take the money for herself – to get that fabulous Gucci wallet.
When the daughter was given the power of attorney and became the trustee of the living trust, a fiduciary relationship was created. This relationship requires that the fiduciary – in this case, the daughter – act for the benefit of the mother regarding matters within the scope of their relationship. Part of this definition, implies that the agent – in this case, the daughter – cannot personally profit by handling the principal’s business – in this case mom. What is key about the example of the wallet is that although at the time mom gave daughter permission to take the money to buy the fancy wallet, when the jealous and unavailable siblings made a claim on the estate because that mom didn’t leave them enough money, they claimed “undue influence”!
Three things must exist for undue influence to be proven:
- the existence of a confidential or fiduciary relationship between the grantor and the fiduciary.
- The fiduciary, or someone represented by the fiduciary, benefited from the transaction,
- The fiduciary had an opportunity to influence the grantor’s decision in that transaction.
Basically in the scenario I described it will be fairly easy to prove that undue influence existed even when it really never did have!
Overall, there are ways in which a parent can reward the contributions of a helpful child that will not cause (or reduce the cause) of legal problems for the whole family down the line. One of the first things is for the aged parent to visit with his or her own attorney. The attorney will make sure that the elder is not being coerced into giving something to a child that they really didn’t want to. Finally there may be legal documents drafted that will record what the elder wishes and the reasons why. Sometimes, notice will also be given to other child so that they can “speak now or forever hold their peace.”
There are many other avenues that an attorney can take in assuring that an elder can give a child a gift without causing legal problems after they are gone.
To discuss your NJ Estate Planning and Probate Litigation matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.