Iowa Court of Appeals Affirms Judgment Upholding Will in Undue Influence Case

April 17, 2014 | Kristine A. Tidgren

In re Estate of Steensma, No. 3-1257 / 13-1003, 2014 Iowa App. LEXIS 432 (Iowa Ct. App. Apr. 16, 2014)

Overview

The Iowa Court of Appeals has affirmed a jury verdict against a nephew and his wife in their action seeking to set aside a decedent’s will on the grounds that it was the product of undue influence by the nephew’s siblings.

Background Facts

The decedent and her husband were a “frugal and deeply religious couple” who worked hard, saved money, and accumulated many assets from their joint efforts. They had no children, and their closest relatives were the nephew and his siblings. During their marriage, the couple executed several wills, the first (in 1972) leaving 100 percent of their estate to charities and missions upon the death of the surviving spouse. Because the nephew farmed with the decedent’s husband and they regarded him “as the son they never had,” the couple executed another will in 1990, leaving 95 percent of their estate to charity and the five percent remainder to their nephew. When the decedent’s husband passed away in 1998, she inherited an estate worth $1.6 million.

Because the decedent, who was 85 years old, felt uncomfortable handling the farm and other business matters, she asked the nephew to manage her affairs. She appointed him as her attorney-in-fact and later moved to an assisted living center.

In 2004, the decedent’s niece accompanied her to a doctor’s appointment. While there, the decedent told her niece that she had not talked to her nephew for a long time and she did not know if she had any money left. She was concerned that she may not be able to continue to live at the assisted living center. The niece then scheduled an appointment with the decedent, her financial advisor, and the other siblings (except the nephew). At the meeting, the advisor informed them that the decedent had only $300,000 remaining in her account, even though she had had $ 1 million in the account several years before. They also learned that the nephew was now the sole beneficiary of the account, with the proceeds of the account payable on the decedent’s death to him.

The decedent was angry and embarrassed, believing that she had been “buffaloed” by her nephew. She directed her advisor to receive no further instructions from the nephew, and she changed the beneficiary of the account to her estate.  She also changed her power of attorney from the nephew to her nieces.

Shortly thereafter, the nieces discovered that in 2000, the decedent had executed a will leaving $500,000 in cash to her nephew and the rest to the charities. When presented with the will, the decedent was upset realizing that there wouldn’t have been anything left for the charities under the disposition. She stated that when she executed that will she still believed the charities would have received the major part of her estate.  The nieces then accompanied the decedent to multiple appointments with a new attorney, and in 2005, she executed a new will leaving 70 percent of her estate to charities and the remaining 30 percent to the nephew’s three siblings. The new attorney and his partner met with the decedent alone and determined that the disposition was the voluntary intent of the decedent. The decedent told them that she did not want to include the nephew in the will because she had been “swindled” by him and he had received enough.  The attorney and his partner believed that the decedent was of sound mind, but they recommended that she be examined by a doctor, who found that the decedent’s “mental capacity was sound” and “her judgment was sound.”  The attorney placed the letter in the decedent’s file.

In 2007, the decedent again met with the attorney to execute a new will. She told the attorney that she didn’t want there to be any questions about the contents of her will. The new will was substantively the same as the 2005 will, but it included a sentence stating that the decedent “made no provision for [the nephew] as he has been the recipient of a substantial amount of [her] money over the years.” The attorney and his partner again met with the decedent privately and again determined that she was of sound mind and that she was executing the will voluntarily.

The decedent passed away in 2010, and her 2007 will was filed for probate. The nephew and his wife filed their petition to set aside all of decedent’s wills after 2003, asserting that the wills were the product of undue influence by the siblings. A jury returned a verdict in favor of the siblings, and the nephew and his wife appealed.

Iowa Court of Appeals

On appeal, the nephew and his wife asserted that they district court committed prejudicial error with respect to several evidentiary rulings. Primarily, they argued that it was error to allow a CPA to testify as to how much money the charities would have received and how much the nephew would have received under each of the wills from 1990 to 2003. Specifically, the nephew argued that this evidence was irrelevant and only led the jury to an improper conclusion about the decedent’s intent vis-à-vis her prior wills. 

The court disagreed, finding that the district court did not abuse its discretion in allowing the testimony. It was undisputed by the siblings that they had a confidential relationship with the decedent and participated in the preparation of the 2005 and 2007 wills. From those facts, the jury could have found an “inference” of undue influence. To rebut this inference, the siblings were allowed to show evidence that while the decedent did in fact authorize gifts to the nephew, she was unaware of the actual value of her assets at the times she made those decisions. The jury could have found that when the decedent found out the amount remaining, she was angry and wrote the nephew out of her will. The only information the expert provided was his opinion as to the dollar amounts that the nephew stood to inherit under past wills. He did not testify as to his knowledge of the decedent’s intent. It was for the jury to decide (in part using this evidence) whether the siblings unduly influenced the decedent or whether she acted on her own free will to remove the nephew as a beneficiary and include his siblings instead. The court concluded by finding that even if the district court erred in admitting any other evidence, the nephew and his wife failed to show any prejudice from such error.

Conclusion

This case should serve as a reminder to practitioners to act prudently to protect against undue influence and lack of testamentary claims before they arise. If the attorney who drafted the original power of attorney had conducted regular follow-ups with the decedent perhaps this litigation could have been avoided. The attorney who wrote this decedent’s final wills appears to have handled the matter in exemplary fashion. On several occasions, he asked one of his partners to join him in meeting with the decedent alone (outside of the presence of the intended beneficiaries). Both attorneys believed from their meetings that it was the true intent of the decedent to include the siblings and not the nephew as the 30 percent beneficiaries under the decedent’s will. Even though the attorney believed the decedent to be of sound mind, he sought a medical opinion for the file, no doubt realizing the potential for future litigation. These steps likely preempted a number of other factual and legal arguments that might have been made in this case had such precautions not been taken.