Iowa Court of Appeals Says “Suspicion and Surmise” not Enough to Show Undue Influence
On October 5, 2022, the Iowa Court of Appeals affirmed the dismissal of a petition contesting the distribution of trust assets. After her father passed away, a beneficiary brought a lawsuit claiming that her father lacked testamentary capacity and that the trustees had exerted undue influence over him. Because the beneficiary only provided “suspicion and surmise,” the court affirmed that she failed to meet the burden to establish either claim.
In this case, a beneficiary contested her father’s trust and will. In 1999, Randall Durschmidt created a revocable trust and named himself as trustee. Randall’s 2017 will directed the residue of his estate to go to the previously established revocable trust. In December 2020, Randall passed away leaving behind his sister and three daughters.
Under a 2019 amendment to the trust, 40 percent of Randall’s estate went to his sister while his oldest and youngest daughters would each receive 25 percent of the estate. The remaining 10 percent of the estate would go to a trust for the benefit of his middle daughter (the beneficiary). In September 2020, the decedent amended the trust document to name his sister as co-trustee and his youngest daughter as successor trustee.
The beneficiary objected to the admittance of the 2017 will to probate. The beneficiary, representing herself, petitioned the court to set aside the 2019 trust amendment claiming that Randall lacked testamentary capacity and that Randall’s co-trustees had exerted undue influence over Randall. The district court denied the beneficiary’s petition. The beneficiary appealed.
Similar to a will contest, a party seeking to set aside a trust amendment must show that the settlor lacked testamentary capacity at the time of execution. See In re Guardianship of Driesen, No. 08- 1311, 2009 WL 1491871, at *3 (Iowa Ct. App. May 29, 2009). To determine whether testamentary capacity existed, the court will consider whether the person executing the document was able:
(a) To understand the nature of the instrument then being executed.
(b) To understand and know the nature and extent of his property.
(c) To be able to identify and recall the natural objects of his bounty.
(d) To realize and know the distribution he desires to make of his property.
In re Est. of Henrich, 389 N.W.2d 78, 81 (Iowa Ct. App. 1986).
The beneficiary argued that Randall’s wobbly signature and health conditions demonstrated that he lacked testamentary capacity in 2020. Conversely, Randall’s physician testified that he “never at any point thought that [Randall] was having issues with his cognition” and his sister testified that Randall knew “to the penny” what he owned. Additionally, the court pointed out that Randall changed the beneficiary distribution in 2019, not 2020. Therefore, the court held that the beneficiary did not meet her burden of proof to establish lack of testamentary capacity.
Next, the court considered whether the trustees exerted undue influence over Randall. To prove undue influence, the proponent must show that:
(1) the testator was susceptible to undue influence;
(2) defendants had an opportunity to exercise undue influence and effect the wrongful purpose;
(3) defendants had a disposition to influence unduly to procure an improper favor; and
(4) the result, reflected in the will, was clearly the effect of undue influence.
In re Est. of Bayer, 574 N.W.2d 667, 671 (Iowa 1998).
Through friendships and family relationships, most people have some influence over others. The court found that the purpose of the fourth element, through the use of the word “clearly,” was to add “protection to the free will of the testator.” See Burkhalter v. Burkhalter, 841 N.W.2d 93, 104–05 (Iowa 2013). Here, the beneficiary was only able to provide “suspicion and surmise,” which was exactly the type of claim this element was designed to filter out.
Additionally, the court found that the beneficiary failed to prove the remaining three elements of susceptibility, opportunity, and disposition. As previously noted, there was no meaningful evidence of Randall’s cognitive decline. The beneficiary did not provide evidence of the trustees’ disposition to influence or of any opportunities to do so. In fact, Randall’s sister never attended estate planning meetings with him. As a result, the Court of Appeals affirmed the dismissal of the beneficiary’s claims.
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