Amendments: So Easy, So Dangerous – Case Summary (Iacono v. Hicken)

 

            In Iacono v. Hicken, the parents of Julie Iacono (“Iacono”) created a trust that named them as the trustees and beneficiaries, leaving the residue at their deaths in equal shares to their four children. The trust contained a provision that made it irrevocable upon either parent’s death.

            In 1998, Iacono’s mother died and the father appointed Iacono as the new co-trustee.  Two years later, in recognition of Iacono’s diligence in caring for him, the father hired an attorney, Keith Weaver, to amend the trust giving his home solely to Iacono, rather than the four children equally.

            In 2001, Iacono’s father passed away.  Shortly thereafter, Iacono’s siblings challenged the validity of the trust amendment, arguing that the trust was irrevocable at the time of the amendment and therefore the amendment was invalid. The siblings brought serious additional claims against Iacono relating to her actions as the trustee.  At that point, Iacono hired an attorney, Bret Hicken, to represent her.

            Ruling on summary judgment, the District Court agreed with the siblings that the amendment giving the home to Iacono was invalid.  In the end, Iacono settled all her sibling’ claims against her and as a result received nothing from her parents’ estate.

            Iacono subsequently brought a legal malpractice action against both attorneys Hicken and Weaver.  Iacono claimed that Weaver committed malpractice when amending the trust.   Iacono and Weaver settled their dispute before trial.  Iacono claimed her probate litigator committed malpractice in the way he represented Iacono against her siblings.  Hicken did not settle.

            At trial, Iacono alleged that Hicken “failed to assert any defenses against summary judgment, failed to conduct discovery of his own, and failed to timely respond and object to Siblings’ discovery request” (¶ 4). Two of Iacono’s witnesses, including the siblings’ former attorney, testified that Hicken’s representation was far below the necessary standard of care and that if Hicken had properly argued the case, Iacono would have had “a good shot at prevailing” (¶ 5).

            The District Court agreed that Hicken had breached a duty owed to Iacono.  Nevertheless, the District Court was not persuaded that Iacono, even with adequate representation, had a good shot at prevailing against her siblings.   The court held that because the substandard representation was not the actual or proximate cause of the damages suffered, Hicken did not commit attorney malpractice.  The Appellate Court upheld the District Court’s decision and Iacono was again left with nothing.   Iacono v. Hicken, 265 P.3d 116 (Utah App. 2011).

By R. Zenock Bishop

 

Failures Regarding Undue Influence

 

This brief analysis refers to the case of Ellsworth v Huffstatler (2016) that is discussed in our previous blog titled “Coins and the Offended Widow.” To best appreciate the following analysis, read this previous blog.  (Hover over the title with your cursor and click.)

Ellsworth teaches us at least two important lessons about estate planning.

Undue Influence is Extraordinarily Difficult to Prove. The Ellsworth court got it exactly right. To prove undue influence, you practically need a video of someone putting a gun to the head of a benefactor and forcing them to sign some document. That is undue influence: a gun-to-the-head standard. Courts are very reluctant to accept accusations by a self-interested party that a benefactor was unduly influenced to disinherit them.

With that said, is there any question in the mind of any rational person reading Ellsworth that Barbara Ellsworth was influenced by her daughter Terry? No. The evidence cited strongly suggests Terry was a strong influence in her mother’s life. But did Terry unduly influence her mother? This is a question that is almost impossible to answer definitively, especially in the law.

One can easily understand why someone could believe that Terry was poisoning the mind of her mother. But the evidence suggested that despite this poisoning, Barbara still knew what she was doing and wanted to do it (disinherit her husband’s children). Barbara was influenced, likely even strongly influenced by Terry, but legally there was no evidence Barbara was forced to do what she did. Her own willpower was not forcibly overwhelmed to disinherit Elmer’s children. In a strictly legal interpretation of the term, the court interpreted the law exactly right. And the law on this point is that undue influence is extraordinarily difficult to prove.

The Real Problem Was the Attorney. The real problem in Ellsworth is never mentioned in the case at all. The real problem was the attorney who drafted the original 1991 Ellsworth trust.

One of the numerous problems with the 1991 attorney is that he probably did not have any experience in probate litigation. That is, the 1991 attorney was unfamiliar with how easy it is for a benefactor to be unduly influenced in reality, and how difficult it is to prove undue influence legally.

An attorney who understands these brutal facts, and who is honest and diligent, can in fact prevent the surprises of undue influence. But this requires more than ordinary communication with clients—and their beneficiaries. This requires thoughtful anticipation of the surprises, and careful documents.

The attorney who prepared the 1991 trust for Elmer and Barbara Ellsworth could only have been a typical document-mill attorney who had no concept of undue-influence and how it could undermine the Ellsworth’s estate planning. The attorney’s failure to anticipate and prevent this common surprise utimately resulted in expensive, protracted litigation.

Does anyone rationally imagine that Elmer Ellsworth wanted his own children completely disinherited after his death? Shame on the lazy, document-mill attorney who did not competently ensure the desires of both Elmer and Barbara Ellsworth were honored–despite what surprises may occur.

Second Marriages: Planning a Disaster – Case Summary (Ellsworth v. Huffstatler)

 

          Second marriages and children from first marriages always pose a serious challenge in estate planning.  The Ellsworth case proves this point. Ellsworth v Huffstatler (2016).

          When Elmer Ellsworth and Barbara May married around 1991, they each had children from their first marriages. Together, Elmer and Barbara created a trust. The Trust indicated that upon the death of the second spouse, their children would each receive an inheritance. Elmer also executed a will which left all of his “personal property” to Barbara.  Unfortunately, the will said that the term “personal property” would be “hereinafter defined,” but it was not.

          When Elmer died twelve years later in 2003, his children were of course interested that their inheritance be preserved.  They were not only interested in division of the major assets, but in division of Elmer’s collection of gold and silver coins, part of Elmer’s “personal property.” Barbara held onto the coins until they were eventually placed in a bank safety deposit box.

          Elmer’s children were patient until about 2012, when Barbara suffered a fall, and her physical and mental health declined. During this time, Barbara relied a great deal on her daughter, Terry, who helped her mother with medical visits to the doctor and also took her mother to see Barbara’s estate planning attorney who suggested Barbara sign an updated general power of attorney authorizing Terry to act for Barbara in her personal affairs.

          Elmer’s son, Mark, was concerned regarding Barbara’s declining health and reliance on Terry. Mark asked that Barbara resign as the trustee of the 1991 trust, and appoint a member of Elmer’s family and Barbara’s family as co-trustees.

          This hurt Barbara’s feelings because she wanted to continue to make decisions on her own. Before visiting her estate planning attorney again in 2013, Barbara visited her doctor, to confirm that she was competent to make decisions. The doctor said that Barbara suffered from confusion but overall could be an active participant in her own care.

          Barbara then met with her estate planning attorney. She requested and signed new estate planning documents.  In this planning and signing of new documents, Barbara ensured the coins would be disposed of pursuant to the terms of her new trust, the 2013 trust.  In the new trust, Barbara named her children as the only beneficiaries of the entire Ellsworth estate. Barbara passed away a few months later. At the time of her death, she was suffering from advanced dementia.

          Elmer’s children sued. They accused Terry of exercising undue influence over her mother to disinherit them, Elmer’s children. Elmer’s children sought half of the estate as well as the coins because Elmer’s will never defined “Personal Property” and therefore his children, as heirs, should receive the coins because they could not be wrapped up in the generic term “Personal Property.”

          The court decided that the term “Personal Property” was a common, legal term and did not need to be specifically defined, no matter what his will said. The court also decided that Terry did not overpower her mother to the extent of taking away her willpower to do what she wanted in her estate planning, which is required before a court will find undue influence. The court found that the estate plan reflected Barbara’s own wishes and hurt feelings and not efforts by Terry to exert controlling influence and force Barbara to disinherit Elmer’s children andturn over everything to Barbara’s side of the family.

          See Ellsworth v Huffstatler, 385 P.3d 737 (Utah App. 2016).

By Alicia Knight Cunningham

          See our analysis of this case in our blog titled: “AN UNWISE FATHER, GREEDY WIFE, AND BAD ATTORNEY.”