Probate and Trust Litigation

Inconsistency Between Terms of Will and Payable on Death Designations Not Enough to Prove Undue Influence

Published on: February 4, 2018 | by J. Ross Pepper

In a fairly recent Tennessee undue influence case, relatives claiming undue influence by another relative argued that there was undue influence because the provisions of the decedent’s last will were inconsistent with payable on death designations to CDs and bank accounts. That argument was rejected by the trial court and appellate court. In Frank v. Fields (Tenn. Ct. App. 2017), the Court of Appeals of Tennessee upheld the decision of the trial court that the defendant had rebutted the presumption of undue influence.

Here is a summary of the facts of the case:

Ray Frank (“Frank”) had no children of his own, but was survived by two nieces and three nephews
One of Frank’s nephews was Fields
Fields moved back to Monroe County in 2004 at which time he began to spend quite a bit of time with his elderly uncle, Frank, and to help him quite a bit
Fields visited with his uncle about every day and transported him wherever he needed to go
The nieces and nephews who brought the undue influence case against Fields admitted that Fields never tried to isolate his uncle from them or to interfere with their relationship with their uncle (in my opinion, in most cases where undue influence has been exerted, there were efforts at isolation)
Prior to his death at age 95, Frank was almost blind for several years, and then totally blind
Prior to his death, Frank executed a power of attorney in favor of his nephew, Fields
In Frank’s last will, made in 2010, two years before he died, he bequeathed 50% of his estate to his two sisters and the remaining 50% to his two nieces and three nephews, which included Fields, to be divided equally among them
Prior to his death, Frank made changes to CDs and bank accounts worth at least $450,000 which resulted in Fields receiving those funds after Frank passed away
The monies from the CDs and accounts did not pass through the estate so none of the other nieces and nephews received any of those funds
Besides the money from the CDs and bank accounts, it does not appear from the opinion that Frank had any other significant assets

Since Fields did not dispute that he had a confidential relationship with Frank, under Tennessee law, a presumption arose that the changes Frank made to his accounts, which resulted in the funds therein passing outside of his will, were the result of the undue influence of Fields.

Besides arguing that Frank was old and blind, and therefore, presumably, did not appreciate his actions, the nieces and nephews challenging the transactions alleged that the undue influence of Fields was proven by Frank’s last will. The last will, they argued, showed that Frank wanted his nieces and nephews to share equally in half of his assets. Since that is what he wanted in his will, they argued, he could not have intended, of his own free will, to leave $450,000 exclusively to Fields.

Choice of Law Provisions in Contracts: When Tennessee Courts Might Not Enforce Them

Published on: December 7, 2017 | by J. Ross Pepper

In many Tennessee cases involving written contracts, the contracts will contain provisions whereby the parties agreed that the substantive law of a state other than Tennessee would apply in any litigation between them. (In the absence of such a provision, Tennessee follows the rule of lex loci contractus whereby it is presumed that the law of the state where the contract was signed applies). Since there is substantial similarity between the laws of the States, especially the common law of breach of contract, which State’s law applies may not make a big difference in most cases. It can, however, make a big difference in some cases.

Where the parties have agreed that the law of a particular state will govern any litigation, a Tennessee court will enforce that agreement unless the jurisdiction whose law is chosen does not bear a material connection to the transaction or unless the law of the jurisdiction chosen is contrary to the fundamental policies of Tennessee. This blog focuses on the issue of when a Tennessee court might not enforce a choice of law provision because the law of the state chosen by the parties does not bear a material connection to the transaction.

There is scant published Tennessee case law that addresses this issue. In a 1931 opinion, Manufacturers Finance Co. v. B. L. Johnson & Co., 15 Tenn. App. 236, the Court of Appeals of Tennessee refused to apply the law of Delaware, which the parties had agreed would govern any dispute between them. In that case, the plaintiff was a finance company organized under Delaware law, but which had a principal place of business in Maryland. The defendant was a Tennessee corporation with a principal place of business in Knoxville. No part of the disputed transaction touched Delaware. The court held that it would not apply Delaware law under those circumstances.

In a 2012 breach of contract case, the Tennessee Court of Appeals enforced a contractual provision whereby the law of Kentucky was to govern any litigation between the parties. In that case, the prospective buyer claimed that it was entitled to a refund of an earnest money deposit it had made to purchase land located in Kentucky from the seller. In that case, the buyer was from Tennessee, but the sellers were from Kentucky and the land being sold was in Kentucky. Under those facts, the court held that there was a material connection between Kentucky and the transaction being litigated.

Parties Challenging the Validity of a Will Based on Undue Influence Lose Recent Will Contest Case

Published on: September 12, 2017 | by J. Ross Pepper

In Tennessee will contest cases where wills are challenged on the basis of undue influence, outcomes are often difficult to predict and depend on the unique facts of each case. A recent Tennessee case proves that point. As the Court of Appeals of Tennessee noted when it affirmed the decision of the jury that there was no undue influence, there was evidence in the case to support that the will was the result of undue influence, but there was also evidence to support that it was not.

The proof at trial showed:

The maker of the will, a Elizabeth Jones (“Decedent”), was about 93 years old in 2010 when she changed a will she had made in 1985
In her 1985 will, the Decedent had left her assets, except for certain real property, to her nieces (who were the parties challenging the 2010 will)
In the 1985 will, the Decedent had left the real estate in question to her stepson
In her 2010 will, the Decedent left all of her assets to her stepson and disinherited her nieces
Stepson began living with the Decedent when he was 5 years old, and then moved next door to her with his wife in 1985
Decedent suffered a stroke in 1985, but her doctor testified that she was mentally competent and had no mental deficits from the stroke at the time Decedent executed her 2010 will
Stepson admitted that he assisted Decedent by cashing her checks, and taking her to doctors appointments
Stepson had a gate installed at Decedent’s house which he claimed he did to keep strangers from coming to her home when she was alone
A family friend testified that the Decedent was “always sharp-minded”
Another friend of Decedent testified that Decedent’s home smelled of urine and caused her to call the Tennessee Department of Human Services (“Department”)
An employee of the Department visited with Decedent and concluded that she was not being neglected
Another friend of the Decedent testified that Decedent had expressed to him that she wanted to make a new will and that, thereafter, he helped her obtain the will she executed in 2010 from Legal Zoom
The friend who helped Decedent with the 2010 will testified that, although she was frail, Decedent was still competent

The jury determined that there was no undue influence and upheld the validity of the 2010 will. The nieces appealed. The court of appeals affirmed the jury verdict. On the facts of this case, and considering the deference given to jury verdicts on appeal, that outcome was a foregone conclusion, in my opinion.

Setting aside a jury verdict in this will contest case would have required the court of appeals to conclude that there was no material evidence to support the jury’s verdict.

Understanding the Effects of the Tennessee Uniform Simultaneous Death Act

Published on: August 4, 2017 | by J. Ross Pepper

Spouses, children and parents, or other persons, who may be heirs of each other, sometimes die because of common accidents or disasters. As well, even in the absence of a common disaster or accident, sometimes spouses die within a short time of each other. When those tragic events or nearly contemporaneous deaths occur, the Tennessee Uniform Simultaneous Death Act may be applicable.

Under the Act, the operative time period is 120 hours, or 5 days. If a spouse dies within 120 hours of his or her wife or husband, then, that spouse is deemed to have predeceased the other spouse for purposes of receiving homestead allowance, year’s support allowance, exempt property, and elective share. The presumption also applies, importantly, for purposes of determining who the heirs are when the spouse who died first died without a will (when someone dies without a will, his or her property is distributed according to the laws of intestate succession).

Here is an example of how the Act would apply in a situation where the spouse who died first died without a will: Husband and Wife were married late in life and each has a child by another marriage who is not the child of the other spouse. Wife has an investment account worth $300,000 which she, alone, owns. As well, Wife has made no payable on death or survivorship designation on the account. Neither Husband nor Wife has a will.

Husband and Wife are in an accident. Wife dies at the scene of the accident and Husband dies two days later. If not for the Act, Husband’s child would inherit one-half of Wife’s account, or $150,000. This is so because, under Tennessee intestate succession law, Husband would be entitled to one-half of the $300,000, and Wife’s child would be entitled to the other one-half.

Rights of “Children” Who are Not Formally Adopted to Probate and Non-Probate Assets in Tennessee

Published on: March 30, 2017 | by J. Ross Pepper

It happens that marriages occur, but children of one of the marrying spouses are not adopted by the other spouse. It also happens that these children are treated by the non-adopting spouse just like his or her own children despite never being formally adopted. So, what are the rights of children in such situations to the assets of the man or woman who, for all practical purposes, became their mother or father, when that man or woman who was not their natural parent and who never officially adopted them passes away?

The answer to the above question depends on, at least, several factors. If the deceased non-natural parent died without a will and did not leave any assets via a joint account, payable on death or other account beneficiary designation (non-probate assets), then the never-adopted child is out of luck. Under Tennessee probate law, when a person dies without a will, the only children who may inherit are natural children and adopted children. That’s it. No exceptions.

If, however, the non-natural parent who died left assets payable on death (non-probate assets) to his or her “children,” it is quite possible that a person the deceased considered and treated like a child, even though that person was never formally adopted, might share in those assets. In the case of In re Estate of Elrod (Tenn. Ct. App. 2015), that very outcome occurred.

Court of Appeals Criticizes Harsh Rule Regarding Who Has Standing to Bring Will Contest

Published on: November 4, 2016 | by J. Ross Pepper

In a recent will contest case, both the trial court and the Court of Appeals of Tennessee let it be known that the current state of the law in Tennessee regarding who has standing to bring a will contest case can result in a major injustice. Both courts also invited the Supreme Court of Tennessee to change the law.

Here is what happened in the case, In re Estate of J. Don Brock:

Don Brock had five adopted children (“Contestants”)
Mr. Brock also had a wife
Mr. Brock executed a will in 2013
The 2013 Will disinherited the Contestants, and left the assets of the estate (“Estate”) to Mr. Brock’s wife
Mr. Brock died
The 2013 Will was submitted to probate
The Contestants filed a notice of will contest based on undue influence, fraud, lack of testamentary capacity, and improper execution
The Chancery Court entered an agreed order that the Contestants had standing to challenge the 2013 Will and transferred the case to the Circuit Court for the will contest trial
The Estate filed a motion to transfer the case back to Chancery Court on the basis that the Contestants did not have standing to challenge the 2013 Will
The grounds for the Estate’s position was that there was a newly discovered 2012 Will which also disinherited each of the Contestants
The Circuit Court granted the motion of the Estate. It determined that the Contestants did not have standing because, even if the 2013 Will was set aside, the Contestants would still receive nothing because of the 2012 Will
The Contestants then filed a motion to amend their notice to contest, not only the 2013 Will, but also, the 2012 Will (as well as some wills before 2012)
Under the wills executed before the 2012 Will, some of the Contestants would be entitled to recover if both the 2013 Will and the 2012 Will were found to be invalid. If all of the wills before the 2012 Will were held to be invalid, all of the Contestants would recover
Applying existing Tennessee law, the Chancery Court determined that the Contestants did not have standing to bring a will contest case

So, what Tennessee law compelled the ruling of the Chancery Court which slammed shut the courthouse doors to the Contestants? How could the ruling be fair given the possibility that the Contestants might be able to prove that both the 2012 Will and the 2013 Will were invalid, in which event, it was undisputed that they would be entitled to assets of their father’s estate? The first question is easy to answer. I do not have an answer to the second question (just like the trial court and appellate court did not).

Total Trust Does Not Equal Undue Influence

Published on: October 20, 2016 | by J. Ross Pepper

A recent Tennessee undue influence case proves that establishing undue influence requires more than proving that the person who was allegedly unduly influenced totally trusted the defendant. The case also illustrates how the outcome of fraud cases and undue influence cases depends so critically on the facts of each individual case. Lastly, it also proves how differently a Tennessee trial court and the Court of Appeals of Tennessee might view the facts of an undue influence case.

The case is Eledge v. Eledge and here is a summary of the relevant facts:

Father owned land
Father had a son (“Son”) and a daughter (“Daughter”)
Father became concerned that his land might be subject to the claims of creditors
Father sought advice from Son about how to preserve his land from debts
Son retained a lawyer who prepared a quitclaim deed for Father to sign
The quitclaim deed transferred half of the land to Son and half to Daughter
The quitclaim deed reserved a life estate in the land for Father
It was undisputed that Father totally trusted Son and relied on him for financial advice
Father was in good health, mentally and physically
Father lived alone and independently
While Son handled many business matters for Father and advised him, Father still handled a number of business matters competently and without Son’s help
Father did not read the quitclaim deed before he signed it
Two years after signing the quitclaim deed, Father became aware that he had only a life estate
At the request of Father, Daughter conveyed her interest in the land back to Father
Son refused to convey his interest in the land back to Father

Father filed an undue influence and fraud case against Son. Father alleged that Son owed him a duty to tell him that, if he signed the quitclaim deed, he was only retaining a life estate which would prohibit him from transferring the land if he wanted to do so. Father alleged that the failure of Son to disclose and explain was fraud because Son and he had a confidential relationship.

The trial court found that a confidential relationship existed between Father and Son. Therefore, it concluded, Son’s failure to disclose the ramifications of the quitclaim deed to Father was fraud.

Temporary Restraining Orders and Temporary Injunctions in Tennessee Business and Employment Litigation

Published on: October 10, 2016 | by J. Ross Pepper

Tennessee courts, if they follow the law, which they usually do, are very disinclined to make a party do something or to make a party refrain from doing something until the usual legal processes which occur after a lawsuit has been filed have taken place. The usual processes, which typically take many months, are an initial round of pleadings and motions, an opportunity for each party to engage in discovery, and the occurrence of a trial (if one of the parties has not shown that it has a strong enough case that it is entitled to a summary judgment or dismissal).

There are situations in which Tennessee courts are authorized to, and will, grant what is referred to as “extraordinary relief” or “injunctive relief” on an emergency or semi-emergency basis. Such relief comes in the form of temporary restraining orders (“TROs”) and temporary injunctions, sometimes also called emergency injunctions. Temporary restraining orders and temporary injunctions are almost always granted at the outset of litigation in order to prevent irreparable harm to a party. (Permanent injunctions are granted after a trial or dispositive motion and are not discussed in this blog.)

The notion behind TROs and temporary injunctions is that, in some situations, if a party has to wait on the usual legal processes to occur, even if it wins, it will suffer damages or harm that cannot be remedied even by an award of money damages.

A. Requirements for Obtaining a TRO or Temporary Injunction

To obtain a TRO, a party must prove to the court that, absent a TRO, the opposing party’s actions will cause it immediate damage which will be irreparable. TROs are frequently issued in cases where ex-employees or independent contractors are violating valid non-compete agreements and/or have confidential information, which information gives them a competitive and unfair advantage over their prior employer or the party with whom they had the independent contractor relationship.

How Elective Share Works in Tennessee Probate Cases

Published on: September 26, 2016 | by J. Ross Pepper

In Tennessee, either a husband or a wife whose spouse has died has the right to elect to receive, from the deceased’s spouse’s assets, an amount allowed by a Tennessee statute, sometimes called the elective share statute, as opposed to receiving the amount left to him or her under the deceased’s spouse’s will.

Where a spouse has died without a valid will, the surviving spouse may also elect to receive the amount to which he or she is entitled pursuant to the elective share statute, as opposed to what he or she would receive under the statutes that prescribe what amount a surviving spouse receives when the deceased spouse did not leave a will. (Under Tennessee law which governs intestate estates, which are estates of those who have died without a valid will, a surviving spouse is entitled to the entire residue of deceased’s spouse’s estate where there are not children, and to the greater of one-third or a child’s share where there are children).

The amount of a surviving spouse’s elective share is based on the length of the marriage as follows:

Less than 3 years 10% of the net estate

3 years or more, but less than 6 20% of the net estate

6 years or more, but less than 9 30% of the net estate

9 years or more 40% of the net estate

Recent Case Lays Down New Law in Tennessee for Joint Bank Accounts of Spouses

Published on: August 25, 2016 | by J. Ross Pepper

In Tennessee, many spouses have joint bank accounts with rights of survivorship. Such accounts are considered accounts held by the spouses as “tenants by the entirety” unless the spouses have specifically agreed otherwise. Such accounts are referred to as “tenancy by the entirety accounts” or “entireties accounts.”

A tenancy by the entirety account is a form of ownership which is only available to spouses. Under Tennessee law, each spouse owns the entire account, and, when one of the spouses dies, the other spouse continues to own the entire account.

In a recent probate case which made it on appeal to the Court of Appeals of Tennessee, the Court of Appeals made some new law on tenancy by the entirety accounts. The case is In re Estate of Fletcher and here are the facts and procedural history:

Husband and Wife opened a joint account with a right of survivorship (which was deemed to be a tenants by the entirety account)
Husband and Wife deposited $100,000 in the account which they received from re-financing their home
According to the account agreement, either Husband or Wife could withdraw funds without the signature of the other
After the account was opened, Husband withdrew $100,00 from the account and bought a certificate of deposit (“CD”)
The CD was in Husband’s name only
Husband died with a will in place (died testate)
Husband’s will provided that his children (“Children”) were entitled to his personal property which included the CD
Husband’s will was admitted to probate
In the probate litigation, Wife contended that the CD was not part of Husband’s estate and Children contended that it was
The probate court held that the funds in the CD ceased to be owned by the entireties when Husband withdrew the funds from the entireties account and bought the CD in his name only
Under the holding of the probate court, the funds in the CD were, therefore, personal property owned by Husband at the time of his death, and, therefore, were part of his probate estate
Under the holding of the probate court, Children, not Wife, were entitled to the funds from the CD