Saturday, August 23, 2014

Testamentary Trust Tussle

Curran v. Building Fund of the United Church of Christ of Ludlow, 2013 VT 118

By Andrew Delaney

Phyllis Agan lived with her husband in Ludlow for over sixty years. They were active community members. When he died, she put her assets into a trust. Over the years, she amended the trust, including several amendments approximately two-and-a-half years before she died. In the end, she left a boatload of money to local nonprofits, and some assets to her relatives. Some of her relatives—a sister and the sister’s two kids—were not too excited about the distribution of over eight-million dollars because it seems the bulk of it went to local nonprofit organizations.

So they sued. They argued that she lacked capacity and that her guardian exerted undue influence over her. Relatives and others who dealt with her during the relevant time “observed personality changes and signs of confusion.” Her primary care physician diagnosed her with dementia when she was in the midst of the various changes to the trust. About a year before the final changes, she recruited her longtime neighbor and friend to help her with her bills. About six months later, she contacted an attorney because she wanted to make a number of changes to the trust.
Then another one of her sisters tried to get an involuntary guardianship. But she entered a voluntary guardianship with her neighbor and friend as guardian, and the sister withdrew the petition.

Phyllis still wanted to amend the trust and she had a number of conversations about that with her attorney and guardian. Both testified that she seemed to know what she was doing. Her attorney testified that she didn’t seem to under anyone’s influence. Though she wanted to cut some relatives out of the trust, her guardian encouraged her to keep them in because they were family. She asked her guardian about organizations she might donate to and he suggested some—most, but not all, received mention in the trust.

There was an eight-day jury trial. Plaintiffs “called two mental health experts who offered a ‘retrospective’ diagnosis of the testator as suffering from moderate Alzheimer’s disease, a cognitive disability which, in their view, would have undermined her testamentary capacity and rendered her susceptible to undue influence.” At the close of plaintiffs’ case, the trial court found enough evidence of “suspicious circumstances” to shift the burden of proof to defendants to show that the final trust amendment was not the product of undue influence.

So defendants brought in their own expert, who also gave a retrospective diagnosis. He opined that Phyllis’s cognitive defects were relatively mild, that she knew what she was doing, and her bequests made sense given her ties to the various organizations. Defendants also brought in a number of people who interacted with her during the relevant time period and remembered Phyllis as mentally aware and competent.

The jury found that Phyllis had capacity when she executed the amendment and that it wasn’t the product of undue influence. So plaintiffs moved for judgment as a matter of law or for a new trial, and the trial court said, “No.”

Do I even need to say it? Fine. Plaintiffs appeal. Defendants cross-appeal on denial of their requests for attorney’s fees and prejudgment interest.

The standard of review is basically if the jury’s verdict can be explained by any reasonable view of the evidence, then it stands. The denial of the motion for a new trial is reviewed for abuse of discretion. To put it mildly, plaintiffs have an uphill climb.

The plaintiffs’ first argument is basically that the defendants presented no countervailing evidence to rebut the presumption of undue influence and that the only conclusion based on the evidence is that there was undue influence. The SCOV—in a much more polite, delicate, and eloquent manner than I’ll put it here—says, more or less, “WTF?”

The guardian testified that though Phyllis asked him for suggestions, it was always her decisions that controlled. The defendants brought in an expert who testified that Phyllis likely had capacity and understood what she was doing. Phyllis’s attorney “testified that he had known the testator for forty years, that she had contacted him about revising the trust instrument, and that he ‘had no question that she understood what was going on.’”

All this, the SCOV concludes, was sufficient to rebut the presumption and justify the jury’s verdict.

Likewise, the SCOV does not see error in the trial court’s denial of the motion for a new trial. The SCOV acknowledges that there was conflicting evidence as to Phyllis’s testamentary capacity, but viewing the evidence in the light most favorable to the jury’s verdict, the trial court was entirely within its discretion in denying the motion for a new trial.

Finally, the SCOV deals with defendants’ request for attorney’s fees and prejudgment interest. Now, there is a statute that allows the probate division to award attorney’s fees and other costs in judicial proceedings involving the administration of a trust “as justice and equity may require.” But it doesn’t do defendants much good.

Here, the SCOV concludes that justice and equity don’t require an award of attorney’s fees or prejudgment interest. Defendants were protecting their interests here and that’s it. The SCOV finds no abuse of discretion.

It’s always hard to determine what a person might have been thinking after the person is gone. In fact, I think the most-educated and evidence-based determination at this point is just a S.W.A.G. But who knows? Down the road, maybe we can just call the NSA in to give us all the goods.


  1. Hello,
    A testamentary trust (sometimes referred to as a will trust or trust under will) is a trust which arises upon the death of the testator, and which is specified in his or her will. A will may contain more than one testamentary trust, and may address all or any portion of the estate.probate law NSW

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  3. Thanks for sharing the informative info about Testamentary Trust..
    A testamentary trust is a trust which arises upon the death of the testator, and which is specified in his or her will.
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