The rules for burden shifting in undue influence cases involving fiduciaries after Cleary and Rempelakis may seem a bit confusing at first glance, but in Estate of Moretti, the Appeals Court recently made it clear that the initial inquiry is this: (1) What was the role of the person accused of benefiting from terms of a trust, will or conveyance in taking care of the settlor/testator’s personal or financial needs; and (2) What was that person’s role in the decision at issue? If a person receiving a benefit stood in a fiduciary or confidential relationship with the settlor or testator at the time of the questioned action and was involved in the decision, then the burden will shift to that person to prove that the challenged act did not result from abuse of the relationship. As discussed below, the impact of this burden-shifting rule was demonstrated in Moretti, in which a judgment that upheld a conveyance of valuable real estate into a trust benefiting a home companion was turned completely around on remand after the Appeals Court reversed the trial judge’s decision to not shift the burden from the challenger to the companion.
According to Moretti, it is “an overly limited reading of the Cleary-Rempelakis rule” that the fiduciary must procure the benefit at issue through the use of the fiduciary relationship before the burden will shift. However, even if a connection is established between the fiduciary and the decision, the burden can be shifted back to the challenger if the settlor or testator received independent legal advice as one method of showing the true independence of the decision from the fiduciary relationship. The fiduciary must not have any strings to pull with the “independent” attorney. As stated in Moretti, “the intervention of legal counsel and measured independence must be real, not illusory; the legal representation must be truly independent, with the lawyer’s loyalty flowing to the client testator alone.”
The continuing benefit of Cleary is its articulation of the longstanding concepts on which the rule applies, and this may be why Cleary is often cited as establishing the standard. Justice Fried’s comment in Cleary, that its result to shift the burden merely applied well established law, can be seen in a careful reading of Cleary, Rempelakis, Moretti and the cases they cite. This shows that the test for burden shifting is neither new nor ambiguous, but that the burden will shift depending on the actual role of the fiduciary in the decision making process. The facts in Cleary and Moretti fell on the side of the line for when burden shifting should occur, and because the burden did not shift in Rempelakis, it may appear not to apply the same burden-shifting standard.
Nevertheless, a closer look at the three cases reveals the contours for when there should be a shift of the burden onto the fiduciary.
In Cleary, the Supreme Judicial Court reversed the lower court’s decision against assigning the burden of proof to the defendant, a nephew of the decedent, in a suit that challenged the validity of a change in beneficiaries of the decedent’s life insurance. The trial judge had relied on the usual presumption that the burden will not shift due to a family relationship between the principal and the ultimate beneficiary. Cleary focused on the defendant’s actual participation in the change of beneficiaries to himself from the decedent’s estate, where the proceeds were to be divided equally between the defendant and another nephew. This analysis identified the different relationships that existed, and how they came into play, to distinguish Cleary from cases in which natural generosity to a family member or close friend and not abuse of the “fiduciary” relationship is the presumed motivating factor behind a gift or bequest. In Cleary, the defendant was also a financial confidant and holder of a power of attorney for the decedent, as well as the insurance agent. He obtained signed forms, perhaps in blank, which ultimately named himself as sole beneficiary. These multiple roles and actual participation in the decision-making process easily fit the established burden-shifting rule that had been most visible in cases where attorneys benefited from transactions with their clients.
In Rempelakis, the Appeals Court upheld the trial judge’s refusal to shift the burden of proof to the defendant, a friend of the decedent who was named in a will drafted by an attorney and witnessed by persons who the friend located. The will left nothing to members of the decedent’s family. On the facts, however, the defendant was shown to take no part in the decedent’s decision. Although he had been given a power of attorney a few days before the will was executed, and so a fiduciary relationship existed as a matter of law, the defendant had not used it when the will was signed and never used it to benefit himself. The attorney who drafted the will was not then representing the friend, although he had done so in the past, and the attorney insisted to all concerned that his only client at that time was the decedent. Therefore, Rempelakis holds that under Cleary the burden of proof does not shift automatically to the fiduciary in every case in which the fiduciary benefits, regardless of involvement – or lack of involvement – in the challenged acts. Rather, if no connection exists between the relationship and the challenged act, so that the challenged decision was made truly independent from the fiduciary relationship, the burden will not shift.
In Moretti, a home health companion for an elderly invalid was found to have instigated changes in the decedent’s estate plan within weeks of becoming hired to simply stay in the decedent’s apartment overnight. Otherwise, the decedent would have been left alone, which was neither safe nor something he wanted. This invalid owned the North End apartment building in which he lived, but he had no family. When he died, the building had both been deeded into a new trust for which the companion was trustee and beneficiary, and left to the companion in a new will. A prior will had left the property to a close family friend of over 40 years. Because the transfer into the trust would have adeemed any devise under either of the two wills, the validity of the deed was decided before the will contest.. Trial of the validity of title in the trust produced the first of the four appeals, in which the trial judge was reversed because he did not make requested findings on the companion’s status as a fiduciary. On remand and later in a separate trial of the will contest (in which the facts were essentially the same), the companion was found to have been a fiduciary and to have participated in the decision making so extensively that that he was involved in hiring and firing a series of lawyers; was represented by the lawyers who executed the will and wrote the trust; isolated his employer from longtime friends, care providers and advisors; intimidated visitors; read all of the decedent’s mail; set up all of appointments with the decedent and lawyers; and marked up at least one draft of the will. The two sets of findings issued in separate cases after the first appeal left no doubt that the companion used a power of attorney and the employer’s total dependency on him to gain control over the decedent and his property. The differences between the first and subsequent findings in Moretti, on the essentially the same facts, demonstrate the outcome-determining impact that burden shifting can have.
As stated in Moretti, “critical to the inquiry is the fiduciary’s involvement in the decision-making process regarding disposition of the decedent’s estate.” If a fiduciary’s involvement is the decisive factor, the underlying rationale for burden shifting suggests that the extent of involvement need not be very high to shift the burden. This should be the rule because the rationale for burden shifting is that the fiduciary relationship itself creates a unique opportunity for exploitation. Since the best (and sometimes only) source of information on whether exploitation occurred is the same person who has an interest benefiting from an advantage that was taken of the fiduciary’s principal, the rule shifts the burden onto the fiduciary. The appellate history of Moretti shows why trial counsel should attempt to ensure that the trial judges’ decisions carefully articulate why the burden was – or was not – shifted.
As a practical matter, practitioners should give careful consideration to the timing for raising and resolving who has the burden of proof. This timing can have significant impact on strategy and litigation expense. Partial summary judgment on this question, or on the entire case, may be appropriate if the facts are not in dispute. A preliminary evidentiary hearing solely on the burden of proof is a good tool for cases in which contested facts on this issue must be resolved first. Such hearings should not be lengthy or complicated, as they should deal only with the preliminary fact of whether the fiduciary participated in the decision making, not on how the role led to the decision itself. However it is resolved, however, the issue must be raised in a timely manner for best results in settling or trying the case, and to survive as an appellate issue.
Robert J. O’Regan is a partner in Burns & Levinson LLP, Boston and a member of the firm’s Probate & Trust Litigation Practice Group. He represents clients in complex trust, estate and fiduciary litigation..