August 25, 2005

Devries Column

Sister vs. Sister case proves fraud, undue influence
over settlor may be shown by circumstantial evidence

This week’s question:
My father died about four weeks ago and I just obtained a copy of his living trust. (My Mom died seven years ago.) I was shocked when I learned that everything now goes to my sister. How can I prove in court that my father was the victim of my sister’s fraud and undue influence? I was always a good son and treated him like a saint, which he was. Are suits between family members allowed in court if it comes to that?

Dean D.
Almaden Valley

Dear Dean:
First of all, Dean, the easy one. Yes, suits between family members are allowed in court. Even aside from family court that involves family members all the time with divorces, custody proceedings, etc., this office has had suits in Superior Court by brother against brother, son against mother, brother against sister, mother against daughter, and others. Just to name a few. Sad but true.

You can possibly prove in court that your father was the victim of your sister’s fraud and undue influence by using circumstantial evidence. You may have followed the Scott Peterson criminal case in the media. If you did, you saw where Mr. Peterson was found guilty of murdering Laci Peterson and her unborn child, largely by the presentation of circumstantial evidence.

A recent civil case in this area is especially interesting. The case is Susan David v. Wendy Alter Herman, decided May 18, 2005, a case involving two sisters.

In that case, Mom and Dad had a living trust called the Alter Family trust. This living trust had substantial assets, including a commercial building at 300 Brannan Street, San Francisco, and an apartment building at Hayes and Divisidero, also in San Francisco.

A rift developed between the two sisters, Susan and Wendy, over management of their parents’ properties held within the family trust. Evidently, the rift started when Dad made a series of monetary gifts of $10,000 each to various family members in order to decrease his federal estate tax. This resulted in a $10,000 imbalance in favor of Susan’s side of the family.

Wendy, very unhappy about the $10,000 perceived favoritism shown to Susan’s side of the family, was upset. Wendy contacted Mom (Jane), Mom’s attorney, and others. Wendy accused Susan of “dereliction” in the management of the family’s financial affairs. Later, Wendy evidently persuaded Mom (Jane) to revoke the parents’ family trust and sign a new trust called the “Jane Alter Living Trust.”

All of Mom’s assets were transferred to her new living trust. Of course, the trustee of Mom’s new trust was Wendy. Mom specified in the new trust that one-half of all assets would go to Wendy and the other one-half to the Dad and Mom’s grandchildren. Susan would get zero. Nothing.

This obviously was not to Susan’s liking and she filed suit for Wendy’s alleged fraud and undue influence on their mom when mom signed her new trust after she revoked the old one and transferred her (mom’s) assets to the new trust. Susan argued that she basically never did a thing to mom so as to be disinherited and that it was all Wendy’s doing.

The Court of Appeal agreed with Susan and held that mom’s new trust was invalid since it was the product of fraud and undue influence of Wendy upon mom. “California courts have long held that a testamentary document may be set aside if procured by undue influence.”

“Undue influence is pressure brought to bear directly on the testamentary act, sufficient to overcome the testator’s free will, amounting in effect to coercion destroying the testator’s free agency.”

“The proof of undue influence by circumstantial evidence usually requires a showing of a number of factors which, in combination, justify the interference, but which taken individually and alone are not sufficient.”

Undue influence may even be presumed. A presumption of undue influence “arises upon the challenger’s showing that (1) the person alleged to have exerted undue influence had a confidential relationship with the testator (will maker); (2) the person actively participated in procuring the instrument’s (e.g. trust or will) preparation or execution; and (3) the person would benefit unduly by the testamentary instrument.”

In the Susan v. Wendy case, the trial court found as a fact that there was no rational explanation for the sudden shift in attitude by mom (Jane) toward Susan and the break with Susan in September 1990 other than Wendy’s falsely poisoning mom’s (Jane’s) mind against Susan because of her (Wendy’s) anger over the perceived slight in the August 1990 gifts.

“In other words, there is compelling circumstantial evidence that Wendy made continuing misrepresentations about Susan to their mother for the purpose of alienating Susan from her mother and affecting Susan’s and her family’s disinheritance. Proof that a testator/settlor is induced by misrepresentations into making dispositions that would not have been made absent those misrepresentations constitutes fraud.”

Feel free to read the case for yourself online at: http://caselaw.lp.findlaw.com/data2/californiastatecases/a101681.pdf. (For my attorney friends, the citation is: 05 C.D.O.S. 4215.) And as I always say, discuss this case with your own attorney for a full, balanced view of this and any other case or statute.

Good luck, Dean. I hope it all works out well with you.

Donald J. DeVries
Almaden Valley

Donald J. DeVries is an attorney practicing law in Almaden Valley. If you would like him to answer your question in his next Almaden Times column, you can reach him by e-mail at don@almadenvalleylawyers.com, fax at (408) 268-6502, telephone at (408) 268-9500, or mail at, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. To view Almaden Times columns since 1986 visit www.almadenvalleylawyers.com. DeVries writes this column to provide you with general information about important legal matters affecting California residents—not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.