Donald and Marjorie were married in 1997. Each of them had two adult children upon entering the marriage–Donald’s kids were Kathy and Ray; Marjorie’s kids were Julie and Colleen. Donald and Marjorie created a revocable living trust together. At first death, the trust remained revocable as to the survivor. Upon the death of the survivor, all four kids were equal residuary beneficiaries.
Donald died in 2000. Kathy and Marjorie communicated sporadically throughout the years after Donald’s death. Ray’s communication with Marjorie ended shortly after Donald’s death. In 2004, Marjorie sold the family home and sent all four children checks for equal amounts of the proceeds.
Julie built a house on her homestead property for Marjorie to live in. Marjorie stayed there for several years and then later moved into a home with Colleen. When Colleen died in 2012, Marjorie moved into an assisted living facility for a short time but then moved back in with Julie. Julie was added as a joint account holder on Marjorie’s bank account, and Julie indeed made several transfers to herself from Marjorie’s funds.
In 2010, Marjorie amended the revocable family trust to remove Kathy and Ray as residuary beneficiaries. Kathy and Ray also had listed specific distributions of $200,000 each, which Marjorie reduced to $100,000 each.
In 2017, Marjorie again went to her attorney, Robert, to amend the family trust. Marjorie told Robert that she felt disappointed in Kathy and Ray for how they had treated her after their father’s death. Marjorie asked Robert to reduce Kathy and Ray’s specific distributions. In this meeting, Robert asked to meet with Marjorie alone; Julie left the room. At this time, Robert assessed Marjorie’s mental capacity by using a four-page worksheet containing questions about cognitive, emotional, and behavioral functioning. The worksheet also allowed Robert to evaluate Marjorie’s legal, contractual, and donative capacity.
Attorney Robert made the following notes on the worksheet:
- “Marjorie communicates clearly, stays on track with the conversation and asks coherent questions.”
- “Marjorie is clear that she accepts assistance from her daughter, Julie, with bills, but insists she (Marjorie) is still in charge of everything.”
- “No overt emotional distress, but Marjorie is experiencing some anxiety because she is seriously considering disinheriting her stepchildren, but is concerned doing so may be disrespectful to her late husband.”
- “No obvious delusions. She does believe her stepchildren have treated her poorly since her husband’s death. This belief seems rational, though.”
- “Despite her advanced age, Marjorie is presenting as very capable of making her own decisions with a high degree of understanding. She is debating what the ‘right’ thing to do is, but knows what she wants, and knows her options.”
The following year, Marjorie had another meeting with her attorney and did eliminate Kathy and Ray’s specific distributions and so named Julie as the sole beneficiary of the family trust. Marjorie died about 5 months later. After Kathy and Ray found out about their disinheritance, they filed suit requesting that a court find the 2018 amendment void due to undue influence on the part of Julie. After a bench trial, the district court concluded that Marjorie had full testamentary capacity and ruled against Kathy and Ray. This appeal followed.
Kathy and Ray argued that Marjorie did not know the extent of her property; they pointed to a 2018 letter signed by Marjorie that said her trust had no property in it when in fact it had almost half a million dollars in it. Kathy and Ray also argued that Marjorie’s attorney didn’t complete a second capacity worksheet when she came into his office to do the amendment a year after the first capacity worksheet was done. Finally, Kathy and Ray argued that Marjorie was on pain medication in the timeframe in which she did the amendment.
The Supreme Court of Idaho affirmed the trial court’s ruling and stated that there was ample evidence that Marjorie had capacity when she executed the trust amendment. Notably, when referencing the capacity worksheet, the court stated, “We recommend the use of such a tool for attorneys who practice estate planning.” The American Bar Association’s Commission on Law and Aging puts forth a handy publication that discusses capacity and has an undue influence screening tool and a capacity worksheet, although it is unclear whether it is similar to the worksheet used in this case.
Revocable living trusts (RLTs) are a cornerstone planning document for many families. Contact us to learn more about WealthCounsel membership and access to a RLT drafting software.