July 2016
IMO Dougherty, Francis J. Sr. Estate C.A. No. 9496-JL (July 22, 2016)
This case concerns the estate of Francis Dougherty, Sr. and whether his daughter, Patricia unduly influenced him. Francis’s surviving wife, Elizabeth, contested that Patricia did.
Francis had a long relationship with Elizabeth. The two lived together in a modest home in Wilmington, Delaware. The evidence at trial demonstrated that Francis did not have the greatest relationship with his wife and that Elizabeth frequently verbally harassed him. Francis also showed signs of early dementia but others testified that his mental condition was normal for his age. This story, however, begins to take shape by the events on March 28, 2011.
On that day, Francis began vomiting, became incoherent, and was unable to walk. At some point Patricia came to the house and 911 was called. Despite Elizabeth’s testimony to contrary, the Court found the living conditions in their house were deplorable. The house was filled with clutter to a point that made it difficult to navigate throughout the house. Neither the sink in kitchen nor the shower in the bathroom worked, and sewage had been seeping into the house through one of bathrooms. They did not even having a working refrigerator. On the morning he collapsed, Francis was eating a bowl of cereal in the bathroom. Patricia blamed the conditions on her mother, Elizabeth, who appeared to be suffering from her own mental infirmities.
After the March 28, 2011 incident, Patricia took over the responsibility for caring for her father and her mother. They both moved in with Patricia who was retired and living by herself. Her relationship with her father was fairly strong before 2011, but her relationship with her mother was one of dislike and mistrust.
In 2012, Francis executed a power of attorney, appointing Patricia as his attorney-in-fact, which allowed her to formally access and control the bulk of Francis and Elizabeth’s finances. But even before the power of attorney, Patricia made most of the financial decisions. She even held a joint bank account with just her father, which she routinely used to pay for her personal expenses.
Patricia also worked to rehabilitate Francis and Elizabeth’s properties that they owned, including bringing their Wilmington home back up to code. In order to fully accomplish these goals, Elizabeth eventually signed a power of attorney appointing Patricia as Elizabeth’s attorney-in-fact.
In September 2012, Francis attended a volunteer estate planning event hosted by Delaware Volunteer Legal Services. It was Francis’s idea to attend, and prior to it he filled an information sheet that identified Elizabeth as Francis’s spouse and identified all seven of his children. And when asked which if any of his children he wished to disinherit, he only chose two children. However when Patricia took him to the event, he told the volunteer attorney drafting his will that he wanted to leave his estate to just Patricia and his other daughter Frannie, excluding Elizabeth and his other five children. Elizabeth was not even aware that they went to this event.
The attorney drafting Francis’s will found Francis to have capacity. He was not aware that he had been previously diagnosed with dementia and testified that he appeared fine. He also stated the Francis made no mention of Elizabeth and thought that he said his wife was deceased. Along with estate, Francis also named Patricia as sole beneficiary of his life insurance policy. The attorney testified that had he known more about his back story, he would not have drafted the will that day.
At trial, Elizabeth’s expert testified that Francis lacked capacity at the time of the will signing event. He likewise concluded that he was a susceptible testator because he was dependent on Patricia.
Francis died on November 7, 2013, and on December 4, 2013, Patricia filed a will with the Register of Wills. Until the will was filed with the Register of Wills, neither Elizabeth nor Francis’s other children were aware of it. In December 2013, Patricia covertly undertook “estate planning” for Elizabeth because she realized at that point that Francis’s will was ineffective in devising the real property to her—the real estate passed directly to Elizabeth. Patricia retained counsel, who drafted an irrevocable trust on Elizabeth’s behalf, naming Patricia as trustee and Patricia and Frannie as residuary beneficiaries (the “Trust”). Patricia intended to transfer all the real estate to the Trust. Upon Elizabeth’s death, the properties were to pass to Patricia and Frannie in equal shares. The Trust never became effective because Elizabeth revoked the power of attorney before the properties were transferred to the Trust.
Elizabeth filed this action on May 23, 2014, seeking review of the will. The Court found that Patricia unduly influenced Francis to make the will and to designate her as beneficiary of his life insurance policy. The Court reiterated the standard for undue influence in Delaware. The Court explained that “the degree of influence to be exerted over the mind of the testator, in order to be regarded as undue, must be such as to subjugate his mind to the will of another, to overcome his free agency and independent volition, and to compel him to make a will that speaks the mind of another and not his own. It is immaterial how this is done, whether by solicitation, importunity, flattery, putting in fear or some other manner. Whatever the means employed, however, the undue influence must have been in operation upon the mind of the testator at the time of the execution of the will.” The Court stated that “unfair persuasion is the ‘hallmark’ of undue influence.”
Patricia argued that Elizabeth had not met her burden of proof, pointing out that she merely stepped forward as a concerned child to assist her parents, and that no ill-motive can be suggested by her assistance. She also pointed out that the volunteer attorney met with Francis both in her presence and alone and that Francis’s statements did not change when she left earshot. Patricia also relied on testimony that Francis wanted to divorce Elizabeth and wanted Patricia to be the beneficiary of his life insurance. And finally, she argued that several people testified to Francis’s sharp mental state, suggesting he was not a susceptible testator.
The Court disagreed and found that Elizabeth established each of the five elements of undue influence. Ironically, the Court found this because of Patricia’s argument that she stepped in to save her father from her mother. That is, Patricia portrayed her role in her father’s life as the loving daughter who rescued her father from the horrible living conditions of her mother and father’s house and saved him from her mother’s control. The Court reasoned that by doing that, Francis became susceptible to Patricia’s influence. Coupled this with the fact that Patricia covertly drafted a will disinheriting her mother and all her siblings but for one, the Court found that Francis was unduly influenced.
First State Fiduciaries LLC v. Morgan Stanley Smith Barney LLC and Margaret E. Day and Morgan Stanley Smith Barney, LLC v. First State Fiduciaries, LLC & Margaret E. Day C.A. No. 9472-MA (July 11, 2016)
The factual background of this matter is complicated and unique, but the keys facts are that the Movant, a trust company, was named as trustee of a trust by one of the factions in this dispute. The naming of the trustee and the creation of the trust itself are both being challenged by the other faction. No direct claims have been made against the Movant, and the Movant only became a party because it was named as a third party defendant by the faction opposing its naming as trustee and arguing that the trust was void ab initio. Ultimately, a Connecticut trial court ruled that the trust was void ab initio. That decision is on appeal. Movant’s position was that it was named as a necessary party by the faction opposing the interim fee motion, and that its fees should be paid from the interpleaded assets as a result. While willing to take and manage the trust assets, the Movant was never afforded the opportunity to do so. The faction opposing the motion argued that the Movant was not entitled to its fees because, among other reasons, the Connecticut appeal is still pending, the appointment of the Movant as trustee may not be valid, and because the trust was declared void ab initio.
The Master explained that “generally, an award of attorney’s fees out of the trust corpus is proper where the attorney’s services are necessary for the proper administration of the trust or where the legal services create a benefit to the trust.” But here, the Master found that as Movant has never had control over the trust corpus, it cannot be said that the legal fees incurred by Movant were necessary for the proper administration of the trust. The Master then recommended that the motion be denied without prejudice and stated that it may be renewed after the stay of this Delaware case (which was entered in order to allow the Connecticut proceedings to first conclude) is lifted.
Note: This firm represents the Movant in this matter.
