Financial Elder Abuse and Undue Influence

          On
January 1, 2014, California amended its statutory definition of “Undue Influence”
in section 15610.70 of the Welfare and Institutions Code.  This new definition of “Undue Influence”
applies both to “financial elder abuse” that affects the victim while alive and
also to undue influence that affect the victim’s “testamentary dispositions” after
death.

          Until
2014, proving undue influence often entailed proving the abuse of a “confidential
relationship,” i.e., a relationship in which the victim trusted and confided in
the perpetrator, “for the purpose of obtaining an unfair advantage.” 

          Now,
“’undue influence’ means excessive persuasion that causes another person to
act or refrain from acting by overcoming that person’s free will and results in inequity.“  “Excessive
persuasion” does not require the existence of any relationship whatsoever
between the perpetrator and the victim; although that is one of the specific
factors to be considered.

          The
old focus on a confidential relationship was sometimes preventing enforcement
of elder abuse cases where the perpetrator had no real relationship, certainly
not a confidential relationship, with the elderly victim.  It is not always the case that a confidential
relationship exists between the victim and the perpetrator.

          Now
what is necessary is to show that an “inequitable result” was obtained through
excessive persuasion. That is a facts and circumstances analysis that requires
consideration of each one the following factors: (1) victim’s vulnerability;
(2) the influencer’s apparent authority; (3) the actions or tactics used; and
(4) the fairness of the results.  Each
factor is elaborated upon in the statute.

          The
new definition’s initial focus is on “excessive persuasion that overcomes a
person’s free will”.  This derives from a
long line of California decisions involving “will contests” where abnormal or
excessive pressure either subverted or overcame the free will of the testator
and resulted in a disposition contrary to what the testator would otherwise
have done freely. 

          The
definition’s back end focus is on “inequity” as the end result.  However, “evidence of an inequitable result,
without more, is not sufficient to prove undue influence.”  Otherwise, without that language, whenever
one beneficiary inherited more than someone else who arguable should have
inherited as much it might be argued that such an uneven result is unfair, even
if it was freely intended by the testator. For example, take a father who
leaves most of his trust estate to a favored child and less to other not as
favored children.

          The
new definition applies both to abusive transactions that take effect during a
victim’s lifetime and those that take effect at death.  These are very different spheres of
abuse.  The former includes the scenario
where the perpetrator, “[t]akes, secretes, appropriates,
obtains, or retains real or personal property of an elder or dependent adult
for a wrongful use or with intent to defraud, or both.”  The second includes the scenario where the
perpetrator coerces the elderly person into devising an estate plan that gift
assets in a way that is not consistent with his free wishes.

          Much
remains to be seen as to how the statute will be applied by the courts.  This is especially true in regards to what is
considered to be an “inequitable result”.