Claim of Undue Influence Resolved by Court Before Death of Testator

A will is obviously prepared when a individual is still alive.  A will contest usually comes about after the individual dies.  However, a California Appellate Court has recently decided that when a conservator secures Court approval of an estate plan while the individual is still alive, any challenge to the will must be made at that time and not after the individual dies.

In the case of Murphy v. Murphy, in the Court of Appeal of the State of California, First Appellate District, Docket No. A115177, a dispute arose between siblings after their father had a stroke and could no longer operate his business.  The son was concerned that his sister was exercising undue influence over the father, and, with Court approval, hired a conservator to wind down the business and deal with the father’s assets.  At that time the son learned that his father’s will left all assets to his sister and none to him.

The conservator sought Court approval, through a substituted judgment, to re-execute the living trust containing the same division of property and the Probate Court authorized the conservator to do so.  This resulted in the implementation of a living trust and pour over will that effectively disinherited the son.  The son was on notice of the plan but did not challenge the trust terms at that time.

Following the father’s death, the son filed suit against his sister alleging breach of an oral contract, undue influence, intentional interference with contractual relation and fraud.  The Trial Court issued a judgment in favor of the son and imposed a constructive trust over one half of the father’s property.

On appeal, the California Appellate Court reversed the decision of the Trial Court finding that the son’s claims were barred by the principles of collateral estoppel.  In the appeal, the parties agreed that the application of the doctrine of collateral estoppel to a substituted judgment order presented an issue of first impression. While the doctrine of collateral estoppel did not bar a second action from being filed, it did preclude a party to an action from re-litigating in a second proceeding matters that had been litigated and determined in a prior proceeding.

The threshold requirements to prevent an issue from being re-litigated are: 1) the issue is identical to that decided in the former proceeding; 2) the issue was actually litigated in the former proceeding; 3) the issue was decided in the former proceeding; 4) the decision in the former proceeding was final and on the merits; and 5) preclusion is sought against a person who was a party or was in privity to the former proceeding.

This  decision appears to be the first decision in the country to provide that attacks on wills would be barred after the estate owner dies, if there has been a court-approved substituted judgment will the testator was still alive.  The opinion essentially bulletproofs the will of a person found incompetent and placed under the protection of a conservator, if the Court approves a revised estate plan with appropriate notice being given to all parties in interest who may have any basis to object.