Estate planning documents that are created under "undue influence" are invalid.

Legal Definition

The California Welfare & Institutions Code Section 15610.70 defines "undue influence" as follows:

(a) “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. In determining whether a result was produced by undue influence, all of the following shall be considered:

(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.

(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following:

(A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep.

(B) Use of affection, intimidation, or coercion.

(C) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.

(b) Evidence of an inequitable result, without more, is not sufficient to prove undue influence."

Examples

In more simple terms, you can think of "undue influence" as pressuring another person to do something that is against their wishes and results in an unfair or unjust outcome. It may be helpful to illustrate this with a couple of examples:

1. An elderly person is pressured into changing the beneficiary of his or her estate to someone in a position of power, such as a caretaker or other family member, often to the exclusion of others.
2. Someone blackmails another to create estate planning documents leaving everything to him or her.

It's fairly obvious why undue influence results in invalid estate planning documents--they don't reflect a person's testamentary intent!

Undue influence may be difficult to detect, especially where a client shows up by him or herself and the source of undue influence is not readily apparent. This is further complicated by the fact that some people do want to leave everything to a caretaker, since that person is often the one who has spent the most time with the client.

In these scenarios, discerning whether an action is a client's free will or caused by undue influence can be challenging to say the least.

Having enforceable estate planning documents require that you have the necessary capacity. This is self-evident, since those who lack the mental ability to understand their actions can't coherently express their wishes about how they want their assets distributed. Capacity, however, can be a sliding scale depending on the particular action being completed. 

California Law

The California Probate Code is helpful to some degree in understanding the definition of mental competence. For example, in the case of a Will, one can look to Probate Code Section 6100 and 6100.5. Probate Code Section 6100 states the following:

"(a) An individual 18 or more years of age who is of sound mind may make a will.

(b) A conservator may make a will for the conservatee if the conservator has been so authorized by a court order pursuant to Section 2580. Nothing in this section shall impair the right of a conservatee who is mentally competent to make a will from revoking or amending a will made by the conservator or making a new and inconsistent will."

And, Probate Code Section 6100.5 states the following:

"(a) An individual is not mentally competent to make a will if at the time of making the will either of the following is true:

(1) The individual does not have sufficient mental capacity to be able to (A) understand the nature of the testamentary act, (B) understand and recollect the nature and situation of the individual’s property, or (C) remember and understand the individual’s relations to living descendants, spouse, and parents, and those whose interests are affected by the will.

(2) The individual suffers from a mental disorder with symptoms including delusions or hallucinations, which delusions or hallucinations result in the individual’s devising property in a way which, except for the existence of the delusions or hallucinations, the individual would not have done.

(b) Nothing in this section supersedes existing law relating to the admissibility of evidence to prove the existence of mental incompetence or mental disorders.

(c) Notwithstanding subdivision (a), a conservator may make a will on behalf of a conservatee if the conservator has been so authorized by a court order pursuant to Section 2580."

Other Probate Code Sections thare are helpful in understanding mental capacity and its contours are Sections 810-813.

Considerations

It's important to know that many mental impairments do not necessarily rise to the level of legal incapacity. For example, one may suffer from depression or anxiety, and yet may still be able to fully comprehend and understand the decisions they are making in their estate planning documents.

That being said, lack of legal mental capacity can present a substantial stumbling block for families trying to help a loved one complete an estate plan. The best course of action is to begin relatively young, when the mental faculties are still in tact. You never know if a sudden, unexpected accident or illness could lead to a permanent and lasting impairment.

Occasionally, you may want to "opt-out" of the default estate planning rules provided by the California Probate Code (a body of law that governs many estate planning transactions and events). The default rules within the Probate Code  can provide bright-line guidance in situations where your estate planning documents may be silent as to what needs to be done. This can be extremely helpful in some situations and very frustrating in others. Here are some issues that come up from time to time.

Co-Trustees and Decision-making

Under California Probate Code Section 15620, "unless otherwise provided in the trust instrument, a power vested in two or more trustees may only be exercised by their unanimous action." This means that if you decided that you wanted 3 co-trustees of your trust and your trust doesn't state otherwise, then all 3 co-trustees would have to unanimously agree with the decision. This may be desired where you want complete harmony among the co-trustees, but it may not be desirable if you think there may be a conflict that will unnecessarily delay the administration or distribution of your trust assets.

Power of An Agent Under a Power of Attorney

A Power of Attorney can grant another person significant power over your assets; however, there are some areas where this power may be limited.

If you want your agent to be able to create, modify, revoke or terminate your trust, then the trust must specify that your agent under a Durable Power of ttorney may do so. California Probate Code Section 4264 describes other powers that your agent may exercise, but only if the Power of Attorney document expressly mentions them.

It's common for laws to provide a default framework. In some cases they are an accurate reflection of what most people want, but in others, you may need to strongly consider whether to deviate from them.

By law, certain estate planning documents must be signed using proper formalities. Sometimes, however, you can require additional procedures that a beneficiary must follow to exercise their rights within your estate planning documents.

A number of reasons exist for doing this, ranging from ensuring proper notice is given to relevant parties such as your trustee, to limiting the time frame in which the beneficiary can exercise their rights, or to avoiding the possibility that someone might fraudulently exercise a beneficiary's power.

Powers of Appointment

One area where you may provide specific instructions or formalities is with respect to "powers of appointment". A power of appointment is a right that is granted to another person to direct the disposition of property.

For example, if I give you a power of appointment over my property, then I'm giving you the right to decide who will receive my property and how they are going to receive it. Often a beneficiary of a trust may have a power of appointment over the trust assets, which is effective at the time of the beneficiary's death (provided that the proper formalities are followed). In essense, this allows you to give whatever remains in the trust to others, subject to the restrictions contained in the trust document.

Common Formalities

A few typical formalities come up with respect exercising powers of appointment (or an exercise of another power):

1. The trust might require a person to exercise the power in his or her Will or a codicil to his or her Will.
2. The trust may require the document in which a person exercises his or her power to be notarized.
3. The trust might require the document in which a person exercises his or her power to be given to the trustee before his or her death.

This issue does not crop up all the time, but it's important to be aware of proper formalities if you are someone with such a power so that you can effectively exercise it.