Marriage may be sacred, but under California law, one spouse cannot take advantage of the other when it comes to estate planning. Spouses have a fiduciary duty to one another, and when one party exerts undue influence over the other, the courts may intervene. Recently, a California appeals court upheld a lower court’s decision to invalidate part of a deceased man’s trust after finding his wife exercised such undue influence.
Lintz v. Lintz
Robert Lintz was a real estate developer worth millions. He was married several times, including twice to his final spouse, Lois Lynne Lintz. Shortly after their second marriage in 2005, Robert Lintz amended one of his trusts-which held his northern California properties-to give his wife a one-half share upon his death. The trust was amended several more times between 2005 and Robert Lintz’s death in 2009, each time increasing Lois Lintz’s share and decreasing the amount left to Lintz’s children from his prior marriages.
After Robert Lintz’s death, his children sued Lois Lintz to overturn the post-2005 trust amendments. The Lintz children accused their stepmother of exercising undue influence over their father. A probate judge agreed and voided the post-2005 amendments, in effect reforming the trust as it existed in 2005. Loiz Lintz appealed.
The Court of Appeals upheld the probate judge’s decision and remedy. The probate court found substantial evidence of undue influence. As summarized by the appeals court, the evidence showed Robert Lintz “was fearful of [his wife] and unable to exercise his free will over her when it came to his money.” The court cited testimony that Mrs. Lintz “misinformed” her husband’s estate planning attorneys about his wishes and ultimately switched lawyers without his consent.
The appeals court did, however, take issue with some of the legal standards applied by the lower court. For example, the appeals court said the probate court should have applied a “presumption of undue influence” to certain trust amendments that converted Robert Lintz’s separate property into community (marital) property. That proved irrelevant to the outcome, as the lower court separately concluded there was undue influence. Nevertheless, the Court of Appeals’ decision should guide judges in the future on this subject.
The Court of Appeals also said that probate courts should apply a higher standard of proof when determining if a person has the legal capacity to make or amend a trust. In this case, the probate court found Robert Lintz was competent under the California law governing the legal capacity to make a will. But the Court of Appeals said that was too low a standard, as “the trust instruments here were unquestionably more complex than a will or codicil.” Instead, the appeals court said the proper standard was that to enter into a contract, which is a “sliding-scale” under California law.
A Cautionary Tale
The Lintz case is an example of what can happen when one spouse ignores his or her fiduciary duty to the other. Courts will not tolerate wills or trusts that result from one spouse coercing the other. As always, the key to avoiding such disputes is to work with an experienced California estate planning attorney who can ensure the intentions of both spouses are respected. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.