The Idaho Supreme Court recently adopted Restatement of the Law Third, Property (Wills and Other Donative Transfers) § 8.3, Comment f. The following is a summary of that case.
In Gestner v. Divine, 519 P.3d 439 (Idaho 2022), the Idaho Supreme Court adopted Restatement of the Law Third, Property (Wills and Other Donative Transfers) § 8.3, Comment f, in holding that a presumption of undue influence arose if an alleged wrongdoer was in a confidential relationship with a donor and there were suspicious circumstances surrounding the preparation, formulation, or execution of a donative transfer.
In that case, disinherited beneficiaries challenged an amendment to a revocable family trust created by their stepmother and father, who predeceased their stepmother; under the trust terms, a surviving settlor had the authority to change the beneficiaries of the trust. The beneficiaries argued that because the surviving settlor lived with and was cared for by the successor trustee, who was their stepmother’s biological daughter, the trustee unduly influenced the settlor to amend the trust to eliminate their father’s special bequests to them and designate the trustee as sole beneficiary. Following a bench trial, the trial court determined that the settlor had full testamentary capacity when she amended the trust to disinherit the beneficiaries, and that they failed to establish that the trustee unduly influenced the surviving settlor to amend the trust.
The Idaho Supreme Court affirmed, holding that the trial court properly concluded that the beneficiaries “failed to establish that a presumption of undue influence should be applied in this case.” The court explained that a rebuttable presumption of undue influence arose when an “alleged wrongdoer was in a confidential relationship with [a settlor] and there were suspicious circumstances surrounding the . . . execution of the trust,” and adopted § 8.3, Comment f of the Restatement, in “expanding the type of confidential relationships which can give rise to the presumption.”
Looking to the definition of “confidential relationship” set forth in § 8.3, Comment g, the court noted that the term embraced three sometimes distinct relationships—fiduciary, reliant, and dominant-subservient—and concluded that the beneficiaries failed to establish that a confidential relationship existed between the trustee and settlor. The court noted that “there [was] no evidence that [the settlor] was a beneficiary of the trust,” as the settlor was not a beneficiary to the trust at the time she amended it. Likewise, there was no evidence that a dominant-subservient relationship existed, because the testimony from numerous witnesses reflected that the settlor acknowledged her attorney’s concerns of the trustee’s exercise of undue influence and “assur[ed] him otherwise,” and was “convincingly insistent that [the trustee] did not tell her what to do.”