Opinion
Nos. 108,547 109,059.
2013-10-11
Mary K. Koehler CRESTO, Individually and as Trustee of the Francis E. Cresto Trust, Appellants/Cross-appellees, In the Matter of the Estate of Francis E. CRESTO, deceased.
Appeal from Johnson District Court; James F. Vano, Judge. James D. Oliver and Matthew Stromberg, of Foulston Siefkin LLP, of Overland Park, and Jay Fowler, of the same firm, of Wichita, for appellants/cross-appellees. Michael R. Ong, of Ong Law Firm, P.A., of Leawood, for appellees/cross-appellants.
Appeal from Johnson District Court; James F. Vano, Judge.
James D. Oliver and Matthew Stromberg, of Foulston Siefkin LLP, of Overland Park, and Jay Fowler, of the same firm, of Wichita, for appellants/cross-appellees. Michael R. Ong, of Ong Law Firm, P.A., of Leawood, for appellees/cross-appellants.
Before BRUNS, P.J., PIERRON and LEBEN, JJ.
MEMORANDUM OPINION
PER CURIAM.
In 2008, Francis E. Cresto executed a will and inter vivos trust leaving all his property to his wife, Mary Kathleen Cresto. His children, Steven G. Cresto and Teresa Jones (Plaintiffs), were the beneficiaries under his prior will and trust executed in 2004. The plaintiffs challenged the 2008 will and trust arguing the instruments were invalid based on undue influence imposed on Cresto. After a bench trial, the court reinstated the 2004 will and trust finding Kathleen had failed to rebut the presumption—shifted to her—to demonstrate that the 2008 will and trust documents were free from undue influence. Kathleen appealed. The plaintiffs cross-appealed the trial court's decision denying payment of attorney fees and costs from the assets of the Cresto trust.
The parties stipulated to a large portion of the facts in this case. Cresto was a former IBM executive and was very detail oriented. He had three children from his first marriage: Steven, Terese, and Jeanne Lubis. After his first marriage ended in divorce, Cresto remarried and moved to Connecticut in 1971. His second marriage brought him two step-daughters, Lauri Pierce–Kessel and Kelly Pierce. Cresto and his second wife moved to New Mexico in 1985, and the couple lived there until she died of cancer in 1992. Cresto then moved back to the Kansas City area in 1993.
In November 1997, Cresto established a revocable trust titled the Francis E. Cresto Trust (Trust). The documents were prepared by Edward J. White, an attorney in Johnson County, Kansas. The persons named to receive the balance of the Trust were his three children and two step-children. Brotherhood Bank and Trust was designated as successor trustee of the Trust upon Cresto's incapacity or death. The Trust referenced a list of tangible personal property for Cresto's specific distribution. The Trust also provided that any property left to the individuals on the list would offset that beneficiary's share of the Trust. Cresto had several valuable paintings included on the list. In 1998, Cresto updated his list of personal property distributions following the death of his step-daughter Kelly.
Cresto executed a First Amendment to the Trust in May 2000. White again prepared the documents, which added a specific bequest of $100,000 to St. Jude Children's Research Hospital in Memphis, Tennessee. Cresto's second wife had been treated at St. Jude's for brain cancer. The First Amendment also updated the trust beneficiaries in light of the Kelly's death.
Cresto and Kathleen met in 2002 at the Church of the Holy Trinity where both were volunteering. They had a loving relationship that blossomed into marriage. At this time, Cresto's estate had an approximate value of $1,058,000 and Kathleen's estate was near $142,000.
In May 2003, Cresto and Kathleen executed a premarital agreement, again with the help of Cresto's attorney, White. Under the terms of the premarital agreement, Kathleen was granted a life estate in Cresto's residence, which upon her death would pass to his intended beneficiaries as set forth in the First Amendment to the Trust in May 2000. The premarital agreement also provided that if Kathleen survived Cresto, the Trust gave her a beneficial interest of the income of the Trust during her lifetime and distribution of Trust principal as needed for her health, support, maintenance, and education as determined by the Trustee. The premarital agreement also addressed Cresto's and Kathleen's permissive use of the other's tangible personal property following each other's death, but expressly provided “the surviving spouse shall not be allowed to dispose of the deceased spouse's tangible personal property except and other than gifts to the deceased spouse's descendents.”
Cresto and Kathleen were married in May 2003. Shortly thereafter on May 19, 2003, Cresto executed a Second Amendment to the Trust. White prepared the Second Amendment. The Second Amendment to the Trust provided that following Cresto's death, Kathleen had the option of initiating a change in the Trustee, but any replacement successor Trustee was required to be selected by unanimous consent of Kathleen and the beneficiaries. On May 19, 2003, Cresto also executed a general durable power of attorney designating Kathleen as his attorney-in-fact together with White.
Patricia Hackett is an attorney licensed to practice law in Indiana and Michigan. She practices mainly in the area of estate planning. Hackett met Cresto at Kathleen and Cresto's wedding in 2003. She was there with Kathleen's daughter Rita. On July 8, 2004, Hackett contacted attorney James Logan explaining that Cresto wanted to make changes to his estate plan. Logan agreed to serve as Kansas counsel to ensure compliance with Kansas law. Logan met with Cresto and Kathleen on September 22, 2004, and facilitated the execution of Cresto's 2004 First Codicil to the Last Will and Testament of Francis E. Cresto and the Third Amendment to the Trust.
Cresto's 2004 will contained a no-contest clause providing that if any beneficiary contested or opposed the will, they would forfeit any right or interest given them. Cresto's 2004 Third Amendment to the Trust amended the specific charitable bequest to St. Jude Children's Research Hospital by limiting it to not exceed 10% of the then-existing Trust estate. The beneficiaries of the Trust remained the same. Brotherhood Bank and Trust continued as successor trustee upon Cresto's death or incapacity. The Third Amendment again provided that if Kathleen survived Cresto, she could not dispose of his tangible personal property except by gift pursuant to his list of personal property distribution.
On September 22, 2004, Cresto also executed an updated general durable power of attorney designating Kathleen as his attorney-in-fact together with White. He also executed a durable power of attorney for health care decisions designating Kathleen as his agent for those decisions.
The parties stipulated to the following facts regarding Cresto's execution of estate planning documents in 2008:
“61. On May 2, 2008, Francis Cresto executed the following documents: (1) Last Will and Testament of Francis E. Cresto ('2008 Will'); (2) First Restatement of the Francis E. Cresto Trust ('2008 Trust'); and (3) General Durable Power of Attorney (collectively referred to as the '2008 estate planning documents').
“62. On or about April 18, 2008, Francis Cresto underwent a biopsy of his prostate.
“63. On or about April 23, 2008, Francis Cresto was diagnosed with prostate cancer.
“64. Francis Cresto began treatment for prostate cancer approximately May 14, 2008.
“65. On April 25, 2008, Patricia Hackett sent Mr. Logan a letter enclosing drafts of Francis Cresto's 2008 estate planning documents for Jim Logan to review.
“66. The April 25, 2008 letter from Patricia Hackett to Jim Logan states: ‘We are asking that you review these documents to ensure they meet the requirements of Kansas law. We are also asking that you meet with Mr. Cresto to facilitate a careful review and execution of these documents to assure that they comport with his wishes and the formalities required by Kansas law.’
“67. On April 30, 2008, Hackett and Logan had a phone conference regarding the final revisions to Francis Cresto's 2008 estate planning documents.
“68. On May 1, 2008, Patricia Hackett sent a letter to Mr. Logan noting the final revisions Francis Cresto requested to the estate planning documents Hackett sent him on April 25, 2008.
“69. The 2008 estate planning documents that were eventually executed by Francis Cresto were enclosed with the May 1, 2008, letter from Patricia Hackett to Jim Logan.
“70. Jim Logan reviewed the May 1, 2008, letter from Patricia Hackett and the final changes to Francis Cresto's 2008 estate planning documents.
“71. The 2008 Will bequeathed all of Francis Crest's Tangible Personal Property outright to Kathleen Cresto.
“72. The 2008 Will makes no bequest of personal property to the children or stepchildren of Francis Cresto.
“73. The 2008 Will provided that in the event Kathleen did not survive him, all of Francis Cresto's tangible personal property should pass to the children of Kathleen Koehler Cresto.
“74. The 2008 Trust document provided that the entirety of the Trust assets were to be distributed and free of trust to Kathleen Cresto, assuming Kathleen survived Francis.
“75. The 2008 Trust document altered the Original Trust by providing that in the event Kathleen Cresto did not survive Francis Cresto, a specific bequest of Twenty Five Thousand Dollars ($25,000) was to be made outright and free of trust to each of the seven children of Kathleen Koehler Cresto including: Gretchen Marie Koehler, Martha Elaine Glenski, Jo Anne Koehler, Thomas Augustine Koehler, Rita Elizabeth Koehler, Mary Bernadette Brune, and Matthew Damien Koehler.
“76. On May 2, 2008, Francis Cresto and Kathleen Cresto met with Jim Logan so Francis Cresto could execute his estate planning documents, including the 2008 Will, 2008 Trust, and Durable Power of Attorney.
“77. Francis Cresto had testamentary capacity on May 2, 2008.
“78. On May 2, 2008, Francis Cresto executed his estate planning documents, including his 2008 Will, the 2008 Trust, and Durable Power of Attorney.
“79. The 2008 Will was executed in accordance with the required testamentary formalities.
“80. The 2008 Trust was executed in accordance with the required legal formalities.
“81. Jim Logan's legal assistant Narla Mance served as the notary.
“82. Francis Cresto executed the 2008 Will before two disinterested witnesses, Carolyn Belden and Katie Gilliam (the ‘witnesses').
“83. Francis Cresto acknowledged that the 2008 Will was in fact his last will and testament in the presence of the witnesses.
“84. Francis Cresto acknowledged that he willingly made and executed the 2008 Will in the presence of the witnesses.
“85. [Notary and witness declarations]
“86. Francis Cresto asked each witness to sign the 2008 Will as a witness.
“87. The witnesses signed the 2008 Will in each other's presence and in the presence of Francis E. Cresto and at his request. “88. At the time he executed the 2008 Will, Francis Cresto possessed the rights of majority.
“89. At the time he executed the 2008 Will, Francis Cresto was of sound mind.
“90. Rita Koehler is Kathleen Cresto's daughter.”
Cresto suffered a debilitating stroke on March 26, 2010, and died 5 days later on March 31, 2010. After Cresto's death, Kathleen sought probate of Cresto's 2008 will. The plaintiffs filed a declatory judgment action seeking to invalidate the 2008 will and trust. The two actions were eventually consolidated for trial.
At trial, Teresa testified there had been no change in the relationship with her father since he had moved back to the Kansas City area. She was completely surprised after his death when she found out that all the Cresto children had been disinherited. Cresto had repeatedly assured her the family heirlooms would be going to the Cresto children. She said that when they were growing up, Cresto never missed a birthday even after the divorce and they saw him on weekends. He kept in contact while he was gone, and they had a typical adult-type relationship after he moved back to Kansas City in 1993. She regularly talked with him about his plans and helped him with estate plans and also with the tangible personal property lists. She talked to him about the premarital agreement as well. Teresa said that she was the liaison between Cresto and the rest of her family, and he had never disclosed any of the 2008 changes he made to his trust and will.
Steven testified as to his relationship with his father—how Cresto never missed a birthday and repeatedly told him that he and the rest of his sisters were well-taken care of under his will. Steven said he saw Cresto from time-to-time before he died and even had lunch with Cresto 10 days before his stroke.
Hackett testified she had met Rita in 1987 and they were married in Massachusetts on June 21, 2010. Hackett explained she had two face-to-face meetings with Cresto in May and July 2004 to work on the 2004 documents. She admitted she had not told Logan of her relationship with Rita. She said it was irrelevant. Hackett testified that Kathleen had input on Cresto's healthcare documents and was present at the execution of all documents in 2004 and 2008. Hackett knew of the personal property lists but never discussed them with Cresto. Hackett testified that she began discussing changes with Cresto in late 2007 and started drafting the new documents in January and February 2008. Cresto told Hackett he wanted to remove his children from the estate plans because they did not need the resources and his relationship with his step-daughter had changed. She said that in April 2008, Cresto communicated that he wanted to immediately make the changes he had been contemplating and wanted it done before he started cancer treatments. Hackett described how Cresto and Kathleen were involved in phone and email conversations about the changes. She said they had no face-to-face contact from December 2007 thru May 2008 when the changes were executed. Hackett described a letter she received from Cresto on June 20, 2008, thanking her for making all the changes and how he could relax. As far as the personal property, Hackett said Cresto told her most of the tangible property was from his second wife and he had already given everything to that step-child.
Logan testified as to his contacts in this case. He said he had talked with Cresto at the signing in 2004 and made sure that he had the capacity and right mind to sign the documents. He had no contact with Cresto from 2004–2008. He knew that Cresto had left all the property to Kathleen in 2008. Logan testified he told Hackett the in terrorem clause, along with the spousal consent clause, were unnecessary but did no harm by being in there, Logan testified as follows:
“He said that he-he said that the diagnosis of prostate cancer made him realize that he was mortal and that he realized that he thought that his wife might need it because she was approximately as old as he was, and that she might need the property. And he wanted to avoid hassles with the children. Something that I didn't bring up in 2004, because it was simply following what he had in the prenuptial contract.
“But having a life estate and tangible personal property, the household goods and furnishings and so on, is never a good idea, and I always try to talk my clients out of that, because what happens if the refrigerator is the wrong color for the color scheme and they want to get rid of it? There's always a chance for hassle between the—you know, can you get a new computer, or do you have to use the same computer that the person had when they died? And just to avoid hassle.
“He gave me the reasons that, No. 1, he thought she might need it. No.2 he really wanted to avoid having her have hassles. He said, if she wants to give the stuff to the kids, she can. And that was it. He also said the children didn't need it, because the two children that he had some contact with were successful business people. He said, they don't need it. My wife may need it. And I want to avoid hassles.”
The trial court had some specific questions for Logan. The court asked Logan what he would have done differently if he had known of the relationship between Hackett and Rita. Logan answered that he would have asked Cresto to go over his property in front of the witnesses and he would have made the same statements about Cresto's property in front of witnesses. Logan testified he would also have reviewed the Kansas statutes and checked to make sure that Hackett was not a beneficiary.
Rodney Jones, Terese's husband, testified to all the lunches he had with Terese, Kathleen, and Cresto. Jones said Cresto talked to Terese about his prostate problems and treatment. He said Cresto knew about and was concerned for Terese's and Steven's continuing medical conditions. Jones testified that from 1993 until Cresto's death, items in the Cresto household were to go to Terese, Steven, and Jeanne. Jones painted a different picture of Kathleen. He said that Kathleen was the most evil, controlling, and manipulative person he had ever met. She controlled conversations and isolated the Cresto children. Jones finished by testifying that Cresto did not like being around children because they annoyed him.
Several witnesses from the Holy Trinity Church testified as to the loving relationship between Cresto and Kathleen. Tina Kuhnhoff and John Errante testified that Cresto and Kathleen had a mutual and loving relationship. Stacey Cretors testified that Cresto loved being around kids. Bernadette Brun, Kathleen's daughter, testified that Cresto had a special relationship with her son Timothy, that all the grandkids considered Cresto to be their grandpa, and Cresto loved family gatherings.
After presentation of all the evidence, the trial court considered Kathleen's motion for directed verdict and was asked to determine which party had the burden of proof. The trial court granted Kathleen's motion concerning count I in the petition involving the statutory claim of undue influence under K.S.A. 58a–406(b), Since Hackett had prepared the 2008 will and trust documents, the court held that she did not fall within the statute because she did not receive a direct or indirect benefit as the “writer or preparer or the writer or preparer's parent, children, issue, sibling or spouse.” The trial court commented that K.S.A. 58a–406(b) is quite specific and does not include fiances, boyfriends, or same-sex partners.
Regarding the common-law claim of undue influence in Count II of the petition, the court denied Kathleen's motion for directed verdict. The court held that Kathleen was in a confidential relationship and she was also in a confidential relationship with Cresto through Hackett and Rita. The court found that in looking at all the facts in the case, suspicious circumstances existed. Consequently, there was a presumption of undue influence and the burden shifted to Kathleen to prove the lack of undue influence.
More specifically, the trial court held the burden shifted to Kathleen to show by clear and convincing evidence there was no undue influence and Kathleen's influence did not taint or overcome the free will and intent of Cresto as testator and settlor of the 2008 estate planning documents. In an extensive oral ruling, the court found Kathleen had failed to meet that burden. The court granted judgment in favor of the plaintiffs and by prior agreement of the parties reinstated Cresto's 2004 estate planning documents.
As part of its ruling, the trial court answered several specific questions propounded by the parties: (1) Kathleen, through the agency of Hackett, caused the 2008 changes to Cresto's estate plan; (2) Hackett did not provide independent legal advice prior to the execution of the 2008 changes; (3) Hackett masked the actual effects of the 2008 documents and Cresto's intent was missing from the 2008 estate plan; (4) Kathleen's undue influence directly affected Cresto's 2008 changes; (5) the facts established suspicious circumstances in the execution of the 2008 changes; (6) plaintiffs demonstrated undue influence by clear and convincing evidence; and (7) the 2008 changes were not valid or enforceable.
After Kathleen filed a motion to alter or amend judgment, the trial court modified its journal entry. The court filed a nunc pro tunc journal entry reflecting its decision at the end of the presentation of the evidence to grant Kathleen's motion for directed verdict on the Plaintiffs' claim of statutory undue influence under K.S.A. 58a–406(b). The journal entry reflected the trial court denied the motion for a directed verdict on the claims of common-law undue influence.
Following the verdict, the plaintiffs filed a motion for attorney fees and costs incurred in successfully challenging the 2008 will and trust documents. The plaintiffs also asked the trial court to restore all the legal fees paid out of trust assets to Kathleen's attorney as improper disbursements of assets. After the parties were unable to mediate the remaining issues, due in part to complications of the trustee, the trial court took the fee matter under advisement. The trial court later held Kathleen's payment of her attorney fees from trust assets was improper as those fees should be returned to the trust. Additionally, the trial court denied payment of the Plaintiffs' fees from the trust assets under the theory that it reduced the assets available to Kathleen.
Kathleen appeals the trial court's decision to invalidate the 2008 estate documents. The plaintiffs cross-appeal the trial court's failure to grant their motion for attorney fees.
Kathleen first argues the trial court erroneously disregarded the presumption of validity that should be given to a properly executed will and trust.
It is well established in Kansas that once it has been shown a will has been executed in accordance with the formalities required by the law, the burden is upon the will contestant to produce evidence of undue influence. In re Estate of Perkins, 210 Kan. 619, 626, 504 P.2d 564 (1972); see also In re Estate of Brown, 230 Kan. 726, 731, 640 P.2d 1250 (1982) (noting that the burden of proof is on the party arguing that there was undue influence in the making of the will); In re Estate of Ziegelmeier, 224 Kan. 617, 622, 585 P.2d 974 (1978) (the burden of proof is on the contestant claiming that undue influence was exerted over the testator). The will contestant must overcome the burden of proof by clear, satisfactory, and convincing evidence. In re Estate of Bennett, 19 Kan.App.2d 154, 165, 865 P.2d 1062 (1993), rev. denied 254 Kan. 1007 (1994).
Kathleen argues the trial court completely misunderstood the effects of the above presumption. She claims that any presumption of undue influence from suspicious circumstances must be sufficient to support an inference that it is probable that Hackett purposefully coerced and compelled Cresto to leave his property to Kathleen against his own will. Kathleen argues there is simply no evidence to support such an inference. Instead, she states the court's findings that Hackett was “emotionally conflicted” and “heard what she wanted to hear” does not support this inference. Kathleen claims Cresto decided to leave everything to her before he ever talked to any of the lawyers involved and Cresto's intent was not altered by coercion or compulsion. She concludes the trial court's burden shifting has no legal or factual basis and cannot be relied upon to overcome the presumption of validity of Cresto's properly executed 2008 will and trust.
The plaintiffs remind us of the standard of review of substantial competent evidence and the factually specific nature of each case where a will or trust is challenged. In Bennett, the court quoted from Kansas caselaw stating that the findings of the trial court, when supported by any substantial evidence, must stand and should not be set aside on appeal even though there is evidence which would support a contrary finding. We are not to reweigh the evidence but must determine whether the conclusions of law are supported by the findings of fact. 19 Kan.App.2d at 167 (citing Hotchkiss, Administrator v. Werth, 207 Kan. 132, 140, 483 P.2d 1053 [1971] ).
Kathleen's argument about the properly executed estate documents is basically that the trial court did not give enough emphasis to the will and trust executed with all the legalities and formalities. The parties have stipulated to the proper execution of the 2008 estate documents and also Cresto's testamentary capacity during execution of the documents. The decisive question here is whether the facts demonstrate a prima facie case of undue influence to negate the properly executed documents such that the burden shifted to Kathleen to demonstrate the lack of undue influence.
Kathleen argues the trial court failed to apply the essential elements of undue influence. She contends there is no evidence to show undue influence because: (1) Cresto was not weak or dependent, but was the dominant mind; (2) Kathleen did not impose purpose or pressure as a dominating mind; (3) there was no evidence of influence by improper means; (4) there were no suspicious circumstances related to Cresto and Kathleen; and (5) the trial court erroneously relied on constructive fraud to alter the elements of undue influence. Kansas caselaw clearly holds that allegations of undue influence are to be judged on a case-by-case basis.
The trial court provided the parties with a lengthy oral ruling. We will outline this ruling with considerable detail. The trial court correctly determined the controlling question was whether the 2008 documents and the disposition of Cresto's property were the product of and accurately represented Cresto's will. The court cited several Kansas estate and trust cases for principles relevant to its decision. The court stated that neither actual dishonesty nor any malevolent or evil intent to deceive are required to demonstrate an undermining or the frustration of another person's intent as a matter of equitable duty. See Logan v. Logan, 23 Kan.App.2d 920, 937 P.2d 967 (1997). The court also stated that a will or trust may be invalidated even if the beneficiary is entirely ignorant of the undue influence exerted on his or her behalf. See Harper v. Harper, 274 Ga. 542, 554 S.E.2d 454 (2001). The court concluded that it was not convinced that Kathleen was ignorant of what was going on with the 2008 will and trust and the changes made therein.
The trial court also recited several additional principles before applying the facts before it. The court stated that a presumption of undue influence does not ordinarily apply to a spouse because it is expected that spouses will influence each other. See In Re Estate of Robinson, 231 Kan. 300, 644 P.2d 420 (1982). The court stated that undue influence must directly affect the testamentary act or trust creation. See In re Estate of Bennett, 19 Kan.App.2d 154, 865 P.2d 1062 (1993). Last, the court cited 79 Am.Jur.2d, Wills § 379, for authority that the undue influence in the execution of a will, which will invalidate it, may be that of a third person as well as of a beneficiary. The court found the “agency and actions of Patricia Hackett are well within the issues framed by the pretrial order.”
The trial court found Logan had not considered Cresto his client for estate planning purposes and he and Cresto had placed a great deal of trust in Hackett. The court concluded:
“Patricia was too emotionally involved to counsel [Cresto] independently on these issues and should have advised Mr, Logan plainly that she was, quote, family, closed quote, or emotionally close to the couple, and particularly, quote, family, close quote of Kathleen's. It would have made a difference in the manner in which Mr. Logan approached his work with [Cresto].”
The trial court found a confidential relationship existed between Cresto and Kathleen and particularly through the agency of Hackett in a fiduciary role all the time building Cresto's confidence and trust. The court found suspicious circumstances from all the evidence especially the relationship between Hackett and Rita, her family ties to the Koehlers, and her emotional ties to both Cresto and Kathleen. Additionally, the court found this evidence coupled with Hackett's failure to reveal her relationships to Logan contributed to suspicious circumstances because Logan considered Hackett to be Cresto's long-time counsel and Logan would have approached the case differently with Cresto had he known of Hackett's relationship.
The trial court also addressed several specific provisions of the 2008 documents. First, the court found the 2008 documents were presented to Cresto without independent advice of counsel and included a superfluous and unnecessary in terrorem clause and spousal consent clause. The court held those clauses “added confusion and masked the intent of Francis Cresto.” The court stated that the terms of the 2008 documents went beyond the expressed intent of Cresto to take care of Kathleen. It is undisputed the 2008 documents caught the Cresto children by surprise and cut them out of the estate after years of assurances of the inheritance of family heirlooms and family property in Florida. Giving the Florida property outright to Kathleen forced Cresto's brother Jack to become an unwilling partner in the property with Kathleen.
The trial court stated it did not find Hackett's conduct rose to the level of a breach of her professional responsibility or had become a reportable event. However, the court clarified that it was critical of Hackett's performance and had not evaluated the case with regard to ethical standards, but only as it related to the free will and intent of Cresto—the later issue being the ultimate question in the case.
The trial court found Kathleen's argument that 80% of the estate went to charity was an illusion. The court found there were no assets left to carry out the charitable allocations because Kathleen could take all assets in her name and make her own distributions of the property pursuant to her own estate planning. The court found there was no change in the relationship between Cresto and his children. Yet, the court recognized that Cresto was fully absorbed in the Koehler family.
The trial court concluded that the circumstances in and around the time of the Cresto children allegedly falling out of favor with their father were contrary to what Hackett gave as Cresto's rationale for disinheriting his children. The court found that Cresto “received no independent legal advice.” The court stated that Cresto was honorable, proud, loving, caring, loyal, and devoted and the 2008 documents do not appear to be the intent of such a person. There was no indication he was vindictive or punishing, and the 2008 estate plan did not comport with the character of Cresto painted by both sides at trial.
The trial court found removal of the corporate trustee was suspicious as well. The court stated it did not make sense that Cresto would have carefully considered leaving Kathleen on her own to take care of the entire estate and perform the financial functions he knew she dreaded. Kathleen had not testified at trial due to her frailty, and the court found that it did not make sense that Cresto intended to leave all the control to Kathleen. The court stated that given Cresto's smart and meticulous businessman-nature, he would have known that completely cutting off his children would have guaranteed a challenge after his death. The court found that was not the picture of the man painted at trial.
The trial court concluded the 2008 documents were more clearly Hackett's estate plan tainted by her interest in protecting Kathleen, acting as her agent, and providing indirect benefit to Rita and herself. The court stated Hackett's actions were not prompted by evil intent but were clouded by affection that undermined the need for Cresto to have independent legal advice. The court found Hackett told Logan that Cresto was cutting off his children from the estate, but the court did not find the testimony credible that Logan ever discussed that with Cresto. The court found Logan acted only in formality, not as independent counsel.
The trial court found no change in the relationship between Cresto and his children after execution of the 2004 documents. There was no evidence of animosity by the children toward Kathleen or her family. The court found that Cresto clearly wanted to care for Kathleen during her lifetime. The court found Cresto had included a spendthrift provision in each of his estate planning document since 1997 and there was no change in the spendthrift provision under the complete trust restatement in 2008. The court found removal of the disinterested corporate trustee was not in line with protecting Kathleen as Cresto had done in 2004.
The court concluded: “[T]here are too many suspicious circumstances to be comfortable as a matter of fact that the 2008 documents accurately represent the free will and actual intent of Francis Cresto, now deceased.” The court stated Cresto had placed a great deal of trust and confidence in Kathleen and Hackett, and Hackett had acted more as an agent for Kathleen than Cresto. The court expected to see more documents carrying forth his intentions in the 2008 estate documents and “[Cresto] had so much confidence in [Hackett] that he failed to protect himself in the expression of his true intention and free will.” The court acknowledged Cresto's loving relationship with Kathleen and her family, but held:
“There is no credible reason other than a common belief that time changes people or that feelings change given for the polar shift in 2008 for Francis to appear to cut his children off from their family heirlooms and property. Nothing happened to alienate them. Francis continued to see them and spend some of his time with them and demonstrated interest in their lives and their businesses even after the purported change in his estate plan. Francis had some anxiety over his estate plan, and Patricia gave him and Kathleen the assurance they were seeking.”
“Power, opportunity, and purpose to exercise undue influence, or possibility, conjecture, surmise and suspicion that undue influence has induced a will, alone cannot authorize the inference that such influence has in fact been exercised.” In re Estate of Millar, 167 Kan. 455, 465, 207 P.2d 483 (1949). Undue influence must “amount to such coercion, compulsion and restraint as to destroy the testator's free agency, and by overcoming his power of resistance, obliges or causes him to adopt the will of another rather than exercise his own.” In re Estate of Hall, 165 Kan. 465, 470, 195 P.2d 612 (1948); see In re Estate of Carothers, 220 Kan. 437, 443, 552 P.2d 1354 (1976); Heck v. Archer, 23 Kan.App.2d 57, 62, 927 P.2d 495 (1996). “[H]uman desire, motive and opportunity to exercise such influence will not alone authorize the inference that undue influence was in fact exercised. Neither will suspicion or the possibility of their having induced the making of the will favorable to them be enough to justify a finding of undue influence.” Klose v. Collins, 137 Kan. 321, 326, 20 P.2d 494 (1933). Legitimate influence is not improper. Influence obtained by kindness and affection will not be regarded as undue. Ziegelmeier, 224 Kan. at 622. Undue influence, in order to overcome a testamentary act, must directly affect the testamentary act itself. Bennett, 19 Kan.App.2d at 163.
A two-prong test is utilized to determine whether undue influence was exerted over the decedent. Bennett, 19 Kan.App.2d at 165. Under the first prong of the Bennett test, it must be shown that the person who is alleged to have exerted the undue influence was in a confidential and fiduciary relationship with the decedent. Under the second prong, it must be shown that there were “suspicious circumstances” which surrounded the making of the will. If a will contestant can show that there are suspicious circumstances by clear, satisfactory, and convincing evidence, a presumption that the undue influence was exerted on the testator will arise. The burden of proof will shift to the will proponent if a will contestant can prove that there were suspicious circumstances surrounding the making of the will. Bennett, 19 Kan.App.2d at 164.
The first prong of the Bennett undue influence test requires the will contestant to show the testator was in a confidential or fiduciary relationship with the testator at the time the will or codicil was executed. Kansas appellate courts have been reluctant to provide an express definition of “confidential relationship” and have, instead, preferred to decide each set of facts on a case-by-case basis. “Fiduciary relation” refers to any “ ‘relationship of blood, business, friendship, or association in which one of the parties reposes special trust and confidence in the other who is in a position to have and exercise influence over the first party.’ “ In re Estate of Brodbeck, 22 Kan.App.2d 229, 237, 915 P.2d 145,rev. denied 260 Kan. 993 (1996) (quoting Brown v. Foulks, 232 Kan. 424, 430–31, 657 P.2d 501 [1983] ).
There is no question that the first prong was met in this case. Kathleen does not raise any arguments under the first prong, and there is substantial evidence to support a confidential or fiduciary relationship. Kathleen and Hackett were in a position of trust and confidence with Cresto and had the opportunity to exercise influence over him. It is well known that the relationship between attorney and client is fiduciary in character. See Ford v. Guarantee Abstract & Title Co., 220 Kan. 244, 261, 553 P.2d 254 (1976). Kathleen was involved in the 2008 changes. Kathleen reviewed the 2004 changes with Cresto and was included in telephone conversations concerning the 2004 and 2008 changes. Kathleen was also present with Cresto when he executed the 2008 documents. The stipulated evidence in this case also demonstrates a fiduciary relationship between Cresto and Kathleen based on Kathleen being appointed attorney-in-fact and health care agent in 2004 and also named successor trustee in 2008, which removed Brotherhood Bank and Trust from that fiduciary position.
The second prong of the Bennett undue influence test requires the will contestant to show that there were “suspicious circumstances” surrounding the making of the will or codicil. In Bennett, the court discussed the meaning of “suspicious circumstances” and stated:
“We have no Kansas decisions defining the term ‘suspicious circumstances.’ We think the absence of a specific definition of that term is wise and appropriate. What may appear as ‘suspicious' under one set of facts may be considered normal under another. For instance, ordinarily it would be considered suspicious for a testator or testatrix to disinherit his or her natural born children and leave the estate to others. Although this would be considered suspicious in most cases, there are certainly factual circumstances where such a disposition would be expected and not at all suspicious. It may ordinarily be ‘suspicious' to omit any provisions for family members and leave the estate to charity. However, there are factual circumstances in which this is not suspicious and may be normal and expected. Our Supreme Court has indicated in Brown v. Foulks, 232 Kan. 424, Syl. ¶ 2 [657 P.2d 501 (1983) ], that it would not state an exact definition of a confidential or fiduciary relationship. Its reasoning was that the existence of that relationship depends upon the facts and circumstances of each individual case. For the same reason, we decline to state a definition of the term ‘suspicious circumstances.’ The question of whether suspicious circumstances exist must necessarily depend on the facts and circumstances of each individual case.
“The question of whether suspicious circumstances exist is a question of fact to be determined on a case-by-case basis in the light of the factual background presented.” 19 Kan.App.2d at 170.
See also Heck, 23 Kan.App.2d at 63 (noting that there is no “laundry list or exact definition” of suspicious circumstances).
Kathleen argues there must be some undue influence demonstrated in the suspicious circumstances in order for an inference to arise. Kathleen argues the inference that must be justified by the circumstances relied upon is not abstract suspicion, but reasonable and logical suspicion of “coercion, compulsion or constraint which destroys the testator's free agency.” In re Estate of Koch, 18 Kan.App.2d 188, 222, 849 P.2d 977 (1993).
In the trial court's lengthy oral ruling, the judge laid out a number of factors contributing to his finding of suspicious circumstances: (1) Cresto completely disinherited his children and step-children; (2) Hackett failed to disclose her relationship with Kathleen's daughter to Logan; (3) Logan would have handled the case somewhat differently had he known of Hackett's relationship with a beneficiary; (4) Because Logan did not know of Hackett's relationship and his limited role, he did not provide “independent legal advice”; (5) Hackett's emotional ties to the Koehler family, Cresto, and Kathleen; (6) The 2008 documents caught the Cresto children by surprise and cut them out of the estate after years of assurances that family heirlooms and real estate would be theirs; (7) The 2008 documents are a complete reversal of Cresto's intent to give his tangible personal property pursuant to the detailed distribution list he had kept since 1998 and routinely updated; (8) No change in the relationship between Cresto and his children; (9) Removal of the corporate trustee; and (10) The 2008 documents contained an unnecessary in terrorem clause and spousal consent clause.
The plaintiffs cite several additional suspicious factors. The execution of the 2008 documents was a “rush-job” after Cresto was found to have advanced stages of prostate cancer. The prognosis was made on April 23, 2008, and the preparation and execution of the documents occurred within 9 days on May 2, 2008. Kathleen counters that Cresto contemplated the changes well in advance of the prognosis when he spoke with Hackett in late 2007. The plaintiffs also cite Kathleen's involvement in the 2008 changes. Kathleen sent the email to Hackett outlining how the trust should be altered to included bequests to Kathleen's children and a charitable bequest to a local university in Kathleen's name. Kathleen was involved in a phone call concerning the 2008 changes.
Kathleen responds that her actions did not rise to a level of suspicious circumstances because spouses are expected to influence each other. They routinely send emails for each other, and the email in question here was nothing more than a follow-up of the conversation Cresto had with Hackett days before. She argues the fact that she was present during phone calls and at the signing of the documents should not raise any suspicions without a hint of coercion in the record. Kathleen argues that all the suspicious circumstances listed by the trial court do not lead to a logical inference of coercion or compulsion by her.
Without a doubt, influences of love and affection will not be regarded as undue. See Ziegelmeier, 224 Kan. at 622. In fact, those are encouraged. On the other hand, it has long been recognized that Cresto could lawfully disinherit outright any of his children. See Ginter v. Ginter, 79 Kan. 721, 750–51, 101 P. 634 (1909). This dichotomy of effective estate planning is exactly why challenges to estates and trusts are such a fact-centered situation and decided on a case-by-case basis. The court in Bennett recognized that, “ordinarily it would be considered suspicious for a testator or testatrix to disinherit his or her natural born children and leave the estate to others. Although this would be considered suspicious in most cases, there are certainly factual circumstances where such a disposition would be expected and not at all suspicious.” 19 Kan.App.2d at 170.
Here, we have a clash between two legal principles. On one hand, an appellate court is not to substitute its view of the facts for that of the fact finder unless the trial court's findings are “clearly erroneous” and unsupported by substantial evidence. See K.S.A. 60–252(a); Tucker v. Hugoton Energy Corp., 253 Kan. 373, 377–78, 855 P.2d 929 (1993). On the other hand is the principle that a fact finder may not simply ignore important and undisputed facts. E.g., Lostutter v. Estate of Larkin, 235 Kan. 154, 163, 679 P.2d 181 (1984) (trial court may not disregard undisputed evidence).
In the instant case we must first note that there is no evidence at all that Cresto lacked the capacity to make the decisions that led to this litigation.
We next note that the disposition of his property under the terms of his will and trust was not incredible. There were straightforward reasons for his estate to be left to his wife and step-children as set out above.
The evidence before us also causes us to believe that an important issue that affected this case was decided by the trial court in a manner that cannot bear close analysis.
To prove there was undue influence, there had to be a showing that Cresto's will was overborne. There was no direct evidence of this. The plaintiffs can only point to a will and trusts that provided for a distribution of property that they did not like.
The trial court found that “Logan did not consider [Cresto] his client for estate planning purposes.” The court also found that Cresto did not have independent counsel because Logan did not know all the facts. There is no evidence to support the view that Logan, an experienced attorney, did not recognize that he had an attorney-client relationship with Cresto. Similarly, there is no reason to consider Hackett's failure to disclose her relationship with Rita as being so important as to change the outcome of this case.
The trial court also found Logan's testimony that he had informed Cresto he was disinheriting his children and that Cresto appeared to be doing so of his own free will, was not credible. Why the court found this is not explained. Essentially, the trial court was ignoring uncontroverted evidence that Logan had made sure Cresto was competent and understood what he was doing. With no support for the trial court's ruling other than speculation, we conclude that the trial court did not have sufficient reason to disregard Logan's testimony on this point. We do not see how the trial court can conclude that an attorney has testified falsely or inaccurately on such an important point for no substantial reason. We also note others testified along the lines that Logan did.
If Logan's testimony on this point is credited, as we believe it must be, then Logan confirmed the essential elements of Cresto's 2008 testamentary plan with Cresto before the documents were executed in an appropriate manner and with appropriate witnesses. The parties have stipulated that Cresto was at that time of sound mind, that he acknowledged that he had executed the will, and that he asked the witnesses to sign it. We have carefully reviewed the evidence; on these facts, there is insufficient evidence of suspicious circumstances to shift the burden to Kathleen.
Reversed.