How to Recognize Fraud in Estate Planning

This post is Part Three in a four-part series discussing a variety of ways an estate plan can be challenged. You can find links to the other posts in the series here.

Suppose your mother has dementia. Her nurse convinces her that he is her only child and has her sign estate planning documents leaving all of her assets to him and expressly disinheriting you and any of her other children. Are those documents valid? Likely not, as your mother has been the victim of fraud.

What is fraud?

There are several ways fraud can be committed in the estate planning process, but the type of fraud we will discuss in this article is referred to as fraudulent inducement. Let's say your mother executed a Last Will and Testament. You could challenge that Will if your mother was fraudulently induced into leaving her property to a person she would not normally have left it (in the example above, the nurse).

You could also challenge the Will if your mother was fraudulently led to believe she was signing a different document, when in reality it was a Will. For instance, the nurse may have tried to convince your mother that the estate planning documents were really medical forms or birthday cards. If she did not realize she was signing a Will, then her estate plan can be challenged on the basis of fraud.

How do you challenge a Will on the basis of fraud?

Even if a loved one has been the victim of fraud in the estate planning process, how do you prove it? How can you get the Will overturned on the basis of fraud? There are three main elements of any claim of fraud:

1. Misrepresentation

To prove fraud, you must show that there was a false representation with the intent that the testator rely on that statement to make or change his or her Will or other estate planning document. The element of "fraud" is often referred to as a "misrepresentation." In the example above, the misrepresentation was the nurse's statement that he was your mother's only child or that the papers she was signing were really something other than a Will.

A false representation does not have to come from someone outside the family. Fraud may occur if one child of the testator lies about a sibling to get more money under their estate plan or to disinherit the sibling entirely. Claims of fraud (and, for that matter, undue influence) are fairly common among family members.

(It is important to note here that fraud is different than undue influence.) 

However, showing a misrepresentation is not as cut and dried as it sounds. Generally speaking, you must be able to prove that the speaker knew the statement was false when he made it. Of course, anyone can pretend they "didn't know" the statement was false, but sometimes it can be enough to show that they should have known it was false. What evidence do you have that a statement was made? What evidence do you have that the statement is false? And what evidence do you have that the speaker knew or should have known the statement was false at the time it was made? These are all questions you should think about when discussing the matter with an attorney.

2. Intent

In most areas of the law, intent is a crucial element. Simply showing that the nurse lied to your mother is not enough to have her Will set aside for fraud. You must also show that the nurse intended for your mother to change her estate plan based on his misrepresentation.

For example, suppose the nurse had told your mother something like, "Don't worry about your cats after your passing. I will take care of them for you." If the nurse had no intention of taking care of your mother's cats, his statement was a misrepresentation. But it does not rise to the level of fraudulent inducement because there is no indication that the nurse intended for your mother to rely on his statement to change her estate plan.

On the other hand, if the nurse made that statement because he hoped your mother would leave him thousands of dollars to take care of her cats, then that may be enough to show fraudulent inducement. Yet providing intent is difficult. How can you show what someone was thinking at a certain point in time? That is why it is important to work with an experienced probate attorney who knows how to gather admissible evidence and convince the court of the speaker's fraudulent intentions.

3. Injury

To have success with any claim, you must be able to show that some injury occurred because of the complained-of conduct. For fraudulent inducement, the injury is not necessarily that the testator was tricked into making or changing his or her estate plan. A claim of a fraudulent inducement in this context usually arises only after the testator has died. Instead, the injured party/parties are the representative of the love one's estate or the heirs of that estate. While even attempts at fraudulent inducement are a cause for concern within your family, from a legal perspective, the injury must actually occur. That means the person who attempted to trick your loved one did, in fact, trick your loved one into making the estate plan change.

To explore this concept further, let's change the scenario a bit: Suppose that your father has passed away and you are your mother's only child. In other words, you are her sole heir at law, meaning that even if she had no Last Will and Testament, you would receive her entire estate after her death. If you fraudulently induce your mother into signing a Will, could that Will later be set aside on the basis of fraud? Maybe not. Because you would receive your mother's entire estate anyway, a court may not find that anyone else was injured as a result of your fraud. A friend or other relative could come forward and claim that your mother intended to leave them a part of her estate, but they would likely face an uphill battle. 

This is not to suggest that only children would face no consequences from defrauding their parents. But it is important to understand the concept of injury when determining whether you may have a valid claim for fraudulent inducement.

Do you have a case for fraud?

Few things are more upsetting than realizing a loved one was tricked or taken advantage of. Falling for a lie is not the fault of your loved one; someone manipulated him or her for their own personal gain. If you believe a loved one has been the victim of fraud in his or her estate planning, contact the experienced Oklahoma City estate planning and probate attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]