Challenging a Minnesota Revocable Trust on the Basis of Lack of Capacity or Undue Influence

A specific Minnesota statutory provision governs any court challenge to a revocable trust based on lack of capacity of the settlor. In a November 2018 decision, the Minnesota Court of Appeals reviewed the statutory standard and the prior court cases interpreting it. The opinion contains important guidance for contesting a trust or will on the basis of lack of capacity or undue influence.

Background of the Case

The Court of Appeals decision, In the Matter of the Trust Created by Eileen Carlson Kasell, Minnesota Court of Appeals, A18-0340, includes the full details concerning the background of the case. The following is a summary of the relevant facts.

Eileen Carlson Kasell created a revocable trust in 2013, naming herself as the primary beneficiary. Her two adult sons, Donald William Carlson and G.C., were named as contingent beneficiaries at her death.

In 2017, Eileen executed a Third Amendment and Complete Restatement of her trust document. The amendment removed Donald William Carlson as a contingent beneficiary, leaving G.C. as the sole contingent beneficiary of the trust. In a district court proceeding regarding the trust (pursuant to an agreement between Eileen and the trustee), Donald filed objections to the amendment, asserting that Eileen was not competent to make the amendment and that G.C. exerted undue influence over Eileen with regard to the amendment.

After noting that Eileen followed the proper procedure in amending the trust, the district court judge issued an order approving the amendment to the trust. The order implicitly rejected Donald’s challenge to Kasell’s capacity to make the amendment and the undue influence claim. Donald appealed to the Minnesota Court of Appeals.

Opinion of the Court of Appeals on Lack of Capacity and Undue Influence

The Court of Appeals began its analysis by quoting the statute that establishes the standard for evaluating capacity relating to a trust, Minn. Stat. § 501C.0601. The section states:

The capacity required to create, amend, or revoke a revocable trust, or to direct the actions of the trustee of a revocable trust, is the same as that required to make a will.

The Court then reiterated the standard and cited previous cases holding that the standard for evaluating capacity and undue influence is the same as that used to determine testamentary capacity for execution of a will.

The Court also noted that a different state statute (Minn. Stat. § 524.3-407) provides the standard of proof required in will contests. Under that section, a person claiming lack of capacity or undue influence has the burden of proving lack of capacity and undue influence.

Quoting from prior cases, the Kasell opinion addresses the standards for lack of capacity and undue influence. A person has the necessary capacity to execute a will or trust (or amend or revoke a will or trust) if she “understands the nature, situation, and extent of [her] property, and the claims of others” and “is able to hold these things in mind long enough to form a rational judgment concerning them.” In other words, the standard evaluates state of mind of the person executing the document at the time of execution.

Prior cited cases state that evidence of undue influence by another person must include:

the opportunity to exercise it, active participation in the preparation of the will by the party exercising it, a confidential relationship between the person making the will and the party exercising the influence, disinheritance of those whom the decedent probably would have remembered in [her] will, singularity of the provisions of the will, and the exercise of influence or persuasion to induce [her] to make the will in question.

Importantly, all these criteria must be demonstrated by the person asserting an undue influence claim.

The Court of Appeals then noted that a district court’s findings on whether lack of capacity existed or undue influence occurred are questions of fact. As such, the appellate court will only set them aside if they are clearly erroneous.

After reviewing the evidence before the district court (including Eileen’s own testimony) and the lack of evidence presented by Donald, the Court of Appeals held that there was no prejudicial error in the lower court’s implicit determinations that Eileen was neither incapacitated nor subjected to undue influence when she executed the amendment to the trust.

Challenging a Minnesota Revocable Trust or Will for Lack of Capacity or Undue Influence

The Kasell opinion is an unpublished decision of the Court of Appeals. While an unpublished opinion is not precedential under Minn. Stat. § 480A.08, subd. 3 (2016), the decision provides excellent guidance regarding a potential challenge to a revocable trust on the basis of the settlor’s lack of capacity or undue influence.

The Kasell case sets forth important propositions (and includes supporting citations from published court opinions) as follows:

• The standards (as stated in the opinion) for challenging a revocable trust or will on the basis of lack of capacity or because of undue influence are clear based on Minnesota statutes and case precedent.
• The burden of proof is on the person contesting a trust or will to demonstrate lack of capacity or undue influence.
• An appellate court will not overturn the findings of fact by a district court on capacity and undue influence absent prejudicial error by the lower court.

In other words, the standards for demonstrating lack of capacity or undue influence are very high — and evidence supporting a claim must be introduced in the trial court. For a challenging party, representation by a lawyer experienced and knowledgeable in probate and estate litigation is absolutely essential, from the very beginning of the court action.

Additional details about contesting a trust or will is available in two other blog posts:

• Litigating Undue Influence Disputes
• Challenging a Will Based on Lack of Capacity of the Testator

Talk With an Experienced Twin Cities Probate and Estate Litigation Attorney

My practice at the Dave Burns Law Office includes years of experience as a probate court litigation attorney. I work with family members, other beneficiaries of an estate, and personal representatives facing probate or estate disputes, including any type of challenge to a trust or will.

If you would like to discuss a situation involving possible lack of capacity, undue influence, or another contested matter that may require probate and estate litigation, I invite you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I welcome inquiries from clients and referring attorneys throughout the State of Minnesota and am available to meet with clients in both Minneapolis and St. Paul.