Intentional interference with expected inheritance (IIEI) was recognized as a legal claim in California about eight years ago in Beckwith v. Dahl (2012) 205 Cal.App.4th 1039. Last week, the Court of Appeal issued the first published opinion in California that affirms a judgment in favor of a plaintiff on an IIEI claim, thus providing guidance to trial judges and lawyers about what evidence is sufficient to sustain such claims.
In Gomez v. Smith (2020) ___ Cal.App.5th ___, the Third District Court of Appeal in Sacramento considered a ruling by a Shasta County Superior Court judge. The judge concluded that the plaintiff should receive the benefit of a trust instrument that her late husband wanted to execute because two of his children precluded him from meeting with his lawyer to sign it. We have written previously of conflicts between stepmothers and stepchildren – this is just such a tale with its own dramatic twists.
Frank’s Children Impede Estate Planning to Benefit His Second Wife
Frank Gomez broke off his engagement with Louise Gomez when he was leaving to serve in the Korean War. Frank eventually married Beverly Gomez and they had four children together, including Tammy Smith and Richard Gomez.
Six decades pass. After Beverly died in 2012, Frank rekindled his relationship with Louise and they were married in 2014. Frank, unfortunately, had serious health issues starting in 2015.
While the details are not entirely clear from the opinion, Frank in July 2015 apparently amended his trust to give Louise a life estate in the house they shared together. Frank asked Tammy for her thoughts on this amendment. Tammy expressed disagreement.
In the first half of 2016, Frank apparently attempted to contact his estate planning attorney, Clarence McProud, to change his trust to further benefit Louise.
By August 15, 2016, Frank was quite ill and staying at a nursing home. A new attorney, Erik Aanestad, met with Frank. Aanestad testified that Frank wanted all his assets to pass to Louise and then to his children upon Louise’s death. Aanestad drafted a set of updated estate planning documents.
Frank went home under hospice care on August 19.
Aanestad and his paralegal arrived at Frank’s house on the morning of August 20. Louise was in the house, tending to Frank. Aanestad testified that Tammy and Richard prevented him from entering the house to meet with Frank.
Frank never saw the new trust documents. He died on August 21 at 1:00 a.m.
Judge Conducts Trial on IIEI Claim
In February 2017, Louise sued Tammy and Richard for intentional interference with expected inheritance (IIEI), intentional infliction of emotional distress, and elder abuse.
Judge Tamara Wood in Shasta County conducted a bench trial over several days in mid-2018. (Apparently, Louise waived any right to a jury trial.) Several witnesses testified, including Louise, Tammy and Aanestad, as well as retained medical experts.
Judge Wood found Aanestad’s testimony regarding Frank’s intent to be credible and unbiased. Aanestad testified that Frank “made it clear to him that he wanted [Louise] to be the trustee and have a life estate in the trust assets which would pass to [his] children upon [his] death.” Thus, instead of only lifetime rights to the house, Louise was to have lifetime rights in all trust assets.
Judge Wood gave Louise the benefit of what Frank would have signed had his children not interfered with his estate planning. The judge imposed a constructive trust over the assets that would have gone into the new trust to be held by Louise as trustee until her death pursuant to the terms of the unsigned trust.
Louise thus won her IIEI claim. She did not prevail on her other two claims.
Court of Appeal Affirms the Judgment
The Third District Court of Appeal affirmed Judge Wood’s rulings.
What must a California plaintiff prove to establish intentional interference with expected inheritance? Citing the Beckwith case from 2012, the Court of Appeal found that an IIEI plaintiff must show: (1) he or she had an expectancy of an inheritance; (2) the bequest or devise would have been in effect at the death of the testator if there had been no interference; (3) defendant had knowledge of the expectancy and took deliberate action to interfere with it; (4) the interference was conducted by “independently tortious means”; (5) plaintiff was damaged by the interference; and (6) defendant directed the wrongful conduct at someone other than the plaintiff.
The appellate court applied the deferential “substantial evidence” standard of review to Judge Wood’s findings of fact. Under this standard, the court resolves any conflict in the evidence or reasonable inferences to be drawn from the facts in support of the trial judge’s decision. The court may not reweigh the evidence and is bound by the trial judge’s credibility determinations.
The Court of Appeal found substantial evidence that Louise expected an inheritance in the form of the new trust and that Tammy knew of Louise’s expectation.
With respect to whether Tammy directed wrongful conduct towards Frank, the appellate court found substantial evidence of undue influence and breach of fiduciary duty. Quoting the Restatement Second of Torts, the court explained that “one who by legitimate means merely persuades a person to disinherit a child and leave the estate to the persuader instead is not liable to the child.” However, a persuader who has improper motives or uses improper means may be liable.
The appellate court found substantial evidence that Tammy “took a grossly unfair advantage of Frank’s distress” because she knew of his weakness and took actions to separate Frank from his attorney, thus precluding Frank from establishing an estate plan that he had been trying to put into place for months. “Frank’s will was overborne by Tammy because he was bedridden and unable to intervene when Tammy precluded Aanestad from entering the home.”
With regard to breach of fiduciary duty, Tammy claimed that she acted lawfully under a power of attorney from 1995 in which Frank named her as his agent. She claimed that she could not be held liable for breaching her fiduciary duty to Frank because he had given her broad authority to act on his behalf and thus ratified her conduct.
The appellate court found that this argument “traverses the line of reason into absurdity” because an agent (or “attorney-in-fact”) owes fiduciary duties that include a duty to exercise the utmost good faith and loyalty to the principal. Thus, Tammy could not act in direct contravention of Frank’s estate planning wishes to favor her own self-interest.
Louise and Tammy’s lawyers also sparred on appeal regarding Frank’s mental capacity. The appellate court agreed with Tammy that the contractual capacity standard in Probate Code section 812 applied instead of the testamentary capacity standard in Probate Code section 6100.5. Yet the court found that the trial judge had applied section 812 by finding that Frank had the ability to appreciate the consequences of finalizing the trust plan that he had previously reviewed with attorney Aanestad.
The appellate court also found that Louise did not have to prove Frank’s mental capacity. Instead Louise only had to prove causation, i.e., that the new trust would have been in effect upon Frank’s passing if Tammy had not interfered. While Tammy could raise Frank’s mental incapacity as an affirmative defense to the interference claim, she would bear the burden of proving his incapacity, and there was substantial evidence at trial of his capacity.
Gomez v. Smith arose from a dramatic confrontation outside a parent’s home resulting in the estate planning attorney being turned away from completing an estate planning change that the parent wanted. While these facts are unusual, the case illustrates when and how intentional interference with expected inheritance claims can be successful in California courts and may lead to the more frequent assertion of such claims.
While each case will have its own strengths and weaknesses, California law has evolved from a cautious initial recognition of IIEI claims in the Beckwith case to the vindication of a spouse’s claims in the Gomez case.