If the settlor of a trust had been coerced into creating it, is trust the product of duress or of undue influence?

Charles E. Rounds, Jr. - Suffolk University Law School

Assume a professor encourages his thesis advisee, a marginal PhD student, to establish a trust for the benefit of the professor’s favorite cause. The student reluctantly acquiesces. Having received his PhD, the now former student seeks equitable voidance/rescission of trust on the grounds that the trust’s inception had been the product of duress or undue influence. Well, which was it?

Duress requires a specific threat that leaves no reasonable alternative. At stake is either the victim’s physical or economic well-being. Undue influence, on the other hand, suggests a more general dominance over someone in a weakened state and use of that dominance to psychologically manipulate the disadvantaged party into doing what he would not otherwise be inclined to do. In either case, voidance/recission is not foreclosed if someone other than wrongdoer benefits. The line between the two abuses is blurry, to be sure, except when acquiescence has been extracted at the point of an actual gun. Otherwise, there is considerable overlap, undue influence having been foraging about in coercion territory since time immemorial.

The case here for classic duress is that there was the implied specific threat that unless the trust was created the student could expect to be washed out of the PhD program with severe adverse economic consequences for the student.

The case for classic undue influence: The settlor being a marginal student, he was in a weakened state psychologically, and thus susceptible to the extracurricular self-serving encouragements of his academic mentor. The professor-student relationship being one of confidence and the circumstances surrounding the entrustment suspicious, a presumption of undue influence prevails.

Now comes the Rest. (Third) of Property (Wills & Don. Trans.) and subsumes much of duress into undue influence, at least this appears so at first glance: “When examined more closely, the term ‘confidential relationship’ embraces three sometimes distinct relationships—fiduciary, reliant, or [sic] dominant-subservient.” See id. at § 8.3, cmt. g. The hired caregiver’s relationship with the ill/enfeebled patient and the adult child’s relationship with the ill/enfeebled parent are proffered as examples of dominant-subservient relationships. Id. Transferring from the duress pigeonhole to the undue-influence pigeonhole an express or implied threat to mess with the medical care/nutritional requirements of someone physically incapacitated might seem a serious doctrinal tweak. The Restatement, however, then goes on to assign to duress criminality and acts that the wrongdoer “had no right to do.” See id, cmt. i. Not sure what non-criminal behaviors are contemplated here. Seems awfully open-ended. And isn’t criminality something one has no “right” to engage in? In the donative-transfer space, suggest that we unambiguously fold whatever is left of duress into undue-influence so that we can finally move on. Since its enunciation by Lord Hardwicke in 1737 in Morris v. Burroughs, 1 Atk. 398; West t. Hard 242, the undue-influence concept has been a work in progress. The notion that coerced donative transfers, particularly via will, belong in undue influence’s bailiwick has been circulating for almost as long. See, e.g., the 1838 case of Baker v. Batt, 2 Moo. P.C. 317, 329.

As to whether our professor committed a wrong that is actionable at law, such as the tort of intentional interference with inheritance or gift, see §8.47 of Loring and Rounds: A Trustee’s Handbook (2023). Section reproduced in appendix below. Handbook available for purchase at https://law-store.wolterskluwer.com/s/product/loring-rounds-trustees-hanbook-2023e/01t4R00000Ojr97QAB.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Charles E. Rounds, Jr. - Suffolk University Law School

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