May 9, 2012
IN THE MATTER OF THE ESTATE OF BETSY A. SCHNITZER, DECEASED.
On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. CP-0046-2008.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 20, 2012
Before Judges Yannotti, Espinosa and Guadagno.
Stephen Schnitzer appeals from a judgment entered by the Chancery Division on June 21, 2010, upholding the 1998 will of Stephen's mother, Betsy A. Schnitzer (Betsy), the 2004 codicil to that will, and related trust instruments. For the reasons that follow, we affirm.
We briefly summarize the relevant facts, which are drawn from the trial record. Betsy was married to Morris Schnitzer (Morris), a prominent New Jersey attorney and former counsel to the Connell, Foley & Geiser law firm (CFG). Betsy and Morris had two children, Sandra and Stephen, who are both attorneys. Sandra has two children and six grandchildren. Stephen has one child.
On April 19, 1995, Betsy executed a will in which she bequeathed her personal property to Morris and Sandra. She placed the residuary estate in two trusts, with income to be paid to Morris. Upon Morris's death or remarriage, income from the trust would be paid to Sandra and Stephen, with distributions from principal as necessary for their health or maintenance. If either Sandra or Stephen died before Morris, such income and distributions would be paid to their children. Betsy named Morris as the executor and trustee.
On February 19, 1997, Morris executed a will in which he bequeathed all of his personal possessions to Betsy and placed the residuary estate into two trusts, with income from the trusts to be paid to Betsy, along with distributions of principal, as necessary for her health and maintenance. Upon Betsy's death, income from the trusts would be paid to Sandra and Stephen or to their children, should either Sandra or Stephen die before Betsy. Morris named Betsy as executrix and Chase Manhattan Bank, which was later known as JP Morgan Chase (Chase), as trustee.
Morris died on March 8, 1997. Betsy retained Thomas Cosma (Cosma) of CFG to assist her in having Morris's will admitted to probate. Betsy also asked Cosma to prepare a new will, but after he did so, she refused to sign it. Betsy then retained Dewey Ballantine, L.L.P. (DB), a New York law firm, and New Jersey counsel as her attorneys. Sandra recommended DB because she had known William Warren, a partner at the firm, since the mid-1980s, and her then-law partner and husband, Stephen Nordquist, had been a partner at the firm.
Initially, Betsy asked John Olivieri (Olivieri), who was then an associate at DB, to draft a new will that would completely disinherit Stephen. She was angry with Stephen's behavior during the administration of Morris's estate. She said that Stephen did not need her money or deserve it. Betsy also was aware that Stephen was likely to contest the will, and she wanted to make it as difficult as possible for him to do so. Olivieri advised Betsy against disinheriting Stephen. Betsy chose not to disinherit Stephen at that time.
On August 18, 1998, Betsy executed the will and the related trust documents. Olivieri reviewed the documents and explained their contents to Betsy before she signed them. Olivieri testified that, based on his experience dealing with Betsy over the previous months, he had no doubt that she was mentally competent and capable of executing the documents. Olivieri also said that he had no reason to believe that Betsy was being unduly influenced to execute the documents, which had been prepared at Betsy's request and according to her instructions.
In the will, Betsy named Chase as executor of the estate. Betsy made several specific bequests of personal property to Stephen and her granddaughter Laura, and left the rest of her personal property to Sandra. Betsy placed the remainder of her estate in trust, and granted Sandra seventy-five percent and Stephen twenty-five percent of the residuary estate. The terms of the trust made it relatively easy for Stephen to invade the principal, and somewhat more difficult for Sandra to do so. According to Olivieri, this was because at the time, Betsy was concerned about Sandra's finances.
In September 1999, Chase filed suit to compel an accounting of Morris's estate. The lawsuit apparently was prompted by Stephen's complaints about the manner in which Betsy was handling the estate. Among other things, Chase sought an order compelling Betsy to turn over to Chase the remaining assets of the estate. Stephen was actively involved in the litigation. Among other things, he objected to the amount of DB's fees, Betsy's commission, and Betsy's failure to assert a medical malpractice claim against Morris's doctors.
Betsy was furious that her decisions were being questioned in the litigation. She perceived that Stephen was suing her personally. She was particularly incensed by Stephen's objection to her commission, and his claim that she wrongfully failed to assert a medical malpractice claim against Morris's doctors, which she viewed as questioning the care she provided for Morris during his final illness. The litigation was settled in 2002.
In June 2003, Betsy retained DB to perform additional work on her estate plan. Olivieri said that at that time, Betsy required assistance with her finances. He recommended that Betsy fund the revocable trust and allow Chase, as trustee, to handle her bills. Betsy agreed with the recommendation, but wanted to name Sandra as co-trustee. Olivier drafted the necessary paperwork.
In February 2004, Sandra called Olivieri and told him Betsy wanted to change her estate plan and grant her three-quarters of the residuary estate, with the remainder going to her children, David and Laura. When Olivieri spoke to Betsy, she confirmed that she wanted to change her will, but said that she wanted Sandra to inherit the entire residue of the estate. Betsy told Olivieri she was concerned about Sandra's finances and she wanted to disinherit Stephen. Olivieri advised Betsy against disinheriting Stephen, as he had in the past; however, Betsy rejected his advice.
On April 14, 2004, a meeting was held at Betsy's home. The meeting lasted about half an hour. Olivieri was present with his associate William Brick (Brick) and Gregory V. Kirk (Kirk), a trust officer from Chase. Sandra had arrived earlier that day to have breakfast with Betsy and help her get dressed. Sandra said she and Betsy did not discuss Betsy's estate plan while they were alone together.
Sandra was present for the first part of the meeting when Betsy executed documents naming Chase and Sandra as co-trustees of the trust. Olivieri explained those documents. After Betsy signed these documents, Sandra left the house.
Olivieri then discussed the estate plan with Betsy. He explained that he brought two sets of documents with him. One set would keep the division of Betsy's residuary estate as seventy-five percent for Sandra and twenty-five percent for Stephen. The other would disinherit Stephen. Olivieri told Betsy to think carefully about disinheriting Stephen. He also told her she did not have to sign either set of the documents.
Betsy laughed and said no one could get her to do something she did not want to do. Betsy stated that she wanted to disinherit Stephen. She said this was something she had been thinking about for a long time. She was angry with Stephen about the litigation over Morris's estate. She also had not heard from him in a long time. Betsy executed the documents that disinherited Stephen. She also executed documents necessary to transfer assets to the trust, so there would be sufficient funds to pay her bills.
Betsy died on October 1, 2007, at the age of ninety-six. Stephen was informed of his mother's death the following day. He did not know that he had been disinherited until after Betsy died. Betsy's will was admitted to probate on October 29, 2007, despite a caveat that Stephen had filed. Testamentary letters were issued to Sandra, as executrix of Betsy's estate.
On February 20, 2008, Stephen commenced this action in the Chancery
Division, seeking an order declaring the 1998 will, the 2004 codicil,
and the related trust documents void. He alleged, among other things,
that Sandra had exercised undue influence over Betsy; the instruments
were forgeries; and Betsy lacked testamentary and contractual capacity
to execute the instruments. In addition, Stephen asserted a claim against Sandra for
tortious interference with his expected legacy, and alleged that
Morris and Betsy had executed reciprocal wills that precluded her from
later changing her estate plan.
Sandra filed an answer denying Stephen's claims and a counterclaim. She sought dismissal of the complaint, a declaration that the 1998 will, the 2004 codicil, and the trust documents were valid. She also sought an award of counsel fees against Stephen.
The court conducted a trial in the matter in June 2009. The court filed a letter opinion dated November 9, 2009, in which it concluded that Betsy had the requisite testamentary capacity when she executed the 1998 will and the 2004 codicil to the will. The court also determined that Betsy had the requisite contractual capacity to execute the 1998 revocable trust and the 2004 amendments to the trust documents.
In addition, the court found that the instruments had not been executed as a result of Sandra's undue influence. The court found no merit in Stephen's claims that the instruments were forgeries, that Betsy and Morris had executed reciprocal wills which precluded Betsy from changing her estate plan, or that Sandra had tortiously interfered with Stephen's expected legacy.
The court also determined that Stephen should be awarded reasonable attorney's fees and costs.
The court addressed the issue of fees in a letter opinion dated May 25, 2010. The court awarded Stephen's attorneys fees and disbursements, and required that they be paid from the estate.
The court memorialized its decisions in an order of judgment dated June 21, 2010. This appeal followed.
Stephen argues that the trial court erred in determining that a confidential relationship between Betsy and Sandra did not exist in 1998, when Betsy executed her will and the trust documents. Stephen contends the evidence established that a confidential relationship existed at the time, giving rise to a presumption that the documents were the product of Sandra's undue influence. We do not agree.
The legal principles that apply to will contests are well established. "In any attack upon the validity of a will, it is generally presumed that 'the testator was of sound mind and competent when he executed the will.'" Haynes v. First Nat'l State Bank of N.J., 87 N.J. 163, 175-76 (1981) (quoting Gellert v. Livingston, 5 N.J. 65, 71 (1950)). However, "[i]f a will is tainted by 'undue influence,' it may be overturned." Id. at 176.
"'Undue influence' has been defined as 'mental, moral or physical' exertion which has destroyed the 'free agency of a testator' by preventing the testator 'from following the dictates of his own mind and will and accepting instead the domination and influence of another.'" Ibid. (quoting In re Neuman, 133 N.J. Eq. 532, 534 (E. & A. 1943)). The burden of proving undue influence rests with the will contestant "'unless the will benefits one who stood in a confidential relationship to the testatrix and there are additional circumstances of a suspicious character present which require explanation.'" Ibid. (quoting In re Rittenhouse's Will, 19 N.J. 376, 378-79 (1955)).
To raise a presumption of undue influence, there must be proof of a "confidential relationship" between the testator and a beneficiary. Ibid. Such a relationship arises when "'trust is reposed by reason of a testator's weakness or dependence or where the parties occupied relations in which reliance is naturally inspired or in fact exists . . . .'" Ibid. (quoting In re Hopper, 9 N.J. 280, 282 (1952)). There also must be proof of "suspicious circumstances," which "need be no more than 'slight.'" Ibid. (citing In re Blake's Will, 21 N.J. 50, 55-56 (1956)).
If the presumption of undue influence arises, the burden of proof shifts to the proponent of the will. Ibid. This burden is ordinarily satisfied by a preponderance of the evidence. In re Estate of Stockdale, 196 N.J. 275, 303 (2008) (citing In re Catelli's Will, 361 N.J. Super. 478, 487 (App. Div. 2003)). However, clear and convincing evidence is required if the presumption "arises from 'a professional conflict of interest on the part of an attorney, coupled with confidential relationships between a testator and a beneficiary as well as the attorney.'" Ibid. (quoting Haynes, supra, 87 N.J. at 183).
In this case, the trial court found that Betsy's 1998 will was executed under "suspicious circumstances." The court noted that, in that will, Betsy partly disinherited Stephen and granted Sandra a larger share of the estate, despite the fact that Betsy's children had "equal familial relationships." The court also noted that Sandra had introduced Betsy to DB, the firm that drafted Betsy's will. Sandra had hired that firm in 1997 to provide tax planning for Morris's estate, and Sandra's husband had worked at DB at one time.
Nevertheless, the court found that Stephen had not carried his burden of establishing that Betsy and Sandra had a confidential relationship in 1998 when Betsy executed the will. The court pointed out that Sandra had spoken to Olivieri about Betsy's estate plan but she was not involved in the plan. The court noted that Sandra had assisted Betsy by relaying information to her attorneys. Sandra also was provided draft documents, and Betsy had looked to Sandra for advice concerning the administration of Morris's estate.
The court observed that "[w]hile Betsy had difficulty reading in 1998, and required large print documents, there is no evidence to demonstrate that Betsy was dependent on Sandra, that Sandra was a 'confidant of Betsy,' or that Sandra had a 'dominant position in their relationship' in 1998." The court noted that Cosma had testified about drafting a will in 1997 for Betsy, and had "some authorized discussions with Sandra[.]" The court found, however, that this evidence did not establish that Sandra prevented Betsy "from following the dictates of her own mind and that [Betsy] was dominated and influenced by Sandra."
The court determined that Betsy "was independently capable of handling her own affairs." The court stated that Betsy required transport and assistance for shopping and medical appointments and Sandra and her husband assisted Betsy in this regard, but the court found that there was "no proof that Betsy was in a position of weakness or dependence leading to an unfair advantage at the time" Betsy executed the 1998 will.
The court reached the same conclusion regarding Betsy's execution of the 1998 trust documents. The court said that, to establish a presumption of influence regarding an inter vivos gift, the challenger need only demonstrate the existence of a confidential relationship between the "alleged influencer" and the settlor. Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 410 (App. Div. 2007). The court found for the reasons previously stated that a confidential relationship did not exist between Betsy and Sandra in 1998.
Factual findings of a trial court, sitting without a jury, will not be set aside unless they are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)).
We are satisfied that there is sufficient credible evidence in the record to support the trial court's factual findings. After Morris died, Betsy turned to Sandra for companionship and some assistance, particularly in finding a new attorney to assist her with her estate plan. However, as the trial court determined, Betsy did not rely upon Sandra due to a state of weakness or dependence, nor did Sandra dominate Betsy or have superior knowledge or an over-mastering influence over her. Pascale v. Pascale, 113 N.J. 20, 34 (1988); Ostlund, supra, 391 N.J. Super. at 401-02.
Indeed, the record shows that, when consulting with Olivieri, Betsy expressed strong opinions on various complex issues, including the proper investment strategy for the trusts established under Morris's will, the selection of an investment advisor, and the language of her own estate documents, including the provisions that she requested to make it more difficult for Stephen to contest her will. She also reviewed multiple drafts with Olivieri before she executed the will in August 1998.
Thus, the record supports the trial court's determination that in 1998, Betsy was in control of her own financial and legal affairs. While Betsy told Olivieri she wanted to disinherit Stephen, Olivieri dissuaded her from doing so. She chose at the time to bequeath Stephen a reduced share of her estate, as compared to Sandra, with whom she had a closer relationship.
Stephen argues that the trial court erred by finding that there was no confidential relationship between Betsy and Sandra in 1998. Stephen contends that the trial court's focus was too narrow and the court failed to give sufficient weight to evidence that Betsy was home-bound, weak and dependent upon Sandra. Stephen maintains that the evidence established that in 1998, Betsy was not independently capable of handling her own affairs, and relied upon Sandra for her legal expertise.
We are not persuaded by these arguments. We are satisfied that the record fully supports the court's factual findings. Based on those findings, the court properly determined that a confidential relationship did not exist between Betsy and Sandra in 1998. The court therefore correctly determined that Betsy's 1998 will and trust were not the product of undue influence.
Stephen additionally argues that the trial court erred by finding that Sandra had overcome the presumption of undue influence with regard to Betsy's execution in 2004 of the codicil to the will and amendments to the trust documents. We disagree.
The trial court found that a presumption of undue influence existed in 2004, when Betsy executed the documents. The court stated that at the time, Sandra maintained a confidential relationship with Betsy. The court noted that by 2004, Betsy's physical condition had deteriorated substantially, and she had become "dependent on Sandra for assistance with her legal, financial, and medical affairs." The court also noted that Sandra communicated with Betsy's attorneys on her behalf, renewed insurance policies for her, communicated with Betsy's doctors, and arranged for Betsy to receive round-the-clock in-home health care.
The court further found that the documents were executed in 2004 under suspicious circumstances, specifically, the complete disinheritance of Stephen in favor of Sandra; Sandra's assistance to Betsy in procuring the 2004 codicil and changes to the trust documents; Olivieri's legal representation of both Sandra and Betsy; and Betsy's failure to obtain independent legal advice.
The court pointed out that the conflict of interest involving Olivieri's representation of Sandra and Betsy required Sandra to overcome the presumption of undue influence by clear and convincing evidence. The court concluded that Sandra met this burden. There is sufficient credible evidence in the record to support the trial court's factual findings.
As the trial court stated, the evidence established that, although Betsy had some physical impairments by 2004, she remained a strong-willed and independent woman who "would not easily give in to the will of another." Furthermore, the evidence established that Betsy wanted to completely disinherit Stephen, and she had expressed that desire on several occasions, including the date she executed the 2004 codicil and trust documents.
Indeed, before Betsy executed those instruments, Olivieri presented her with two sets of documents for her consideration and he explained the documents to her. Olivieri said that Betsy was unequivocal in her desire to disinherit Stephen and she explained her reasons for doing so. Those reasons were consistent with the evidence regarding Stephens's strained relationship with Betsy and with the family.
Sandra was not present when Betsy executed the 2004 documents. Olivieri, Brick and Kirk were witnesses to the signing. They testified that Betsy had no memory problems or mental weaknesses that would impede her judgment or ability to act voluntarily. The court found their testimony to be credible. The court pointed out that Olivieri and Brick had worked with Betsy for many years. Their interactions with her were "significant and add[ed] weight to their observation[s] that [Betsy] acted of her own free will in this matter."
Our deference to the trial court's findings is warranted where, as here, the court's findings are "'substantially influenced by [the court's] opportunity to hear and see the witnesses and to have the "feel" of the case, which a reviewing court cannot enjoy.'" State v. Locurto, 157 N.J. 463, 471 (1999) (quoting State v. Johnson, 42 N.J. 146, 161 (1964)).
Stephen argues, however, that the trial court erred by limiting its analysis to the events of 2004. Stephen also contends that the court erred by crediting Olivieri's testimony because Olivieri and Sandra "contradicted" each other in their discussion of how Olivieri "reemerged and how the decision to amend the estate plan arose." Stephen maintains that the Betsy's estate plan changed in 2004 because "Sandra took control."
We are not persuaded by these arguments. In our view, the record clearly and convincingly established that, although Sandra was involved in Betsy's legal and medical affairs in 2004, Betsy remained firmly in control of the disposition of her estate. Betsy made clear that she wanted to disinherit Stephen, and executed documents to achieve that end. The record supports the trial court's determination that Betsy was not unduly influenced by Sandra when she changed her estate plan in 2004.
Stephen also argues that the trial court erred by refusing to set aside the will executed in 1998 and the codicil in 2004 because Betsy allegedly did not read the documents. Again, we disagree.
We note that the trial court expressly rejected Stephen's claim that Betsy was blind and unable to read when she executed these documents. There is sufficient credible evidence in the record to support that finding. Indeed, the evidence established that Betsy was fully knowledgeable about the contents of the documents she signed.
The evidence additionally established that Olivieri drafted both the 1998 will and the 2004 codicil at Betsy's direction, and discussed these documents with her, explaining their contents and legal effect, before she signed them. The record indicates that Betsy executed the 1998 documents knowing that she was reducing Stephen's share of the residuary estate, and she executed the 2004 documents fully aware that she was disinheriting Stephen.
Although Stephen argues otherwise, there is no statutory requirement that a testatrix read her will or have the will read prior to signing it. N.J.S.A. 3B:3-2 provides that,
a. Except as provided in [N.J.S.A.] 3B:3-3, a will shall be:
(1) in writing;
(2) signed by the testator or in the testator's name by some other individual in the testator's conscious presence and at the testator's direction; and
(3) signed by at least two individuals, each of whom signed within a reasonable time after each witnessed either the signing of the will as described in paragraph (2) or the testator's acknowledgment of that signature or acknowledgment of the will.
b. A will that does not comply with subsection a. is valid as a writing intended as a will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting.
c. Intent that the document constitutes the testator's will can be established by extrinsic evidence, including for writings intended as wills, portions of the document that are not in the testator's handwriting.
Moreover, in In re Probate of Last Will and Testament of Catelli, 361 N.J. Super. 478 (App. Div. 2003), we stated that we appreciated the trial judge's concern that a testatrix with a severe visual impairment is ordinarily unable, without the intervention of a neutral person, to determine if the will as drafted accurately memorializes her testamentary instructions. The same, of course, is true of a testator who cannot read by reason of illiteracy. But whether the statutory provisions for the witnessing and execution of the wills of such testators should be augmented to require that the pre-execution reading of the will to the testator be by a disinterested person is, in our view, a matter within the province of the Legislature. [Id. at 483-84.]
We therefore conclude there is no merit to Stephen's contention that 1998 will and the 2004 codicil are invalid because Betsy allegedly did not read these documents before she signed them. Whether Betsy read the documents or not, it is clear that she understood the contents of the documents and they were entirely consistent with her expressed testamentary intentions.
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