VOLUME 24 NUMBER 21
To be valid, a will or trust must reflect the intentions of a competent signer. If the signer is deemed to have been subject to the undue influence of someone else, the document can be invalidated. Even documents carefully prepared by lawyers sometimes get successfully challenged. When the lawyer is a beneficiary, additional rules allow challenges to the documents.
Siv Ljungwe was, by all reports, an accomplished teacher and scholar. She was also an accomplished She and her husband lived in California, and managed to amass an estate worth several million dollars by making smart real estate investments. They also raised their two children together.
The couple’s daughter tragically died in 1985. The couple separated in the mid-1990s, but never divorced. When their son was diagnosed with brain cancer, her mental health began to deteriorate.
Legal proceedings begin
Ms. Ljungwe was apparently convinced that her son’s cancer could be cured if he would just get out of his hospice bed. She was disruptive at the hospice center, and her husband had to secure a protective order to prevent her from interfering with their son’s care.
There were two hospitalizations for Ms. Ljungwe during her son’s final illness, both based on her paranoia and delusions. She was also arrested three times for violating her husband’s restraining order.
At that point Ms. Ljungwe walked into the Encinitas office of attorney Carl Dimeff. She asked for his help with the restraining order, and hired Mr. Dimeff as her attorney.
For the next six years, Ms. Ljungwe would regularly evidence a peculiar attraction to her lawyer. She regularly wrote him notes with sexual innuendo and peculiar references. In the fourth year of their professional relationship, she made it clear that she wanted to change her estate plan to favor Mr. Dimeff.
The prior estate plan
In 2004, Ms. Ljungwe had signed a living trust prepared by Mr. Dimeff. She was already evincing mental health problems, but her trust was consistent with earlier estate planning documents. Especially since both of her children had died, it made sense for her to leave her entire estate to charities.
The 2004 trust left Ms. Ljungwe’s estate in equal shares to four charitable organizations. The four charities she listed:
- NPR (National Public Radio) Foundation
- San Diego State University Research Foundation
- US Fund for Unicef
- Doctors Without Borders / Médicins Sans Frontières
When she told her lawyer that she wanted to leave her estate to him, he didn’t tell her she should not, or that she should seek counseling. He did (correctly) tell her that he wasn’t permitted to prepare a new trust naming himself as beneficiary. He suggested that she talk with another lawyer about her estate plan, and he referred her to an attorney who had recently represented him, Kirk Miller.
The 2008 trust
Mr. Miller (who had represented Mr. Dimeff in an unrelated legal malpractice case) did write a new trust for Ms. Ljungwe, which she signed in 2008. The new trust left her entire estate to Mr. Dimeff.
While Mr. Dimeff did not prepare the actual trust document, he did have as many as six separate telephone conversations and one in-person meeting with Mr. Miller while he prepared the document. He also prepared a list of Ms. Ljungwe’s assets for Mr. Miller to include as part of the trust.
When Ms. Ljungwe died in 2010, her husband learned of the estate plan changes for the first time. He informed the four charities that they had been included in, and then excluded from, her estate. None of them had been aware they were named in her 2004 trust, either.
The trust contest
The four charities filed suit against Mr. Dimeff, arguing that the 2008 trust was invalid and that they should share Ms. Ljungwe’s estate. They argued that Ms. Ljungwe was mentally incapable of executing the trust document, that she was the victim of undue influence from Mr. Dimeff, and that he had been involved in preparation of the trust document. By that time he had already taken possession of over $1.3 million of Ms. Ljungwe’s assets.
The charities’ lawsuit went to trial in 2014, and the probate judge agreed with the charities. The 2008 trust was invalidated, and Mr. Dimeff was ordered to return the $1.3 million. He was also ordered to pay another $2.6 million in damages, plus $1.5 million in attorneys fees and costs incurred by the charities. In other words, instead of inheriting several million dollars from his client, Mr. Dimeff lost over $4 million from his own funds.
Mr. Dimeff appealed, arguing that the trial judge had insufficient evidence to support the judgment. Particularly, he insisted that he was not involved in drafting the 2008 trust, and that Mr. Miller prepared his client’s estate plan.
The California Court of Appeal last month ruled against Mr. Dimeff, and upheld the entire trial court ruling. The appellate judges noted that both Mr. Dimeff and Mr. Miller clearly knew about Ms. Ljungwe’s mental illness. They criticized Mr. Dimeff for not discouraging Ms. Ljungwe’s notions, or even helping her secure counseling or mental health treatment.
The court also agreed with the trial judge that Ms. Ljungwe was subjected to undue influence by Mr. Dimeff. There is a general rule of law that allows undue influence to be presumed from a close, confidential relationship between the signer and beneficiary of a trust. The attorney-client relationship is just such a confidential relationship. By the time she signed the 2008 trust, Mr. Dimeff was also trustee of her prior trust, creating a second confidential relationship. Both of those relationships justified the finding of undue influence.
California law has an unusual provision, not shared in most other states (and not present in Arizona). Under the California statute, any will or trust naming the drafter of the document as a beneficiary is automatically invalidated. In addition to finding undue influence by Mr. Dimeff, the trial court had found that he was a drafter of a key part of the 2008 trust — the list of trust assets. That meant the entire document was invalid, and the Court of Appeals agreed. NPR Foundation v. Dimeff, April 20, 2017.