Unconscionable Procurement: Setting Inter-Vivos Gifts Aside

Unfortunately, when a person is nearing the end of their life, it is not uncommon for family members or close friends to try and take advantage of the situation for their own financial gain. This can take many forms, including exercising undue influence on the will-writer to leave large gifts in the will, or simply misleading them into changing their will to reduce or exclude someone else’s inheritance. Fortunately, those adversely impacted may be able to challenge a will when there has been interference which led to the will being unrepresentative of its writer’s final wishes, even after the death of the writer. But, what about gifts given under similar circumstances before the will-writer passes (inter-vivos gifts)?

Unconscionable Procurement

The doctrine of unconscionable procurement is meant to uphold the interests and intentions of the gift giver in significant wealth transfers. It allows the courts to make wealth transfers voidable if the gift giver did not fully understand what they were doing, or were ‘tricked’ by the person receiving the gift. For the courts to consider a wealth transfer voidable due to unconscionable procurement, it must be established that:

• The person receiving the gift obtained a significant benefit 

And

• The person receiving the gift played an active role in arranging the transfer of the gift

The courts will consider the value of the gift, and the level of involvement the receiver of the gift had in arranging the transfer. Examples of over-involvement in the arrangement of the transfer include:

• Documents being prepared by the gift receiver for the gift giver to sign;
• The gift receiver arranging for the gift giver to meet with a lawyer who has already received instructions; 
• Driving the gift giver to meet with a lawyer regarding the transfer, or to a bank to make a withdrawal

Recent Case Argues Unconscionable Procurement

While the doctrine of unconscionable procurement had fallen out of use, it was recently argued successfully for the first time in over 100 years in the 2019 case, Gefen v. Gaertner, (2019). In the case, two brothers wanted to have several wealth transfers between their mother and another brother voided. Following the death of their father, each of the three sons were meant to inherit equal ⅓ shares of their parent’s assets upon their mother’s death. However, through numerous inter-vivos gifts (gifts given during a person’s life) of property and cash assets, the mother had gifted a significant portion of the estate assets to one of her three sons. These gifts significantly decreased the value of the ⅓ shares that were left to be given to her other sons upon her death. Though there were several other issues raised in this case, the two brothers brought forward the unconscionable procurement claim specifically to have the wealth transfers to their other brother undone, and to hold the assets in question in a trust for their mother to ensure the problem would not arise again. The courts sided with the two brothers, finding that the third brother had unconscionably procured the gifts from his mother. Several handwritten and typed documents prepared by the brother for his mother to sign demonstrated that he had played an active role in arranging each transfer, and he received a significant financial benefit from the transfers. 

The successful argument of unconscionable procurement in this case is important, as it opens a new avenue for voiding inter-vivos gifts in estate claims, where the more common approaches of claiming undue influence or lack of capacity might fail. In Gefen v. Gaertner, it was noted that the mother had been assessed by a doctor and determined to have had legal capacity to make the transfers. The court also did not find the transfers were voidable as a result of undue influence, however they were voidable due to the unconscionable procurement of the gifts.

3 Approaches to Voiding Inter-Vivos Gifts

Inter-vivos gifts can be made voidable by the courts under certain circumstances, such as those of Gefen v. Gaertner. Most commonly, these gifts are attacked under claims of undue influence, or lack of capacity. How do these types of claims differ?

Undue Influence claims can render gifts voidable in situations where “A person is pressured to perform a legal act, and where that person does not truly wish or intend to perform that act.”

•  For example, if the receiver of the gift threatens the gift giver to pressure them into making a wealth transfer, the wealth transfer may be ruled voidable.

Lack of Testamentary Capacity renders gifts voidable if the gift giver did not have legal capacity at the time of the transfer. 

• A common example of gifts being voidable due to lack of capacity are gifts given by a parent or grandparent who suffers from severe memory loss. 

Unconscionable Procurement makes transfers voidable if the gift giver was mislead into making the transfer, or otherwise did not understand the effects of their actions. The gift receiver must have been directly involved with the arrangement of the transfer.

• For example, in the case Gefen v. Gaertner, the courts found the assets given to the brother were unconscionably procured as the gift giver did not fully understand the effects of her actions, and the gift receiver went to significant lengths to arrange the transfers. 

In many circumstances, the courts may render gifts already given voidable if there is evidence of foul play, or that the will-writer did not have legal capacity when giving the gift. If you suspect that a loved one has been mislead or unduly influenced to give a large gift that they may have not intended or wished to, contact an experienced estate lawyer today. We’ll make sure the intentions of the will-writer are respected and upheld. 

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.