Until a few weeks ago, life was going pretty well for a respected Trusts and Estates attorney. Edward F. Campbell, Jr. (Edward Jr.) owned a spectacular seven-bedroom house in the exclusive Long Island community of Lloyd Harbor, an area where houses are routinely valued in excess of $2 million. Interestingly, Edward Jr. acquired title to the expensive parcel with no down payment or mortgage. All that he was asked to do in return was to care for, and reside in common with, the former owners and pay them a mere $1000 a month. Of course, it was no coincidence that the occupants happened to be Edward Jr.'s elderly parents. But as harmonious as that arrangement initially appeared, a Supreme Court Justice later concluded that the parents had been duped and were the victims of "undue influence."
When examining undue-influence claims made with respect to property transfers, the Court must first determine whether a confidential, fiduciary, or family-type relationship existed between the parties. Once this element is established, there is a presumption of undue influence that can be overcome if the opponent can demonstrate by "clear and convincing" evidence that the purchase agreement was "fair, open, voluntary and well understood." In Campbell v. Campbell, the Honorable Paul J. Baisley, Jr., of the Suffolk County Supreme Court, concluded that Edward Jr. was unable to satisfy his burden of proof.
In 1995, after 10 years of no contact with his financially troubled parents, Edward Jr. began negotiations with Lucy, 82, and Edward Sr., 85, regarding the sale of their home. By September of that year, without consulting with their own lawyer, Lucy and Edward Sr. accepted the terms of their son's offer, which provided that the seniors could live out their remaining years in the home and that Edward Jr. would compensate them with monthly payments of $1000. Curiously, Edward Jr. did not make copies of this purchase agreement available to any of his eight brothers and sisters, although he did make his siblings sign releases stating that they would never assert a claim regarding the sale.
Upon moving in with his parents in November of 1996, Edward Jr. unilaterally reduced the payments to his parents to $400 per month. He argued that this offset was based upon a loan repayment made on his parents' behalf.
In 2001, Lucy and Edward Sr. brought an action to rescind the sale. In addition to the unfair contract provisions and the reduction of their monthly income, the parents alleged that they were not permitted to have a window air-conditioner in their bedroom during the summer, were not given a key to the front door of the house, had limited access to food and meals, were not allowed to use the washing machine, and were not permitted to have visitors. After reviewing the evidence, the court agreed with the seniors and determined that the transaction was unfair, citing to contract provisions which granted the son the unfettered right to deduct any amounts he deemed appropriate from the required monthly payments, and clauses that required the parents to obtain their son's consent before they could receive or entertain any guests. These provisions only bolstered the court's finding that the consideration given by the son to his parents for the home was "woefully inadequate."
The court also found that the bargaining positions of the parties had not been equal. Although Edward Sr. was also an attorney, the elder spent the majority of his life as an airline pilot and did not possess the requisite expertise in estate planning and real estate that his son did. The trial testimony reflected that Edward Jr. was the dominant force in the negotiations process and that the parents were in a weakened and dependent state at the time they entered into the sale. The court also found that the agreement was not truly voluntary and that no evidence had been presented that the parents understood the agreement's terms. All these factors led the court to annul the entire transaction.
Unfortunately, this case is representative of a larger, national problem. The United States Department of Health and Human Services, Administration on Aging, reports that over half a million seniors are abused, neglected or exploited by family members each and every year. The 2004 Survey of State Adult Protective Services reveals that there were over 560,000 reports of suspected elder abuse in 2003 alone. About a third of the alleged perpetrators were adult children (32.6%), 21.5% were other family members, while 11.3% were spouses/significant others. The range of conduct include: self neglect (37.2%), caregiver neglect (20.4%), financial exploitation (14.7%), emotional, psychological and verbal abuse (14.8%), physical abuse (10.7%), sexual abuse (1%), and other forms of misconduct (1.2%).
Hopefully, the court's decision in the Campbell case will serve as a wake-up call for those with elderly or otherwise vulnerable relatives and will reinforce that it is a grave error to believe that you will be afforded carte blanche simply because you're a member of the clan.
For a copy of the Suffolk County Supreme Court's decision in Campbell v. Campbell, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_50850.htm
To visit the Administration on Aging's website, please click on the following link:
http://www.aoa.gov/eldfam/Elder_Rights/Elder_Abuse/Elder_Abuse.asp
For additional resources and information, including hotline numbers to report abuse to local authorities, please click on the following link:
http://www.elderabusecenter.org/