In a surprising decision from the Montana Supreme Court, we find that landscape isn't the only thing that's wide open in that jurisdiction. Consider, for example, the case of Stanton v. Wells Fargo Bank Mont. N.A., 2007 MT 22 (Jan. 30, 2007).
Frances Barker and her husband owned and operated a drug store in Hardin, Mont. They had one daughter, Joanne, who married Wendell Stanton in 1963. Stanton was an accountant and attorney. Frances and her husband had concerns about Stanton's ability to manage his finances and provide for Joanne. So they established separate revocable trusts for Joanne's benefit. After her husband's death, in 1977, Frances executed a trust naming Joanne as a remainder beneficiary and giving Joanne a power of appointment that specifically excluded Stanton.
Apparently, Frances had a realistic view of her son-in-law -- at least she did back then. In fact, Stanton incurred Internal Revenue Service tax liens resulting in the foreclosure of his family home in 1995. In that same year, Joanne and Stanton divorced, yet their relationship continued. About the same time, Joanne developed terminal cancer.
In 1996, Frances restated her trust agreement because of Joanne's illness. Her attorney suggested naming a charitable beneficiary and provided Frances with a list of suggested prospects. Frances selected Trail's End Ranch, a Christian summer camp for children. Joanne died the following year, after asking Frances to "take care of Wendell [Stanton]."
After Joanne's death, Frances' relationship with Stanton improved significantly, and she told her Wells Fargo trust officer that she believed Stanton had "turned himself around." Stanton visited Frances daily for lunch and took her on errands. In 1999, Frances asked her attorney to draft a will containing a testamentary trust for Stanton's benefit in the amount of $200,000. The trust's income was to be distributed to Stanton during his life, and upon his death, the trust's principal was to pass to a family foundation established by Frances. Stanton and Frances continued to spend a great deal of time together and, in 2000, Frances informed her trust administrator and current attorney that Stanton was to be her new attorney and accountant.
In April of 2000, Frances had Stanton revise her 1996 trust to provide for income distributions to Frances and discretionary principal distributions to Stanton as he requested. Upon her death, the trust's principal would be distributed to Stanton. In June of 2000, Frances had Stanton draft a new will naming Stanton as sole beneficiary. Two months later, Frances directed Wells Fargo to transfer about $530,000 in stock to him. Though she was 90 years old at the time, friends testified that she was in good mental and physical health and that she treated Stanton as her last living relative.
In September of 2001, Frances asked her trust administrator to put her in touch with a new attorney because Stanton was becoming "greedy," but when contacted by the new attorney, Frances stated that she did not recall making those statements. Frances' original attorney contacted Wells Fargo in May 2002 and expressed concern (based upon conversations with Frances' friends) that Stanton was unduly influencing Frances.
In August of 2003, Frances was diagnosed with Alzheimer's dementia. She died three months later, whereupon Stanton requested the final distribution from her trust. Wells Fargo refused and filed a declaratory judgment action regarding the trust distribution and the validity of Frances' 2000 will and 2000 gift of stock to Stanton. Trail's End intervened as a beneficiary under Frances' 1996 trust and alleged that Wells Fargo breached its fiduciary duties to Trail's End and that Stanton unduly influenced Frances. The lower court granted summary judgment in Stanton's favor and ordered Wells Fargo to distribute the remaining trust assets to Stanton. Wells Fargo appealed and the case made it to the highest court in the state
The Montana Supreme Court first considered whether the lower court properly granted summary judgment in Stanton's favor. In considering this issue, the court examined the elements required for undue influence. First, the court looked at the "confidential relationship" between Stanton and Frances. Stanton conceded that such a relationship existed, but Trail's End argued that the relationship should raise a presumption of undue influence. The court noted that Stanton's conduct may have run afoul of the Montana Rules of Professional Conduct. But, the court said, neither this possibility nor the existence of a confidential relationship would raise a presumption as "undue influence may never be presumed and must be proven like any other fact."
Second, the court examined Frances' physical and mental condition. It agreed with the lower court that the testimony of those who knew Frances indicated she was physically and mentally sharp even into her 90's.
Third, the court looked at whether the disposition was "unnatural" and again agreed with the lower court that the disposition to Stanton who she referred to as her "son-in-law" was a more natural disposition than to charities to which Frances had little or no connection (Trail's End admitted it never met with Frances or had any connection to her.)
Finally, the court examined whether Stanton made any requests to or demands on Frances to amend her will and trust or to make monetary gifts to him. The court concluded that Trail's End had merely demonstrated that Stanton had the opportunity to exercise undue influence given his confidential relationship with Frances, but this was insufficient to prove that undue influence had indeed occurred.
In concluding its opinion, the court held that Wells Fargo did not breach any fiduciary duty to Trail's End because, under Montana law, a trustee only owes a fiduciary duty to "the person holding the power to revoke [while that person is competent] . . . and not the beneficiaries." Because the court concluded that Frances was competent during the relevant time period and she had the power to revoke the trust, Wells Fargo's fiduciary duties only ran to her.
Most other venues -- if confronted with this same fact pattern -- would have imposed a presumption of undue influence on the fiduciary who benefited from his principal. In addition, most courts would come down like the proverbial ton of bricks on the lawyer who engaged in this conduct -- generally referring the matter directly to the state disciplinary body governing lawyers conduct.
Ordinarily, for arrangements like this to pass muster, the client must be referred to an independent attorney.
In other words: don't try this one at home.