Trusts and Estates. Disclaimers are irrevocable, but are voidable for duress, coercion, undue influence incompetence, or other equitable basis.

Burden of proof shifts in “suspicious circumstances” where attorney represents both sides. Carvahlo v. Estate of Carvahlo, 2009 VT 60 (Dooley, J.)

This case requires us to decide whether and in what circumstances a person who has disclaimed an interest in property under the Uniform Disclaimer of Property Interests Act, codified at 14 V.S.A. §§ 1951-1959, may revoke that disclaimer. Persons wishing to disclaim interests in property devolving to them by will or intestate succession may do so in writing within nine months of the owner’s death. Id. § 1952(a). The disclaimer “is binding upon the disclaimant,” id. § 1954(c), and the disclaimed property passes “as if the disclaimant had predeceased the decedent,” id. § 1954(a). We hold that, while statutory disclaimers are generally revocable only in limited circumstances, the superior court erred by granting summary judgment to Ms. Carvalho’s nephew who opposed revocation of the disclaimer. Accordingly, we remand the matter for the court to hold a hearing on whether the circumstances warranted allowing revocation of the disclaimer.

Agnes Carvalho appeals the superior court’s summary judgment order precluding her from revoking a disclaimer of her interest in her son’s estate. Ms. Carvalho was a ninety-two-year-old widow when her son Donald, who was her only child and had been living with her, unexpectedly died. The trial court found that she “was deeply upset and distraught after Donald’s death.” Three weeks later, nephew took Ms. Carvalho to the office of the attorney representing him in his capacity as executor of Donald’s estate. Ms. Carvalho would on that day sign her own will, and do an advanced directive and a financial power of attorney and a disclaimer, the latter of which had not been prepared or reviewed by her in advance of the meeting. The superior court found that “there are facts in dispute about how much Ms. Carvalho understood,” and that “she does not appear to have understood that the effect” of the disclaimer was to deprive her of the assets of her son’s estate during her lifetime. The court nevertheless concluded nephew was entitled to judgment as a matter of law, because Ms. Carvalho was not coerced or unduly influenced.

On appeal, Ms. Carvalho claims that the superior court erred in: (1) ruling that disclaimers are irrevocable absent incompetence, duress, coercion, or undue influence; (2) finding that there were no genuine issues of material fact as to whether she was incompetent or under duress or coercion when she executed the disclaimer.

On the weight of the case law, by virtue of our statutory text, and out of concern for the stability of property rights, we hold that disclaimers irrevocable based on claims, such as a unilateral mistake of law, that fall short of equitable claims that would support rescission of a contract or cancellation of an instrument. Disclaimers are not revocable simply because the revocation is filed within the statutory time period for filing disclaimers, even if there is no prejudice.

A disclaimer can be revoked in situations involving incompetence, fraud, undue influence, or other accepted bases for cancellation of instruments. Accordingly, if the fact finder on remand in this case were to find undue influence, coercion, or incompetence, revocation of the disclaimer would be warranted, particularly given that it was executed within the statutory time frame for disclaimers and before any property interests were affected.

The attorney testified at his deposition that he considered Ms. Carvalho to be his client, but he billed the estate for his services in having her execute the disclaimer. Thus, not only was the execution of the disclaimer facilitated by the contingent beneficiary of the estate, but the attorney who presented the disclaimer to Ms. Carvalho appeared to be representing the interests of parties with potentially conflicting interests. These facts amount to suspicious circumstances as a matter of law, which places the burden on nephew to establish affirmatively that the disclaimer was not procured by undue influence or coercion.

We conclude that the facts of this case preclude summary judgment in favor of nephew. As noted, the facts establish “suspicious circumstances” that impose upon nephew the burden of showing the absence of undue influence or coercion with respect to Ms. Carvalho’s signing of the disclaimer. On remand, the fact finder must determine, following an evidentiary hearing, whether nephew has met his burden of demonstrating a lack of undue influence, duress, or coercion with respect to Ms. Carvalho’s signing of the disclaimer. In assessing whether nephew has met this burden, the court should consider the effect of the attorney obtaining the disclaimer from Ms. Carvalho, his client, while acting as attorney for the estate and its executor. The issue cannot be decided on summary judgment.