Richard E. Ivie, Jimmie R. Ivie, LaDonna Small, and Bernard Ivie v. Arnold L. Smith and Sidney B. Smith
2014 Mo. LEXIS 190
| Mo. | 2014Background
- Patricia Watson (retired teacher, substantial assets) created a trust in 2002 leaving almost all assets to her half-siblings (the Ivies) and expressly excluding her husband, Arnold Smith.
- Watson’s cognitive health declined over several years; medical records and evaluations (including Mayo Clinic) diagnosed vascular/Alzheimer’s-type dementia and documented progressive confusion, memory loss, paranoia, and dependence for daily living.
- Between July 2007 and December 2008 Watson signed two trust amendments (7/27/2007 and 7/2/2008), retitled accounts and vehicles, and changed beneficiary designations so that Smith received almost all assets on her death.
- Watson’s attorney prepared both trust amendments but had not reviewed her medical records or obtained a medical capacity opinion; one attorney later prepared a memo opining Watson understood the changes.
- After Watson’s death in April 2009 the Ivies sued to void the amendments, beneficiary changes, and transfers for lack of testamentary/contractual capacity and undue influence; the circuit court found Watson lacked capacity and voided the changes; the Supreme Court of Missouri affirmed.
Issues
| Issue | Plaintiff's Argument (Ivies) | Defendant's Argument (Smith) | Held |
|---|---|---|---|
| Whether Watson had testamentary capacity to amend the trust | Medical records and expert testimony show Watson lacked testamentary capacity after July 1, 2007; trust amendments void | Attorneys’ testimony and defendant expert show Watson understood and had capacity when amendments signed | Court: Substantial evidence supports finding Watson lacked testamentary capacity for both trust amendments; affirmed |
| Whether beneficiary designations and during-life transfers can be voided for incapacity under Nonprobate Transfers Law | Such designations are governed by "applicable law" and are contractual; mental (contractual) capacity is required, so incapacity can void them | §461.054 lists fraud/duress/undue influence and omits incapacity, so incapacity should not be a basis to void beneficiary designations | Court: Beneficiary designations are matters of agreement governed by contract law; contractual capacity is required; changes after July 1, 2007 void; statutory omission not read to abrogate common-law capacity doctrine |
| Whether the circuit court misapplied testamentary-capacity standard to beneficiary changes | Even if misapplied, contractual-capacity standard is higher than testamentary capacity and record shows incapacity to meet the higher standard | Court erred by applying testamentary standard to nonprobate transfers | Court: Circuit court technically misapplied the label but error was not prejudicial because contractual capacity requires greater mental functioning and record supports incapacity |
| Whether the judgment is against the weight of the evidence or lacks substantial evidence | The evidence favoring incapacity (medical records, expert) is strong; circuit court credibility determinations appropriate | Contrary evidence (attorneys’ testimony, defendant expert) shows capacity; appellate reversal appropriate | Court: Not against the weight of the evidence; appellate deference to trial court credibility findings; affirmed |
Key Cases Cited
- Murphy v. Carron, 536 S.W.2d 30 (Mo. 1976) (standard of review for court-tried cases)
- Lewis v. McCullough, 413 S.W.2d 499 (Mo. 1967) (testamentary capacity elements)
- McElroy v. Mathews, 263 S.W.2d 1 (Mo. 1953) (contractual capacity standard higher than testamentary capacity)
- In re J.A.R., 426 S.W.3d 624 (Mo. banc 2014) (appellate review deferential to trial court factual findings)
- Watson v. Watson, 562 S.W.2d 329 (Mo. 1978) (will void if maker lacked sound mind when executed)
- Hahn v. Tanksley, 317 S.W.3d 145 (Mo. Ct. App. 2010) (deference to trial court credibility in testamentary-capacity disputes)