Elder Law FAX The July 2,, 2007, issue of Elder Law FAX, a free newsletter published every other Monday by the Elder Law Practice of Timothy L. Takacs.   Case alleging undue influence against elderly woman dismissed Estelle Ray (Ray) and Fred were married when Fred died in 2000. They had no children together, but there were children from prior marriages. Fred’s children were Diane, James and Martin, and Ray’s child was Mary.   After Fred died, Martin began assisting Ray with her finances (approximately $200,000 in bank accounts). Ray, with only a sixth grade education, had always been dependant on Fred, leaving all banking and business affairs to him. Martin was never appointed Ray’s agent under a power of attorney. Later, when Mary finally took over Mary’s affairs and a lawsuit was filed, it was alleged that Martin withdrew a significant amount of money from Mary’s account without permission. Unfortunately, the story gets worse.   In July of 2000, Ray gave a power of attorney to Diane and James. She sold her home to a neighbor, retaining a life estate. The sale proceeds were approximately $84,000. In the subsequent lawsuit, Mary alleged that Diane and James then “drained the account.” It was also alleged that Ray’s car was given to Martin, who then sold it back to Ray for $2,500, after which the car was transferred to Diane’s daughter. Tools and yard equipment, including a riding lawnmower, also turned up missing.   Finally, Ray called Mary, asking that she be taken to her bank. After a meeting with bank officials, Ray was very upset. By May 3, 2002, when Ray executing a new power of attorney appointing Mary as her agent, Ray’s accounts were down to $10,000.   The lawsuit alleged that Martin, Diane and James abused a confidential relationship taking approximately $188,227.56. The case went to trial without a jury on September 16, 2004 where the trial court dismissed the case.   Regarding Martin, the court found there was no evidence of a confidential relationship that would raise the presumption of undue influence. Proof of a normal family relationship, alone, does not give rise to the presumption that someone exercised dominion and control over another. Although the proof showed that Ray was uneducated, she remained competent.   On the other hand, James and Diane had an unrestricted power of attorney. The existence of an unrestricted power of attorney creates a confidential relationship and raises the presumption of undue influence if there was a transaction benefiting them. Effectively, this presumption forced James and Diane to provide clear and compelling evidence of the fairness of their transactions.   James used the power of attorney to withdraw $30,675.53 from Ray’s accounts. Also, James signed the car title when it was transferred to Diane’s daughter after buying it back from Martin. James provided no explanation for his actions, so the trial court reversed dismissal of the case against James. The case against Diane, though, was affirmed because there was no evidence that she used the power of attorney – failure to execute any transactions negates the presumption of a confidential relationship so she had no liability.   Both the trial court and the court of appeals were troubled by the case. The court of appeals said “disturbing to this court, as indeed to the trial court, are the surface implications involving an elderly lady and her money.” Unfortunately, though, there was almost no competent evidence at trial of anything. Ray had died prior to the trial and no one had taken steps to preserve her testimony. The evidence presented at trial was described as “nebulous assertions of undue influence without any substantial proof.”   Basham v. Duffer, Tenn. Court of Appeals, June 27, 2007.