Wednesday, July 29, 2009

Indiana Court of Appeals Decides Man Incompetent and So Is His Contract

From The Indiana Lawyer comes Man wasn t competent to sign contract
The Indiana Court of Appeals affirmed a neighbor of a mentally ill man shouldn't have been able to purchase the man's farm because the man was incompetent when he signed the sales contract.

In James Nichols v. Estate of Ernest M Tyler, No. 45A04-0811-CV-640, the appellate court determined the trial court didn't err when it concluded Ernest Tyler was incompetent in February 2005 to convey his farm nor did it err by determining James Nichols failed to rebut the presumption of undue influence over Tyler with regard to the real property transfer.

I cannot but help raise my eyebrows at the fact that the attorney who drew up the Power of Attorney did not question Tyler's competency.

Meanwhile, looking at the actual opinion, there are some very important facts left out of the news report (pages 2 -3 of the opinion):
In March 2002, with the assistance of Shuster, Tyler formed a revocable living trust and transferred to the trust the real estate, including a 124 acre farm and a farmhouse valued together at about $1.5 million, which he had inherited from his mother. Nichols was the trustee of the trust and Tyler was the sole beneficiary. On February 8, 2005, Tyler signed a Direction to Sign Contract for Conditional Sale of Real Estate (the “Contract”), directing Nichols as trustee to sell his real estate held in trust to Nichols. Nichols took the property by another trust which he formed. Under the terms of the Contract, Tyler retained a life estate in the property, and Nichols was required to pay Tyler $200 per month until Tyler‟s death. Nichols was also responsible for paying all taxes, assessments, and insurance with respect to the property. Throughout the dealings between Tyler, Nichols, and Shuster, Shuster was never made aware of Tyler‟s mental health history.