Another Undue Influence Case

January 20, 2010 | Erin Herbold

 

In this case, the trial court dismissed an executor’s claims that the decedent’s daughter had committed constructive fraud by abusing a confidential relationship and exerting undue influence over her father.  The daughter helped her parents as they aged by managing their finances and helping them with errands. In July 2001, the mother transferred money to her daughter to pay her parent’s expenses. The mother died in September 2001, and the father executed a new power of attorney, naming his daughter as agent. 

A few months later, the father executed a new will, providing for equal distributions between his daughter and one of his grandsons and naming his daughter executor. The father also deeded his homestead to his daughter and her husband.  After the father’s death in 2004 the daughter, acting as executor, admitted the will for probate. The grandson received no notice that his grandfather’s estate was being administered. The estate was closed before he finally learned that he had been a beneficiary under the will. A new executor was appointed to serve in the daughter’s place.  The new executor filed a petition to reopen the estate. After the trial court dismissed his claims, the executor petitioned the Iowa Court of Appeals to consider the case.

The appellate court found that a confidential relationship did exist between the decedent and his daughter, because his daughter was a “dominant influence” on her father. Since a confidential relationship was present, the daughter had the burden to prove that the conveyances of property during her father’s life were made in good faith and that her father acted “freely, intelligently, and voluntarily.”  The new executor submitted evidence that the daughter had used about $170,000 to her advantage after becoming her father’s agent under the power of attorney. The court’s record showed that the father had little knowledge that his daughter had nearly depleted all of his assets during his life. Thus, the daughter failed to rebut the presumption that she exerted an undue influence over her father and breached her fiduciary duty by self-dealing. Miller v. Eisentrager, No. 9-819/09-0596, 2009 Iowa App. LEXIS 1704 (Iowa Ct. App., Dec. 30, 2009).