Estate settlement can be a long and drawn-out process when there’s a family feud. Under Iowa law, a surviving spouse is entitled to a statutory share of the estate by election. But, the election must be properly made. That was the issue in this case.
A step-mom sued her step-son for allegedly defrauding her out of $337,000 of marital assets. The step-mom and father were married for thirty-years. During that time, the step-son had no relationship with his step-mother and a strained one with his father. The step-mom was never allowed to be involved in financial discussions and decisions, although most of the couple’s monetary assets were held in joint accounts, payable to the step-mom upon her husband’s death.
In 1999, the father began to suffer from several health problems, and he executed a will disinheriting his son. In 2002, the father was diagnosed with the early stages of dementia and became suspicious of his wife’s marital fidelity. He subsequently transferred $300,000 into both a C.D. and joint bank account with his son. As the father’s dementia began to progress, step-mom obtained a restraining order against the father and filed suit seeking temporary support. After his father’s death, the son withdrew all of the money ($337,000) from the accounts on which he was a co-owner. The step-mom sued the step-son for conversion, bad faith, breach of fiduciary duties, undue influence and fraudulent conduct. The trial court determined that the son cooperated with his now-deceased father to defraud his step-mom out of marital assets and ordered the son to pay his step-mom all of the money.
On appeal, the Iowa Court of Appeals found that a wrongful conversion of the assets did not occur, because the step-son lawfully obtained the assets. Since no fiduciary duty existed between father and son, the son had no obligation to make sure his father understood the nature of his actions. The court found no evidence of bad faith or the exercise of undue influence. Since the son had limited involvement with his father for the five years leading up to his death, he was not in a position to exert pressure on his father. Further, there was no evidence that the son had the intent to defraud his step-mother. In re Estate of Borgus, No. 8-370/07-2011 (Iowa Ct. App. Oct. 1, 2008)