Lawyer Son Required to Return $383,595 to Mother’s Estate

On March 6, 2019, the Iowa Court of Appeals issued a ruling concerning a district court’s judgment ordering a lawyer to return $383,595.63 to his mother’s estate. The court found that because there was a confidential relationship between the son and his mother, and the son did not act in good faith when transferring money from his mother’s account to his account, he had to return the money he took from his mother’s account.

Background

A couple owned farmland and transferred it into a trust. After the surviving spouse passed away, the trust property was to be equally divided among the couple’s four children.

After the father passed away, one of the sons, a lawyer, drafted a power of attorney form which the mother signed. The son then began to help with the mother’s financial affairs. When the farmland and machinery was sold, the money from the sale was deposited into an account held by both the mother and son, rather than the mother’s own account. This led the other three siblings to question the state of their mother’s financial affairs. In several letters signed by both the son and the mother, the son denied any wrongdoing and claimed he was acting in accordance with his mother’s wishes. The mother passed away in 2016 after living in a nursing home for several months.

After the mother died, the estate produced evidence that the son transferred money out of his mother’s account and to his own account. The son claimed these transfers were gifts made by his mother with her blessing. The district court found that despite the mother being of sound mind, the son had a confidential relationship with his mother and the monetary transfers were done without the mother’s consent. The court ordered him to return the money to his mother’s estate. The son appealed.

Confidential Relationship

In reviewing the case, the court of appeals stated that a confidential relationship exists when one person has the confidence of another and a duty to act in good faith for the benefit of the other party. Despite finding that the mother was of sound mind, the court found that a confidential relationship existed because the mother placed her trust in her son and allowed him to act on her behalf concerning financial matters. Specifically, the mother allowed her son to receive her bank statements and handle many different financial and legal matters.

Undue Influence

 If a confidential relationship exists, the court will presume there is also undue influence. The son was not able to offer credible evidence that he acted in good faith on behalf of his mother when transferring her money to his account. The mother clearly intended for her assets to be divided equally amongst her four children. Additionally, while the son claimed all the money from his mother’s assets could be accounted for, a substantial amount was actually in the son’s account. Because of that, the court found the son was not able to prove his actions were done in good faith.

The court found the son was in a confidential relationship with his mother and that the transferring of assets from her account to his was not done in good faith. The Court of Appeals upheld the district court’s ruling and ordered the money returned to the estate.