Wills, Trusts, and Estates, Pages 374–380

In re Estate of Anton

Supreme Court of Iowa, 2007

Facts:

Mary Anton and her husband were given a piece of real estate by her step daughter Gretchen. They then built a duplex on it. After her husband died, Mary executed a will bequeathing half of her interest in the duplex to Gretchen and half to her biological son, Robert. The remainder of her estate was bequeathed to her biological children, Robert and Nancy.

Five years later, Mary was in an auto accident and had to be taken care of in a series of nursing homes due to suffering from Huntington's Chorea. She executed a durable power of attorney authorizing her daughter Nancy to manage her financial affairs. Nancy handled her mother's assets properly and was advised not to discuss the matters with her mother by the nursing home staff so as not to exacerbate her condition.

However, to pay for Mary's living expenses, Nancy was forced to sell off her mother's assets. When all her mother had left was the duplex, Nancy listed it for sale. Her stepsister Gretchen then called and informed her of the terms of the will and said she could not sell it. She then unlisted it for sale and got advice from an attorney who said that she was able to sell it but that she should try contacting her deceased father's trust because it was able to use its principle to pay for Mary's living expenses.

Nancy contacted the trust officer, who basically implied she had to sell the duplex before the bank would dip into the trust's principal. Nancy therefore sold the duplex. At the time, Mary was "not incompetent" but was not competent to handle her affairs herself, "sle[pt] almost all the time", and had "periods of confusion." Six weeks afterwards she was noted as having "advanced dementia."

Eventually Mary died, leaving $104,317.38 of the $133,263 that the duplex was sold for.

Issue:

Is the bequest to Gretchen and Robert adeemed because of the sale by an attorney-in-fact?

Reasoning:

  • While Iowa once followed the identity theory of ademption, since the '60s it has followed the "modified intention theory," under which ademption does not apply to property that is involuntarily removed from the estate.

    However, it has never been considered whether ademption applies when property is sold by one with power of attorney. Other states have—Kansas would not adeem here to avoid attorneys-in-fact from selling property just to be hostile to beneficiaries, but Ohio would, noting that attorneys-in-fact have more power than guardians.

  • If Mary was incompetent, the sale of the duplex would clearly be involuntary for her. Although she did have power to appoint a power of attorney, if she had no ability to review Nancy's decision to sell the duplex and revise her will according, the at was not voluntary. Unlike Ohio, Iowa has not specifically excluded considering guardianship in ademption.

    If Mary was competent, it depends on her intent before the sale. Her estate claims that she knew her assets would need to be sold to support her, but the duplex was never specifically mentioned. Again if she did not have the opportunity to change her will after knowing the duplex was sold, the devise should still not be adeemed.

    In Iowa, devisees are only entitled the proceeds from the specific property that have not been expended, so Gretchen should receive $52,158.69, not $72,625.

Holding:

No, the sale by an attorney-in-fact did not adeem the bequest.


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