A daughter did not engage in self-dealing when she exercised her durable power of attorney by transferring her mother''s property to herself after her mother became mentally unsound. In re Estate of Cummin (Mich. Ct. App., No. 235495, Sept. 9, 2003).
June Cummin executed a durable power of attorney that gave her daughter, Beth Hegyi, the authority to convey her property at her discretion. Mrs. Cummin also executed a will that named Mrs. Hegyi as her estate's personal representative and devised the residue of her estate to her children, including Edward Murphy, who was named as alternate personal representative. Nearly two years after Mrs. Cummin moved into a residential care facility, Mrs. Hegyi transferred her mother''s real property to herself by quitclaim deed, reserving a life estate in the property for Mrs. Cummin.
Following Mrs. Cummin''s death, the trial court appointed Mr. Murphy the estate's personal representative and shortly thereafter Mr. Murphy filed a complaint against Mrs. Hegyi alleging that she converted the estate's assets and requesting that the trial court impose a constructive trust over the proceeds from the real property. Mr. Murphy contended that Mrs. Hegyi had obtained ownership of the property by exerting undue influence over her mother. The trial court found that Mrs. Cummin had not been unduly influenced when she executed the power of attorney and that Mrs. Hegyi credibly testified that her mother wanted her to have the property. Nevertheless, the court concluded that Mrs. Hegyi breached her fiduciary duty to refrain from self-dealing because she did not make the transfer until several months after Mrs. Cummin became mentally unsound, and because Mrs. Hegyi had engaged in behavior inconsistent with merely wanting to fulfill her mother''s wishes. The trial court held that Mrs. Hegyi''s transfer of the property to herself created a constructive trust in favor of the estate.
The Michigan Court of Appeals reverses, ruling that the trial court erred in failing to acknowledge that an agent may engage in self-dealing if the principal consents and has knowledge of the details of the transaction. The court holds that the passage of time and the change in Mrs. Cummin''s mental status did not affect Mrs. Hegyi''s authority to transfer the property. However, the court remands the case because it is uncertain whether the trial court concluded that Mrs. Cummin freely consented to the transaction.
For the full text of this decision in PDF format, go to: https://www.michbar.org/opinions/appeals/2003/090903/20185.pdf.
Did you know that the ElderLawAnswers database now contains summaries of more than 700 fully searchable elder law decisions dating back to 1993? To search the database, click here.
Subscribe to the Knowledge Bank.
