Despite evidence that a mother transferred property to two daughters to qualify for Medicaid, a North Carolina appeals court rejects a disinherited son's suit seeking a constructive trust on the property. However, the case may proceed against the daughter who also served as attorney-in-fact. Hughes v. Craddock (N.C. Ct. App., No. COA10-266, Nov. 2, 2010) Unpublished.
In 1998, Mary Elizabeth Hughes Lambeth executed a will that divided her estate equally between four of her children while intentionally excluding her son, Baxter Hughes. In 2002, she transferred real estate to two of her daughters, Bonnie Craddock and Lois Levine. Ms. Lambeth died in August 2006 and the daughters' interest in the property vested in 2008 following the death of the life tenant.
Mr. Hughes sued Ms. Craddock and Ms. Levine, asserting that their mother had not intended to gift the property solely to them to the exclusion of the other children, but rather had transferred the property to qualify for Medicaid and to shield it from claims for nursing home expenses. Mr. Hughes proffered a holographic codicil to his mother's will, ostensibly entitling him to a share of her estate. He asked the court to impose a constructive trust on the property, to convey beneficial title to him and his siblings as heirs or devisees and to reopen Ms. Lambeth's estate if necessary. Finding no basis for the imposition of a constructive trust, the trial court granted the sisters' summary judgment motion. Mr. Hughes appealed.
The Court of Appeals of North Carolina affirms the grant of summary judgment as to Ms. Levine because Mr. Baxter failed to rebut the argument that, absent any allegation of fraud, inequitable conduct, or breach of fiduciary duty, an essential element of the claim for a constructive trust was lacking. However, the court reverses as to Ms. Craddock, who had a confidential relationship with her mother as attorney-in-fact when the property was transferred. Because Ms. Craddock received a benefit, a presumption arises that constructive fraud has occurred.
To download the full text of this decision in PDF format, go to: https://www.aoc.state.nc.us/www/public/coa/opinions/2010/unpub/100266-1.pdf.
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