An Iowa appeals court finds that a decedent’s half-sister failed to overcome a presumption of undue influence when she was added to the decedent’s bank accounts with a joint right of survivorship. In the Matter of the Estate of Helen M. Halter (Iowa Ct. App., No. 21-1213, November 2, 2022).
After her husband died in 2010, Helen Halter became forgetful, less independent, and more susceptible to influence. In 2013, her longtime attorney helped her prepare her will, a general power of attorney, a combined living will, and medical power of attorney. The will provided for bequests of $5,000 each to her half-sister, Phyliss Green, and her daughter, Kim Barber, with the residue of the estate going to her daughter-in-law’s son, Chad Halter. Ms. Halter’s daughter-in-law, Judy Conn, was designated as the executor of her will.
In 2019, Ms. Green, Ms. Halter’s half-sister, learned that Ms. Conn also had Ms. Halter’s power of attorney. Confronting Ms. Conn, Ms. Green said she was going to do something to replace herself as the power of attorney. When Ms. Conn asked her what she wanted, Ms. Green is alleged to have said, “The money.”
In September 2019, Ms. Green and Ms. Barber took Ms. Halter to her attorney’s office and told the attorney that Ms. Halter wanted to grant them powers of attorney. When the attorney asked to talk with Ms. Halter alone, she told him she didn’t want to make any changes to her power of attorney or her will, and wanted Ms. Conn to remain her executor.
Later the same day, Ms. Green took Ms. Halter to her bank and told the bank’s assistant vice president that Ms. Halter wanted him to add her to Ms. Halter’s checking account with a joint right of survivorship. The assistant vice president testified that Ms. Green did most of the talking and directed him not to notify Ms. Conn of the change to Ms. Halter’s accounts. Ms. Green also did not tell Ms. Halter about the implications of the changes she had made.
In the months after Ms. Green was added to Ms. Halter’s accounts, Ms. Green filled out checks from Ms. Halter’s account, which Ms. Halter signed. Some were payable to Ms. Green and her daughter, Ms. Barber, directly, and some were payable in cash.
In October 2019, Ms. Halter’s longtime physician conducted a cognitive assessment of Ms. Halter and opined she had “moderate cognitive impairment” and was not “capable of making financial or other legal decisions on her own accord.” Ms. Conn was notified of the diagnosis. Ms. Green did not agree with it.
In February 2020, Ms. Barber was added to Ms. Halter’s checking account with a joint right of survivorship and moved Ms. Halter to her own home in Marshalltown, Iowa. Ms. Barber called her own attorney and discussed with him how to terminate a power of attorney. Ms. Barber drafted a letter using the language he suggested. She had Ms. Halter sign it, them had it and sent to Ms. Halter’s law firm, stating Ms. Conn’s power of attorney was revoked, effectively immediately.
Ms. Halter signed a new power of attorney in Ms. Barber’s lawyer’s office, naming Ms. Barber as agent and Ms. Green as successor agent concerning decisions about her property.
After learning that her power of attorney had been revoked, Ms. Conn petitioned to establish a guardianship and conservatorship over Ms. Halter and applied for a temporary injunction. An attorney was appointed to represent Ms. Halter. He reported that when he met with her, she had trouble tracking the conversation. When asked about her financial matters, Ms. Halter told him “she wanted to leave everything the way it was” and never expressed a desire to give Ms. Barber any money.
Ms. Green died in November 2020. Ms. Halter passed away in December that same year. A probate petition was filed after her death, and Ms. Conn was appointed as executor. As executor, Ms. Conn applied for an accounting, including a determination that the bank accounts were estate property. Her application alleged that Ms. Halter lacked capacity or understanding and/or was coerced, intimidated, or tricked by Ms. Barber into adding her and her mother as co-owners of Ms. Halter’s accounts.
At the hearing on the application, Ms. Barber acknowledged that she had stood in a confidential or fiduciary relationship with Ms. Halter at the times she gained an interest in Ms. Halter’s accounts. The court agreed, triggering presumptions of undue influence and fraudulent transfers, and found Ms. Barber failed to meet her burden to rebut the presumptions. The court ordered the accounts were the sole property of the estate.
Ms. Barber appealed. On de novo review, the court notes: “A transfer to a grantee standing in a confidential or fiduciary relationship to a grantor is presumptively fraudulent and therefore presumptively the product of undue influence.” Mendenhall v. Judy, 671 N.W.2d 452, 454 (Iowa 2003). As a result, “the burden of proof shift[ed] to [Ms. Barber] to negate a presumption of undue influence by clear, convincing, and satisfactory evidence.” Mendenhall, 671 N.W.2d at 455.
The record is filled with evidence that Ms. Barber and her mother isolated Ms. Halter before obtaining survivorship rights on her accounts and siphoning funds to themselves from those accounts. They hid their actions from Ms. Conn to keep their addition to Ms. Halter’s accounts secret. They did not act in good faith and did not present any evidence to the contrary.
Because the court agrees that Ms. Barber failed to meet her burden to rebut the presumption of undue influence, the appellate court affirms the decision of the district court.
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