In re Estate of Anton
not provided (2007)
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Rule of Law:
The sale of a specifically devised property by an attorney-in-fact does not cause ademption by extinction where the testator was either incompetent or was competent but lacked knowledge of the specific sale, at least to the extent of the unexpended proceeds remaining in the estate.
Facts:
- In 1972, Hestor Mary Lewis Anton (Mary) and her husband became owners of a duplex property, which Mary came to own solely after her husband's death in 1976.
- In her 1981 will, Mary bequeathed a one-half interest in the duplex to her stepdaughter, Gretchen Coy.
- Following a serious car accident in 1986, Mary executed a durable power of attorney, appointing her daughter, Nancy Ezarski, to manage her financial affairs.
- Mary moved into a nursing home and suffered from Huntington's Chorea, a degenerative disease.
- In 1998, Mary and Nancy discussed the need to sell assets for Mary's support, but nursing home staff later advised Nancy to avoid discussing finances with Mary to prevent distress.
- To pay for Mary's ongoing care, Nancy sold various assets over the years; Mary was generally aware her assets were being sold but was not informed of specific transactions.
- By 2003, the duplex was Mary's only significant asset. A bank trust officer advised Nancy to sell the duplex before invading the principal of a trust.
- On August 28, 2003, Nancy sold the duplex to pay for Mary's care, without Mary's specific knowledge of this particular sale. Mary died on December 2, 2003.
Procedural Posture:
- After Mary Anton's death, Gretchen Coy filed a claim in probate court against the estate for the value of the duplex bequest.
- The executor, Nancy Ezarski, disallowed the claim.
- The estate filed a motion for summary judgment in the district court (trial court), which was denied.
- Following a bench trial, the district court denied Gretchen's claim, finding the bequest was adeemed by the sale of the duplex.
- Gretchen Coy (appellant) appealed to the Iowa Court of Appeals, which affirmed the district court's judgment.
- The Supreme Court of Iowa granted further review.
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Issue:
Does the sale of a specifically bequeathed property by an attorney-in-fact result in ademption by extinction when the testator either was incompetent at the time of the sale or was competent but lacked specific knowledge of the sale?
Opinions:
Majority - Appel, Justice
No. The sale of the duplex by the attorney-in-fact under these circumstances did not result in ademption. Under Iowa's 'modified intention theory,' ademption does not occur when specifically devised property is removed from an estate through an act that is involuntary as to the testator. The court extends the rule from cases involving court-appointed guardians to those involving attorneys-in-fact, reasoning that the focus is on the testator's knowledge and intent, not the status of the agent. Whether Mary was incompetent or merely unaware of the specific sale, the act was involuntary as to her because she lacked the contemporaneous knowledge of the transaction and the opportunity to revise her will. Therefore, the bequest to Gretchen Coy was not adeemed, and she is entitled to the identifiable, unexpended proceeds from the sale remaining in the estate.
Analysis:
This case significantly clarifies the doctrine of ademption in the context of durable powers of attorney, a common estate planning tool. By extending the 'involuntary act' exception from guardians to attorneys-in-fact, the court prioritizes the testator's actual intent and knowledge over the rigid 'identity theory' of ademption. This decision signals that Iowa courts will look beyond the mere absence of a specific asset in the estate and examine the circumstances of its disposal. It establishes a protective precedent for specific bequests, ensuring they are not inadvertently defeated by the necessary financial management actions of an agent, especially when the principal is incapacitated or uninformed.
