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No showing was made of fraud or other misconduct

Fund transfer made by dying woman found to be valid

Funds transferred by a dying woman into a man’s bank account became the property of the account holder where there was no finding of fraud or other wrongful conduct, the Court of Appeals has ruled.

Prior to her death, the decedent placed funds into the bank account of the man, who knew the decedent for 30 years and lived with her for the last six years of her life (until she entered a nursing home). The man used a portion of the funds to purchase three vehicles and make some home improvements.

The decedent’s daughter subsequently sought judgment against the man for breach of fiduciary duty and theft.

A Hennepin County District Court judge determined that the funds used for the vehicles and home improvements were not a gift and were expended without the decedent’s consent.

But the Court of Appeals reversed.

“Once [the decedent] transferred the funds to [the defendant’s] sole account, [he] became the presumptive legal owner of them and could use them for any purpose,” wrote Judge Sam Hanson. “That presumption could only be overcome by a finding that [he] obtained possession of the funds by fraud, theft, conversion or other wrongful act. There was no such finding, nor would the evidence support such a finding.”

The seven-page decision, In Re: Estate of Whish v. Bienfang, is Minnesota Lawyer No. CA-272-01.

Minneapolis attorney Barry L. Blomquist, Jr., who along with Robert V. Espeset, represented the defendant, said that up until now, there has been no caselaw in Minnesota on the issue presented by the present case.

There is good law when joint bank accounts are involved, but not sole accounts, Blomquist observed. This decision fills a gap in our state’s caselaw.

“It also provides trusted family members with significant legal support … to do things like [our client] did,” Blomquist added. The burden of proof is now unquestionably on the person contesting the transfer to show that the receiver of the funds committed some wrongful act, he said.

Blomquist predicted that the decision will have a negative impact on the number of people coming forward and making claims like the daughter made here.

Minneapolis attorney Frederick Kopplin, who represented the daughter, could not be reached for comment prior to deadline.

Transferred funds

Defendant Elvern Bienfang knew decedent Donna Whish for about 30 years until her death in September 1994. They resided together from 1988 until she entered a nursing home less than one year prior to her death. Decedent’s minor son resided with them. Throughout this period, Bienfang, decedent and her son lived as a family, vacationing and maintaining the household together.

Initially, they lived in Bienfang’s residence, but in 1990, decedent purchased a home and placed title in the name of Bienfang. Their mutual expenses were paid from Bienfang’s individual checking account, to which Bienfang deposited his earnings and the decedent periodically transferred funds from her own bank account. Their individual funds were commingled in this account with no evidence of any expectation that they would be separately disbursed or even accounted for.

The decedent became ill in 1993, necessitating her entry to the nursing home, but she remained mentally competent. During the last year of her life, she executed a will naming Bienfang personal representative and trustee, had him appointed as her son’s guardian and granted him a health care power of attorney. She also made transfers totaling more than $250,000 into Bienfang’s checking account during this period. She made the arrangements for each transfer voluntarily, without any action or direction by Bienfang, and she was aware of how the funds were spent prior to her death.

Prior to decedent’s death, Bienfang used some of these funds to purchase three vehicles and to pay for home improvements performed by a contractor friend of Bienfang and decedent. The contractor was also the recipient of one of the vehicles. Both the contractor and Bienfang testified that the decedent wanted to purchase the vehicles for them with money in Bienfang’s account. Bienfang also testified that it was the decedent who decided on the home improvements and it was her idea that he pay for them with money that she had transferred to his checking account. While all home improvements were commenced prior to the decedent’s death, some of the payments occurred after her death.

In April 1999, the decedent’s daughter, petitioner Darla Whish-Smith, sought to remove Bienfang as personal representative of the decedent’s estate, to have herself appointed as successor personal representative and to obtain judgment against Bienfang for the return of funds transferred by the decedent to Bienfang’s account.

The District Court judge did not find that Bienfang had breached any fiduciary duty or committed theft, but concluded that he should be removed as personal representative of the estate for conflict of interest reasons and ordered judgment against him in the amount of $86,588.

The trial court judge apparently determined that while the other funds transferred by the decedent were a gift to Bienfang or were used for the decedent’s expenses, the amount used to purchase the vehicles and to pay for home improvements was not a gift and was expended without the decedent’s consent.

Bienfang appealed.

The powers that be

Hanson began by addressing the petitioner’s request for judgment against Bienfang, both individually and in his capacity as personal representative, for breach of fiduciary duty and theft.

The judge explained that Bienfang was appointed personal representative upon the order for probate of the decedent’s will on Dec. 15, 1994, 2 1/2 months subsequent to her death. All of the expenditures in question occurred prior to Bienfang’s appointment as personal representative of the estate.

Because the duties and powers of a personal representative commence upon appointment, any liability of Bienfang to the estate must be in his individual capacity, Hanson observed.

The judge also noted that the District Court judge did not find that Bienfang acted in a fiduciary capacity toward the decedent prior to his appointment as personal representative.

“Instead, the District Court focused on the ownership of the funds transferred by [decedent] to Bienfang’s account, and the question whether [decedent] specifically consented to the use of those funds for purchase of the vehicles and payment for home improvements,” wrote Hanson.

The Court of Appeals concluded that the District Court judge applied an incorrect legal standard to the question of ownership and also that its findings relative to consent were clearly erroneous.

True owner

In addressing the ownership issue, Hanson observed that once the decedent transferred the funds to Bienfang’s account, he became the presumptive legal owner of them and could use them for any purpose. Only a finding of fraud, theft, conversion or some other wrongful act could overcome the presumption. The judge noted that there was no such finding here, nor would the evidence support such a finding.

This transfer of ownership occurs even where a decedent places funds in a joint account with another person, Hanson continued. Upon the decedent’s death, the funds become t
he property of the surviving joint tenant, absent clear and convincing evidence of a different intent, the judge said.

“The transfer of funds to the sole account of another person, such as here, shows an even stronger intent to transfer ownership,” Hanson noted.

The Court of Appeals determined that there was no evidence of any intent by the decedent to limit, restrict or qualify Bienfang’s ownership of the funds. In this regard, the presumption relieved Bienfang of the burden to prove an intent to make a gift, and instead required the petitioner to rebut the presumption by proving a different intent or proving fraud, theft, conversion or other wrongful act, the court found.

“No such proof was presented,” Hanson observed.

The Court of Appeals went on to note that even if the legal test turned upon whether the decedent consented to the expenditures made by Bienfang with the transferred funds, the District Court judge’s finding that she did not consent was clearly erroneous.

— Michelle Lore

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