In re the ESTATE OF Harry L. RICKERT

934 N.E.2d 726

In re the ESTATE OF Harry L. RICKERT, Carole Baker, Personal Representative of the Estate of Harry L. Rickert, Deceased, Appellant (Petitioner Below), Keta Taylor, Appellee (Respondent Below).

No. 18S04-1002-CV-118.

Supreme Court of Indiana.

Sept. 9, 2010.

P. Gregory Cross, Sara E. Shade, Muncie, IN, Attorneys for Appellant.

Stan G. Wyrick, Muncie, IN, Attorney for Appellee.

On Petition to Transfer from the Indiana Court of Appeals, No. 18A04-0812-CV-746

BOEHM, Justice.

A holder of a power of attorney is a fiduciary and therefore any transaction in which the holder uses a power of attorney to transfer assets to the holder is presumed invalid. The Non-Probate Transfer Act creates a presumption that joint ownership of a bank account is intended to transfer the account to the survivor(s) at the death of an owner. We hold that the Act's presumption of intent to transfer does not overcome the fiduciary's duty to prove that the account was properly established as a joint account. The holder in this case used the power to establish joint accounts with herself, and did not overcome the presumption that the accounts were not validly established as joint accounts.

Facts and Procedural History

Harry Rickert and his wife, Novella, had no children. When Novella suffered a stroke in 1990, Rickert hired Keta Taylor to assist him in caring for her. After Novella's death in 1991, Taylor continued to provide general housekeeping duties and care for Rickert until his death in May 2006 at the age of 93. In 1992, Rickert executed a will that divided his residuary estate equally among four nieces and nephews, and Carole Baker, whom Rickert described in his will as one “loved as if she were [the Rickerts's] daughter.”

According to some witnesses Rickert could sign his name but was otherwise illiterate. In 1997 Rickert gave Taylor a general power of attorney, and six months later he executed a codicil to his will adding Taylor as a sixth residuary beneficiary. In 1999, a second codicil named Baker as personal representative of his estate. At that time he told Baker that his estate was worth about $600,000 and that each beneficiary would receive approximately $100,000 when he died.

Between 1999 and 2006, Rickert's health declined. He required more constant care and was attended by Taylor on weekdays and by other hired caregivers on the weekends. The evidence is undisputed that by 2005 Rickert could no longer make decisions for himself, but it is not clear how long that was the case before then. According to Baker and Ervin Rickert and Walter Washburn, two of Rickert's nephews, Rickert lost the ability to make conscious decisions for himself sometime around 2000, but Taylor disputes that and the record includes no medical evidence. A Mutual Federal Savings Bank employee testified that when she dealt with Rickert prior to 2002 it was her opinion that he understood the terms of the accounts that he and Taylor opened.

At Rickert's death his probate estate was valued at approximately $147,000, including real estate, furniture and household goods, corporate stocks, cash, and the proceeds of insurance policies payable to the estate. Baker also identified $404,000 in non-probate assets. Specifically, a number of bank certificates of deposit (CDs) had been purchased in Rickert's name as joint owner with Taylor and others. Ind.Code § 30-5-6-4(b) (2004). Because Baker was herself a joint owner of CDs that had been established by Rickert, she requested that the trial court appoint a special personal representative to investigate whether the joint accounts should be recovered for the Estate. I.C. § 29-1-13-16. Attorney P. Gregory Cross was appointed and conducted an investigation. Some, but not all banks furnished the documentation surrounding these accounts.

Cross concluded that at the time of his death, in addition to the probate estate, Rickert did own other assets totaling approximately $404,000. These included:

1. At least nine CDs totaling $168,000 and one checking account with a balance at Rickert's death of $3010. These accounts were at four Muncie area banks and each was established from 2001 to 2005 as either a joint account owned by Rickert and Taylor, or an account in Rickert's name with Taylor as “Pay on Death” beneficiary. The documentation creating each of these accounts was signed only by Taylor using her power of attorney to sign for Rickert;

2. One checking account with a balance at Rickert's death of $2833 and one CD worth $31,200. The checking account was established in 2001 as a joint account with Taylor and the CD purchased in 2000 named Taylor as POD beneficiary. The documentation creating these two accounts was signed by Rickert himself;

3. Two CDs totaling $22,000 naming Charles Jester as POD beneficiary. Taylor's marriage to Jester was dissolved in 1999. According to Taylor, Rickert and Jester were close friends. One of these CDs for $10,000 was purchased in 2000 by documentation bearing Rickert's signature and a $12,000 CD was purchased in 2001 with Rickert's signature on the I.R.S. withholding documentation, but not the account papers;

4. Three CDs totaling $100,009 were established in 2001, 2004 and 2005 as joint accounts owned by Rickert and Taylor. The documentation creating these accounts is not in the record;

5. One $50,000 CD with Rickert and Baker as joint owners was purchased in 2001 by documents signed by Rickert. Documentation relating to a second CD payable on death to Baker indicates only that its value as of Rickert's death was $40,045;

6. One $10,000 CD jointly owned by Rickert and Nancy Wolfe, who, according to Taylor, was another of Rickert's caregivers. This CD was created in 2001 by Taylor using her power of attorney; and7. Two vehicles titled as owned jointly by Rickert and Taylor.

In addition to these assets located at death, Cross identified three CDs totaling $39,000 that apparently matured in 2005 without any record of the use of the proceeds. All of these assets were purchased originally with Rickert's funds, or were renewals of CDs purchased with his funds.

In November 2007, Cross issued a report recommending that the thirteen accounts benefiting Taylor that were created without evidence of Rickert's involvement be placed in the Estate. Cross proposed that the remaining jointly held accounts and pay-on-death accounts be released to their presumptive owners. The report also recommended that the two vehicles be returned to the Estate. Baker requested a trial.

At the trial the Estate successfully invoked the Dead Man Statute, Indiana Code section 34-45-2-4, to exclude any testimony from Taylor. The trial court nonetheless ruled for Taylor on most issues. The trial court relied on the Non-Probate Transfer Act (NPTA), which provides that “[s]ums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created.” I.C. § 32-17-11-18(a). The trial court concluded that “[t]he estate has failed in its burden to show by clear and convincing evidence that Harry L. Rickert intended anything different than the joint ownership or pay on death status of the accounts or certificates of deposits in this matter.” The trial court accepted Cross's recommendation as to the vehicles, which were not “sums remaining on deposit” subject to the NPTA, but ordered that the funds in all accounts and CDs be released to their presumptive owners.

The Estate appealed, and a majority of the Court of Appeals reversed and remanded with directions to apply the common law presumption of undue influence to determine the validity of Taylor's transactions as attorney-in-fact. In re Estate of Rickert, 912 N.E.2d 831, 838 (Ind.Ct.App.2009). Judge Barnes dissented, finding the NPTA placed the burden on the Estate to establish by clear and convincing evidence that Rickert did not intend for Taylor to receive the funds in the joint accounts. Id. at 839. Taylor argued that the trial court erred in excluding her testimony justifying her transactions. She contended that the Estate had waived any objection to her testimony based on the Dead Man's Statute by filing her deposition with Cross's report in the trial court. Id. at 838. The Court of Appeals held that her testimony was properly excluded. Id. We granted transfer.

Standard of Review

This case raises two issues. First, does the NPTA override the common law and statutory presumptions of invalidity of transactions in which a holder of a power of attorney uses that power to benefit the holder? Second, does filing a deposition of a person adverse to an estate constitute use of the person's testimony that waives the estate's Dead Man's Statute objection to the claimant's testifying adversely to the estate? Both issues present questions of law which we review de novo. Smith v. Champion Trucking Co., 925 N.E.2d 362, 364 (Ind.2010).

I. Presumptions As To Joint Accounts Established Through a Power of Attorney

The trial court did apply the common law presumption to order the two vehicles, which were not subject to the NPTA, to be restored to the probate estate, finding the common law presumption of invalidity was not rebutted. The NPTA was deemed conclusive as to the accounts, however. The NPTA states: “Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created.” I.C. § 32-17-11-18(a). It is undisputed that Taylor's name appears as joint owner or pay on death beneficiary for the thirteen accounts at issue. The trial court and the Court of Appeals dissent found this statute controlling and found no clear and convincing evidence that Rickert did not intend to create joint accounts with...