Self-Dealing By A Fiduciary Creates A Presumption that the Action is Invalid, and An Attorney-In-Fact Is Obligated to Demonstrate the Fairness of His or Her Conduct

Mar 1, 2013

Castro v. Castro, 8th Dist. App. No. 98710, 2013 Ohio 1347. Decedent's son, and executor of decedent's estate, filed a claim for concealment of assets against his brother and co-beneficiary of decedent's estate alleging that during decedent's lifetime, brother had fraudulently misappropriated assets belonging to decedent. Executor's brother claimed that his use of Decedent's assets was pursuant to a financial power of attorney, and had been at decedent's request and authorization. At a hearing, evidence was presented that the executor's brother had become joint owners with rights of survivorship on all of Decedent's accounts, including one account which was payable on death to the executor and that a majority of the funds in all of the accounts had been spent, transferred to the brother's personal bank accounts or was unaccounted for. Brother testified that he did not contribute any funds to the decedent's bank accounts, of which he was a joint owner. Further, there was no evidence presented to support the brother's claim that he had been named as decedent's power of attorney. The trial court dismissed the estate's claim for concealment of assets finding that there was evidence to support the claim for concealment or that decedent was incompetent or suffered from undue influence.

On appeal, the executor argued that the brother failed to rebut the presumption of undue influence that arose due to brother's fiduciary relationship with decedent. The appellate court reversed the trial court's dismissal because the trial court failed to place the appropriate burden on the brother, who was in a fiduciary relationship with decedent, to prove that the financial transactions engaged in were not the product of undue influence or lack of capacity.