Daughters Not Required To File Claims In Father's Estate Against Brother On Account Of Brother And His Wife's Pre-Death Transfer To Selves And Their Children Of Father's Assets But May Bring Independent Action Against Brother And His Wife
01/10/08
Over period of years, brother and his wife transferred all of father’s assets to selves and their children. After father’s death, sisters filed non-probate court action seeking a constructive trust and accounting against brother for transferred assets. Although sisters’ claim could be asserted in the probate court, for example through a discovery of assets action, “the inherent jurisdiction of our circuit courts to establish, declare and enforce trusts may cetainly not be foreclosed by probate jurisdiction or proceedings.” Missouri precedent clearly establishes that circuit courts have concurrent jurisdiction with the probate courts over actions in equity to determine the ownership of assets. When a trial court does not otherwise have equitable jurisdiction, the claimant must prove the existence of a fiduciary relationship and the inadequacy of legal remedies for an award of an equitable accounting. However, a trial court may award an equitable accounting in conjunction with the establishment of a construct trust. It does not matter that only brother’s wife improperly utilized father’s power of attorney to transfer assets, where brother assisted his wife in her duties as attorney in fact for father and also helped father with his personal and financial affairs and assets. Brother had a confidential and fiduciary relationship with father sufficient to justify joint and several liability with brother’s wife for breach of fiduciary duties and imposition of constructive trust and accounting. In order to enforce a constructive trust or lien upon property in the wrongdoer’s possession, the wrongfully appropriated funds must be traced into specifically identified property to the res upon which the trust may be attached. The constructive trustee is personally liable only for the value of the property traced into his possession. The beneficiary is entitled to enforce the construct trust either for his proportionate share of the trust property, or as an equitable lien for the value of the traced property. The award of pre-judgment interest in an equitable accounting is completely discretionary with the trial court to compensate for the use or loss of the use of money to the person entitled to it. In order to receive an award of attorneys’ fees under RSMO 404.717.5, daughters were required to prove that brother’s wife acted “in bad faith, fraudulently or otherwise dishonestly.” Finding that brother’s wife violated the “prudent person” standard in making gifts to self and her children supports a finding that brother’s wife acted fraudulently so as to support an award of attorneys’ fees. Taylor-McDonald v. Taylor, Docket No. 28088 (Mo.App.E.D. 1/10/08)
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