Opinion ID: 2078029
Heading Depth: 2
Heading Rank: 1

Heading: Effect of Sale of Specifically Devised Property by Attorney-in-Fact if Mary was Incompetent at Time of Sale.

Text: If Mary was incompetent at the time of sale of the duplex, the act would clearly be involuntary as to her. The question then arises whether the rule in Bierstedt should be extended to cases involving the sale of specifically devised property by an attorney-in-fact, In re Estate of Graham, 533 P.2d at 1321, or whether the extension should be rejected. In re Estate of Hegel, 668 N.E.2d at 478; In re Estate of Bauer, 700 N.W.2d at 579. We follow the approach in In re Estate of Graham. It is true, however, that there are some differences between the appointment of a guardian by a court and the selection of an agent with durable power of attorney by a competent testator prior to the onset of any mental infirmity. For example, in the case of the execution of a durable power of attorney, the principal has the power to choose the agent and to approve the scope of the agent's powers. The rationale of Bierstedt, however, is that ademption does not occur when specifically devised property is sold as a result of acts that are involuntary to the testator. The rationale of our cases is that ademption occurs where a testator had knowledge of a transaction involving a specific devise, realizes the effect of the transaction on his or her estate plan, and has an opportunity to revise the will. Where these elements are not present, no ademption occurs. The focus of analysis is on the testator and whether the testator has made a deliberate decision not to revise the will, and not on the nature of the agency causing the involuntary act. Bierstedt, 254 Iowa at 775-76, 119 N.W.2d. at 236-37; Wolfe, 208 N.W.2d at 925. The legal contexts of In re Estate of Hegel and In re Estate of Bauer are distinguishable. In these cases, the legislature had stepped in to amend the probate code to specifically exclude acts of guardians from the rule of ademption. The legislative failure to exclude acts of agents pursuant to durable powers of attorney was found to be significant. The Iowa legislature, however, has not taken action similar to that of the legislatures in Ohio and Nebraska. The Iowa legislature has, of course, enacted Iowa Code section 633.705(1). The district court held that if, in fact. Mary was disabled or incompetent at the time of the sale of the duplex, section 633.705(1) would cause the specific bequest of the duplex to fail as a result of ademption because the act of the attorney-in-fact would have the same force and effect as the act of the testator. We do not agree. Iowa Code section 633.705(1) is a variant of Uniform Power of Attorney Act section 2 (1979), which has been incorporated into the Uniform Probate Code sections 5-01, 5-02 (1997). As indicated above, the purpose of the provision is to change the common law rule that the mental disability of the principal terminated the agency relationship. Gregory S. Alexander, Ademption and the Domain of Formality in Wills Law, 55 Alb. L.Rev. 1067, 1070 (1992). In other words, a purchaser of real estate or other property can be assured clear title when dealing with a duly appointed agent operating pursuant to a valid durable power of attorney. Our view that section 633.705(1) does not determine whether ademption occurs when property is sold by an agent acting pursuant to a durable power of attorney is supported by the language of the statute. Under section 633.705(1), acts of the agent are binding on third persons, including heirs. Here, the agent has not acted to cause an ademption, but only to cause the sale of property. This actnamely the sale of the propertyis indeed binding on third parties, including heirs. The statute, however, is silent on the issue of who is entitled to the proceeds of the sale where the principal has made a specific bequest in a will and where identifiable proceeds are found in the estate.