October 20 2009
DA 08-0568
IN THE SUPREME COURT OF THE STATE OF MONTANA
2009 MT 344
IN THE MATTER OF THE GUARDIANSHIP
AND CONSERVATORSHIP OF
LUCILLE ANDERSON.
An Incapacitated Person.
APPEAL FROM: District Court of the Ninth Judicial District,
In and For the County of Glacier, Cause No. DG 07-02
Honorable Laurie McKinnon, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Jeffrey G. Winter; Hartelius, Durocher & Winter, P.C.; Great Falls,
Montana
For Appellee:
Patrick Watt, Warren C. Wenz; Jardine, Stephenson, Blewett & Weaver,
P.C.; Great Falls, Montana (Attorneys for Appellee, Conservator T. Kai
Lee, n/k/a T. Kai Groenke)
Louis C. Villemez; Villemez Law Office, PLLC; Cut Bank, Montana
(Court-appointed Attorney for Lucille Anderson)
Merle J. Raph; Special Deputy Glacier County Attorney; Shelby, Montana
Submitted on Briefs: June 17, 2009
Decided: October 20, 2009
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 The Ninth Judicial District Court, Glacier County, without notice or hearing,
removed Laurie Wilder (Wilder) as a transfer on death (TOD) beneficiary of an
investment account upon the request of the conservator for Lucille Anderson, a protected
person. Upon learning of the District Court’s action, Wilder filed a Rule 60(b)(4) motion
for relief from the order. The District Court did not rule on the motion and it was denied
by operation of law. Wilder appeals and we affirm.
¶2 We consider the following issue: Did the District Court err by failing to provide
notice to Wilder, an assertedly “interested person,” and conduct a hearing on the
conservator’s request to remove Wilder as a TOD beneficiary on the protected person’s
investment account?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 On August 28, 2007, the Montana Department of Public Health and Human
Services (DPHHS), Adult Protective Services, received a referral concerning
101-year-old Lucille Anderson (Lucille). The referral alleged undue influence and
financial exploitation by Wilder, Lucille’s second cousin and caretaker. An investigation
by DPHHS revealed questionable financial transactions, and on September 19, 2007, the
District Court approved the commencement of guardianship and conservatorship
proceedings, appointing DPHHS as temporary guardian and T. Kai Lee (Lee) as
temporary conservator for Lucille. The District Court also appointed attorney Louis
Villemez (Villemez) to represent Lucille in the guardianship and conservatorship
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proceedings. On November 7, 2007, the District Court dismissed the guardianship as no
longer necessary, but continued the conservatorship, issuing Letters of Conservatorship to
Lee.
¶4 The District Court set a hearing for December 5, 2007, to receive an initial
accounting of the conservatorship and Lee’s conservatorship report. Neither Wilder nor
her attorney was provided notice of the hearing. Villemez and Lee were the only persons
present at the hearing. Lee presented her report to the District Court, detailing
questionable transfers from Lucille’s accounts to Wilder and the naming of Wilder as the
TOD beneficiary on Lucille’s Edward Jones & Co. investment account. The report stated
that, in the spring of 2007, Wilder had transported Lucille to an Edwards Jones office to
name Wilder as the beneficiary on Lucille’s account. The broker related to Lee that
Lucille appeared to be under some duress, and that Lucille had expressed concern that
Wilder would be upset if she did not designate her as beneficiary on the account.
¶5 Lee and Villemez advised the District Court that Lucille desired to remove Wilder
as the TOD beneficiary of her Edward Jones account, but that Edward Jones had asked
for a court order to effectuate the change. Both Lee and Villemez requested the District
Court issue an order removing Wilder as the TOD beneficiary of the investment account.
The District Court was reluctant, asking “isn’t it very similar to an issue regarding a will,
whether she had the competency to make a declaration by naming Laurie Wilder as a
beneficiary, and don’t I need to have a hearing on that? . . . I mean, I don’t have a
problem staying it until we have a hearing.” In response, Lee stated:
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[A]s full Conservator, I have the powers to do exactly what Lucille would
have done. I have control over her finances with or without her consent. I
don’t need to act in any way, as long as I’m acting in her best interests; and
the only reason I’m asking for the court order is because Edward Jones
requested it. They will not change the transfer on death beneficiary
designation without a court order. I don’t think you need to make any
findings regarding her capacity. It’s my understanding, from reading the
conservatorship statutes, that I don’t even need to ask for permission to
change her accounts. I doubt I could change her Will at this point, but I can
change her accounts.
¶6 Lee and Villemez persuaded the District Court and, on December 7, 2007, without
notice or hearing on that issue, the court entered an order removing Wilder as the TOD
beneficiary of Lucille’s investment accounts. Lucille died on March 8, 2008.
¶7 On September 2, 2008, Wilder filed a motion under Rule 60(b)(4), M. R. Civ. P.,
seeking relief from the order, on the ground that the District Court did not provide her
notice as an “interested person” or hold a hearing. The motion was not ruled upon within
60 days and was therefore deemed denied. Rule 60(c), M. R. Civ. P. Wilder appeals.
Lucille’s Conservatorship remains open, pending this appeal.
STANDARD OF REVIEW
¶8 The standard of review of a district court’s ruling on a motion pursuant to M. R.
Civ. P. 60(b) depends on the nature of the final judgment, order, or proceeding from
which relief is sought and the specific basis of the Rule 60(b) motion. Essex Ins. Co. v.
Moose’s Saloon, Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d 451 (citing In re
Marriage of Barnes, 251 Mont. 334, 336, 825 P.2d 201, 203 (1992)). We generally
review a district court’s ruling for abuse of discretion. Essex, ¶ 16; see Heller v.
Gremaux, 2002 MT 199, ¶ 7, 311 Mont. 178, 53 P.3d 1259; Hall v. Heckerman, 2000
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MT 300, ¶ 12, 302 Mont. 345, 15 P.3d 869. However, where the movant seeks relief
under Rule 60(b)(4), on the ground that the judgment is void, we review the district
court’s ruling de novo, as the determination that a judgment is or is not void is a
conclusion of law. Essex, ¶ 16 (citing Export Group v. Reef Indus., Inc., 54 F.3d 1466,
1469 (9th Cir. 1995) (“We review de novo . . . a district court’s ruling upon a Rule
60(b)(4) motion to set aside a judgment as void, because the question of the validity of a
judgment is a legal one.”)); see Hicklin v. CSC Logic, Inc., 283 Mont. 298, 301, 940 P.2d
447, 449 (1997).
DISCUSSION
¶9 Did the District Court err by failing to provide notice to Wilder, an assertedly
“interested person,” and conduct a hearing on the conservator’s request to remove
Wilder as a TOD beneficiary on the protected person’s investment account?
¶10 Wilder contends that the District Court erred in removing her as the TOD
beneficiary of Lucille’s Edward Jones investment account because neither the District
Court nor Lucille’s conservator possessed the authority to remove her as a TOD
beneficiary, and Wilder was not provided notice as an “interested person.” We begin
with the authority of the conservator and the district court.
¶11 A conservatorship may be established when a person is “unable to manage his
property and affairs effectively for reasons such as mental illness, mental deficiency,
physical illness or disability, [or] advanced age,” or if property “will be wasted or
dissipated unless proper management is provided . . . .” Section 72-5-409(2)(a) and (b),
MCA (2005); In re Estate of Clark, 237 Mont. 179, 183, 772 P.2d 299, 301 (1989).
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¶12 Section 72-5-421(5), MCA, provides that, “[a]n order . . . determining that a basis
for appointment of a conservator or other protective order exists, has no effect on the
capacity of the protected person.” Applying the statute, this Court has held that
appointment of a conservator to protect an individual’s property does not equate to an
adjudication of incompetency. Stave v. Estate of Rutledge, 2005 MT 332, ¶ 19, 330
Mont. 28, 127 P.3d 365 (“[T]he fact that a conservator has been appointed does not mean
that a protected person lacks the capacity to make certain decisions, including executing a
will.” (citing In re Estate of West, 269 Mont. 83, 95, 887 P.2d 222, 229 (1994); In re
Estate of Prescott, 2000 MT 200, ¶ 47, 300 Mont. 469, 8 P.3d 88; § 72-5-421(5), MCA)).
¶13 Because the appointment of a conservatorship does not declare that a protected
person is incompetent, the protected person may, if otherwise able, make testamentary
dispositions, including removing or changing beneficiaries to insurance policies, as well
as annuity and investment accounts. See In re Estate of Oliver, 934 P.2d 144, 148 (Kan.
1997) (conservatee’s changes to payable on death certificates of deposit valid); Campbell
v. Black, 844 P.2d 759, 762 (Kan. 1993) (“The authority of a conservatee to make
testamentary dispositions includes the authority to change POD beneficiaries.” (citing
Union Natl. Bank of Wichita v. Mayberry, 533 P.2d 1303, 1307 (Kan. 1975))).
¶14 During these proceedings, Lucille was not adjudged to be incompetent, and her
guardianship proceeding was dismissed. The order appointing a conservator for Lucille
did not itself prohibit her from making testamentary dispositions, including changing the
TOD beneficiary designation of her Edward Jones account, without a court order, if she
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was able to do so. It was likewise permissible, as Lee argues, for Lucille to enlist the aid
of her attorney in accomplishing this objective. However, when Lucille and her attorney
were unable to accomplish the task, they turned for assistance to the Conservator and the
District Court, who could act with regard to Lucille’s estate only in the manner
authorized by statute.
¶15 The conservator is a fiduciary, § 72-5-423, MCA, and her duties and powers are
enumerated at § 72-5-427, MCA, et seq. The statutes authorize a conservator to act
without court approval in various ways, including collecting, holding and retaining estate
assets, receiving additions to the estate, making ordinary or extraordinary repairs to
property, or entering into leases. Section 72-5-427(3)(a)-(y), MCA. The conservator
“must administer the estate as would the court if administering it directly, that is, for the
benefit of the protected person.” Clark, 237 Mont. at 183, 772 P.2d at 302. However, a
conservator’s authority is not unlimited. It is circumscribed by the statutory provisions
requiring certain transactions on behalf of the protected person, or conservatee, to be
approved by the court. Before the District Court, Conservator Lee contended that she had
“control over [the conservatee’s] finances with or without her consent [and can] change
her accounts.” As explained below, this assessment was overbroad. Lee did not possess
the statutory authority to unilaterally change the TOD beneficiary on Lucille’s investment
account. Court approval was required.
¶16 District courts are vested with broad management powers over a conservatorship,
possessing “all the powers over [the person’s] estate and affairs which he could exercise
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if present and not under disability, except the power to make a will.” Section 72-5-
421(3), MCA. More specifically, the statute also provides that “[t]hese powers include
but are not limited to [the] power to: . . . (g) exercise [the person’s] rights to elect options
and change beneficiaries under insurance and annuity policies.” Section 72-5-421(3)(g),
MCA (emphasis added). This provision provides examples of the district court’s powers
in a conservatorship, and by the but “not limited to” language, indicates this list of
powers is not exhaustive or limited to those which are expressly enumerated. We see no
substantive distinction between changing a beneficiary designation under a conservatee’s
insurance policy, as enumerated in the statute, and changing a TOD beneficiary under an
investment account, such as at issue here. Given the statute’s contemplation of additional
powers of the district court, and the similar function at issue, the District Court possessed
the power to remove or change the beneficiary designation under Lucille’s investment
account.
¶17 As other courts have explained, intervention by the court is required to change a
conservatee’s beneficiary designation because the “conservator is not the alter ego of the
conservatee and the decision to . . . change a beneficiary is a purely personal elective
right of the conservatee.” In re Estate of Briley, 825 P.2d 1181, 1184 (Kan. 1992)
(collecting cases); Mayberry, 533 P.2d at 1308 (“the right to change the beneficiary in a
life insurance policy owned by the ward remains a personal right of the insured over
which the guardian has no power”); Citizens St. Bank & Trust Co. of Hiawatha v. Nolte,
601 P.2d 1110, 1114 (Kan. 1979) (“It is not [the conservator’s] function, nor that of the
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probate court supervising the conservatorship, to control disposition of the conservatee’s
property after death.”).
¶18 However, to enter such an order, a district court must follow the statutory
procedures which govern the exercise of this power. A district court may “change
beneficiaries under insurance and annuity policies, only if satisfied, after notice and
hearing, that it is in the best interests of the protected person and that [the protected
person] either is incapable of consenting or has consented to the proposed exercise of
power.” Section 72-5-421(4), MCA (emphasis added). The District Court was thus
required to hold a hearing and determine whether such a change in the TOD beneficiary
was in Lucille’s best interest, and whether Lucille was incapable of consenting or had
consented to the proposed exercise of power. Section 72-5-422(4), MCA; see In re
Estate of Leone, 860 P.2d 973, 977 (Utah 1993) (“Thus, under [the statute], the court may
change a protected person’s life insurance beneficiaries after the court holds a hearing to
determine the best interests of the protected person.”); Grahl v. Davis, 971 S.W.2d 373,
378 (Tenn. 1998) (“[T]he conservator must petition the court, and the court, on behalf of
the conservatee, can exercise such an election if it is clearly proven to be in the best
interests of the conservatee.” (citations omitted)).
¶19 Here, the District Court did not conduct a hearing to determine whether the
beneficiary change to Lucille’s investment account was in her best interests, and whether
she had consented to the change or was incapable of consenting. It may well be, as Lee
argues, that the beneficiary change was what Lucille desired, that she was capable of
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consenting to the change, and that it was in her best interest. However, no evidence was
presented, and the District Court entered no factual findings to that effect. 1
¶20 Whether this error by the District Court requires reversal depends upon whether
Appellant Wilder was prejudiced or harmed by it. This leads to her argument that, as a
TOD beneficiary, she was an “interested person” who was entitled to notice of a hearing
to consider removing her as beneficiary. Because the statute required the District Court
to hold a hearing and provide notice to “interested persons,” we must determine whether
Wilder, as a TOD beneficiary of Lucille’s investment account, was an “interested person”
as defined under § 72-1-103(25), MCA, who was entitled to notice of the proceeding
under §§ 72-1-301, 72-5-403(2), or 72-5-404, MCA, the probate and conservatorship
notice provisions.
¶21 By these statutes, notice must be given to any “interested person” of a hearing
regarding the protected person, as well as to any “interested person” who has specifically
requested notice. Sections 72-1-3012, 72-5-403(2)3, and 72-5-4044, MCA. In turn,
1
Although a “hearing” was held in which Lee and Villemez conferred with the court, it was not
an evidentiary hearing necessary to establish the court’s authority to act for this purpose.
2
Section 72-1-301(1), MCA, provides that “notice of a hearing on any petition is required and
[shall] be given to any interested person or his attorney if he has appeared by attorney or
requested that notice be sent to his attorney.” (Emphasis added.)
3
Regarding notice during conservatorship proceedings, § 72-5-403(2), MCA, provides that
“[n]otice . . . of any subsequent hearing must be given to any person who has filed a request for
notice under 72-5-404 and to interested persons and other persons as the court may direct.”
(Emphasis added.)
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The conservatorship statutes further provide an additional notice provision at § 72-5-404(1),
MCA, permitting “[a]ny interested person who desires to be notified before any order is made in
a protective proceeding [to] file with the clerk a request for notice . . . .”
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“interested person” is defined by § 72-1-103(25), MCA, to include “heirs, devisees,
children, spouses, creditors, beneficiaries, and any others having a property right in or
claim against a trust estate or the estate of a decedent, ward, or protected person.”
¶22 We previously interpreted this statutory definition of “interested person” in In re
Estate of Miles v. Miles, 2000 MT 41, 298 Mont. 312, 994 P.2d 1139. We concluded that
“the correct interpretation of the statute is that heirs, devisees, children, spouses,
creditors, beneficiaries, and any others, each have to have a property right in or claim
against the estate to be considered ‘interested persons.’” Miles, ¶ 46 (emphasis added).
In Miles, the decedent’s children, denominated “Heirs,” were entitled to half of all
insurance proceeds by virtue of a provision in the decedent’s will. The decedent also
owned an annuity contract which terminated on the decedent’s death and paid out any
remaining funds to his estate. Upon the decedent’s death, the Heirs claimed they were
likewise entitled to half of the annuity contract, given its similarity to insurance proceeds.
After concluding that an annuity contract could not be considered insurance proceeds for
this purpose, we further concluded that the Heirs had “no property right in or claim
against the estate, thus they [were] not interested persons” under § 72-1-103(25), MCA,
and accordingly had no standing to challenge the estate’s administration. Miles, ¶¶ 8-14,
41-46. In so holding, we rejected the Heirs’ assertion that the statutory language—“and
any others having a property right [] or claim”—meant that the others listed in the
statutory definition of “interested person,” such as “devisees, children, spouses, creditors
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and beneficiaries,” did not need to have a property right in order to be an “interested
person” under the statute. Miles, ¶ 44-46.
¶23 Miles thus makes clear that the beneficiary must have “a property right in or claim
against” the estate to qualify as an “interested person.” As we have previously explained,
an “on death” designation in either POD or TOD form does not create a present property
right or interest in the designated beneficiary until the account owner is deceased:
A P.O.D. designation provides that the beneficiary receives an interest in
the CD only at the death of the depositor. See Official Comments to §§ 72-
6-211 and 213, MCA, Annotations. The P.O.D. certificate of deposit is
akin to an insurance policy – the proceeds cannot be claimed by the
beneficiary until death. At any time before the depositor’s death, the
depositor can change the beneficiary or withdraw the account and use the
funds. However, the P.O.D. beneficiary has no such right. See Official
Comments to §§ 72-6-211 and 213, MCA, Annotations. Therefore, a
P.O.D. designation does not entitle the beneficiary to a present interest in
the CDs . . . .
In re Estate of Lahren, 268 Mont. 284, 288, 886 P.2d 412, 414 (1994) (emphasis in
original). Section 72-6-306, MCA, provides that “[t]he designation of a TOD beneficiary
on a registration in beneficiary form has no effect on ownership until the owner’s death.”
(Emphasis added.) A beneficiary designation “may be canceled or changed at any time”
by the owner. Section 72-6-306, MCA. The California Supreme Court has explained
that “[t]he interest of a beneficiary designated by an insured who has the right to change
the beneficiary is, like that of a legatee under a will, a mere expectancy of a gift at the
time of the insured’s death.” Grimm v. Grimm, 157 P.2d 841, 842-43 (Cal. 1945)
(citations omitted); see Feely v. Lacey, 133 Mont. 283, 297, 322 P.2d 1104, 1111 (1958)
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(where the owner has the right to change the beneficiary, the beneficiary has a mere
expectancy).
¶24 The statute at issue here may be contrasted with § 72-1-103(3)(a), MCA, wherein
the Legislature provided that a trust beneficiary includes those who have “any present or
future interest, vested or contingent.” The Legislature thus accorded “interested person”
status to beneficiaries of a trust who only possess a future or contingent interest, or those
whose rights have not yet vested. See also Mayer v. M.S. Bailey & Son, 555 S.E.2d 406,
409 (S.C. 2001) (interpreting the Probate Code to afford “contingent remaindermen
standing to pursue actions involving ‘alleged misconduct of a fiduciary, in connection
with the creation, administration and depletion of trusts,’” (citations omitted)). The
Legislature did not accord such status to beneficiaries of a POD or TOD account which is
not part of a trust.
¶25 Thus, Wilder did not qualify as an “interested person” under § 72-1-103(25),
MCA, for purposes of a conservatorship hearing, because she did not possess a present
property right or interest in Lucille’s investment account while Lucille was alive, in
accord with Miles. Neither did she have a “claim” against Lucille’s estate, as she had no
present interest to protect. Wilder would have qualified as an “interested person” under
§ 72-1-103(25), MCA, as a beneficiary of Lucille’s TOD investment account only if she
had possessed a present property right or interest in the account. Because Wilder had no
present property right or interest when Lee sought the District Court’s order to change the
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beneficiary designation on Lucille’s investment account, Wilder was not an “interested
person” entitled to notice.
¶26 Just as Wilder would have had no standing to be heard or to present objections to
her removal as beneficiary if Lucille had changed the investment account on her own,
neither did Wilder have standing to object to Lucille’s conservator’s request that the
District Court order the beneficiary change while Lucille was alive. Miles, ¶¶ 45-47
(because the Heirs had no property right in or claim against the estate, the Heirs were not
“interested persons” and therefore had “no standing”). Wilder had no property interest,
had no claim, was not an “interested person” under the statute, and was not entitled to
notice of the December 5, 2007 hearing. Although Wilder makes a very brief due
process argument, her authorities fail to support her argument because she has established
no property interest mandating constitutional protection. Lucille could have removed
Wilder as the account TOD beneficiary at any time, without notice, and so could the
conservator, upon the court’s approval after a hearing. Thus, Wilder has no standing to
challenge the failure to conduct a proper hearing or to receive notice, and has not
established reversible error.
¶27 Affirmed.
/S/ JIM RICE
We concur:
/S/ MIKE McGRATH
/S/ W. WILLIAM LEAPHART
/S/ PATRICIA O. COTTER
/S/ BRIAN MORRIS
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