               In the Missouri Court of Appeals
                                   Western District

In the Estate of MARTHA LUTISHA            )
QUALLS;                                    )
DEBRA M. KIRCHHOF,                         )
                           Appellant,      )           WD76962
v.                                         )
                                           )           FILED: July 29, 2014
BONNIE WILLIAMS,                           )
                               Respondent. )

    APPEAL FROM THE CIRCUIT COURT OF CALLAWAY COUNTY
             THE HONORABLE CAROL A. ENGLAND, JUDGE

         BEFORE DIVISION ONE: MARK D. PFEIFFER, PRESIDING JUDGE,
          LISA WHITE HARDWICK AND KAREN KING MITCHELL, JUDGES
      Debra Kirchhof appeals from a probate order that reversed her deposit of funds,

as attorney-in-fact for the decedent, into a bank account on which Kirchhof herself was

listed as a pay-on-death beneficiary. The circuit court found that Kirchhof exceeded her

authority as attorney-in-fact by depositing the funds into the account. For reasons

explained herein, we affirm.

                          FACTUAL AND PROCEDURAL HISTORY

      On December 6, 2006, Martha Lutisha Qualls (the "decedent") executed a Last

Will and Testament, naming her son, John Qualls, her stepdaughter, Bonnie Williams,

and her step-granddaughter, Debra Kirchhof, as the equal beneficiaries of: "[A]ll of my

estate, whether real, personal or mixed, wheresoever situated which I may own at the
time of my death." Additionally, in the Will, the decedent named Qualls and Kirchhof as

co-personal representatives of her estate.

      On December 6, 2006, the decedent also executed a Durable Power of Attorney

(POA), naming Kirchhof as her attorney-in-fact. The POA included a provision

authorizing Kirchhof:

      [T]o make gifts or transfers in my name out of my property and assets to
      such recipients as her sole discretion may seem appropriate and proper . .
      . . Said attorney-in-fact, may herself be a recipient of such gifts. If I have a
      current Will, the terms thereof shall be respected as to gifts by my said
      attorney."

      On March 24, 2007, at the instruction of decedent, Callaway Bank amended the

signature card for a checking account that decedent opened in 1966 (the "Callaway

Account"). The amended signature card named Kirchhof as an authorized signatory,

and named Kirchhof and Qualls as pay-on-death beneficiaries, each to share fifty

percent of the funds in the Callaway Account upon the death of the decedent.

      On August 23, 2009, Kirchhof, acting as attorney-in-fact, sold the decedent's

home, acreage, and household contents at auction. The net proceeds from the auction

were $80,240.00 — $5,395.00 from the household contents and $74,845.00 from the

home and acreage. Kirchhof deposited the $80,240.00 into the Callaway Account.

Kirchhof testified that her deposit of the proceeds into the Callaway Account was not at

the direction of the decedent. Some of the funds in the bank account were used for

decedent's living expenses. However, there was no evidence that the sale of the

decedent's property was necessary to cover those expenses.

      The decedent died on February 23, 2010, at the age of 93. In accordance with

the pay-on-death beneficiary designation for the Callaway Account, Callaway Bank paid


                                             2
the balance of the account existing at the time of the decedent's death to Kirchhof and

Qualls.

         On April 27, 2010, in the Circuit Court of Callaway County, Kirchhof filed a Small-

Estate Affidavit,1 asserting that the value of the decedent's estate did not exceed

$40,000 and seeking to establish title in the estate without the granting of letters

testamentary. In the Affidavit, Kirchhof provided the following itemized description and

valuation of the decedent's property at the time of her death:

         D.      [Personal Property]:

                 1.      State Farm Check #114156134D . . . . . . .               $743.03
                 2.      [Life Insurance Check] . . . . . . . . . . . . . . $7,465.95*
                         * - Plus any interest that may accrue
                 3.      REA Patronage Capital . . . . . . . . . . . . . . .      $995.52
                 4.      Fulton Manor Care Center Refund Check . .                $595.73

         E.      Decedent left the following described real estate:               NONE

         F.      Expenses previously allowed and ordered paid . . . .                -0-

         G.      Total value of estate . . . . . . . . . . . . . . . . . . . . $9,800.23


         On February 18, 2011, Williams, believing that the value of decedent's estate

was greater than $40,000, filed her Petition for Order to Direct Application for Letters

Testamentary. In her Petition, Williams asserted that the decedent "possessed property

that should be a part of her estate that had a sum value in excess of Forty Thousand

Dollars." Following a hearing on Williams's Petition, the circuit court found that Kirchhof

exceeded her authority as attorney-in-fact in depositing the auction proceeds in the

Callaway Account, of which Kirchhof herself was a pay-on-death beneficiary. The court


1
    § 473.097.

                                                      3
concluded: "A reversal of the deposit of funds into the account at The Callaway Bank

from the sales proceeds of the house and acreage and household contents is now

required. Such funds become a part of the estate of the Decedent Martha Lutisha

Qualls subject to probate administration." The court directed "DEBRA KIRCHHOF TO

DEPOSIT 1/3 OF ESTATE VALUE ($73,093.28) WITH THE COURT UNTIL APPEAL IS

RESOLVED OR GET BOND TO COVER FULL VALUE OF THE ESTATE."2

        Finding that the decedent's probate estate consisted of more than $40,000.00,

the circuit court held that the Small Estate procedures, Section 473.097,3 were no

longer applicable and ordered Kirchhof and Qualls, as the co-personal representatives

of the decedent's estate, to apply for letters testamentary or otherwise indicate a

renunciation to serve as a personal representative.

        Qualls and Kirchhof both applied for letters testamentary, and on June 29, 2012,

the circuit court issued letters testamentary to Qualls. On September 20, 2013, Qualls

filed an Inventory and Final Settlement of the decedent's estate, indicating that the

estate's only asset was $24,364.43 that had been deposited in the court registry.

Although not clearly established in the record, it is presumed that the $24,364.43 —

equaling a third of $73,093.28 — was the deposit Kirchhof made to the court per its

2011 directive. On October 22, 2013, the circuit court approved the Final Settlement

and ordered the balance of the settlement to be distributed to Williams. Kirchoff

appeals.


2
 There is nothing in the record to explain the court's conclusion that the value of the decedent's estate
was $73,093.28. However, during oral argument on appeal, counsel for both parties agreed that this
amount was the cash balance of the Calloway Account at the time of the decedent’s death.
3
 All statutory references are to the Revised Statutes of Missouri 2000, as updated by the Cumulative
Supplement 2013, unless otherwise indicated.


                                                     4
                                   STANDARD OF REVIEW

       We review this court-tried case under the standard articulated in Murphy v.

Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will affirm the judgment unless there

is no substantial evidence to support it, it is against the weight of the evidence, or it

erroneously declares or applies the law. Id. We review the evidence in a light most

favorable to the judgment, accept it as true, and disregard any contradictory evidence.

Murphy v. Holman, 289 S.W.3d 234, 237 (Mo. App. 2009). We also defer to the trial

court's determination of the weight to be given the evidence and to the credibility of the

witnesses. Id.

                                 ANALYSIS

       In her sole point on appeal, Kirchhof contends the circuit court erred in "ordering

funds, paid to attorney-in-fact Debra Kirchhof via a pay-on-death designation, be turned

over to . . . the Estate of Martha Qualls." In ordering the funds to be turned over to the

decedent's estate, the circuit court found that Kirchhof exceeded her authority as

attorney-in-fact in depositing the auction proceeds in the Callaway Account.

       A person who is appointed an attorney in fact under a power of attorney . .
       . who undertakes to exercise the authority conferred in the power of
       attorney, has a fiduciary obligation to exercise the powers conferred in the
       best interests of the principal, and to avoid self-dealing and conflicts of
       interest . . . and in the absence of explicit authorization, the attorney in fact
       shall exercise a high degree of care in maintaining, without modification,
       any estate plan which the principal may have in place . . . .

§ 404.714.1. Section 404.710.6(3) states that, in order for an attorney-in-fact to "make

or revoke a gift of the principal's property in trust or otherwise," the power of attorney

must "expressly authorize[ ]" such action. In Estate of Herbert, 152 S.W.3d 340 (Mo.

App. 2004), this Court reviewed case law interpreting Section 404.710.6(3) and held:

                                              5
"[W]e read [the relevant case law] as standing for the proposition that, pursuant to §

404.710.6(3) of the POA Act, an attorney in fact is prohibited from making a gift of the

principal's property to himself, unless he is expressly authorized to do so in the POA."

Id. at 353.

       "In Estate of Herbert, the attorney-in-fact used a power of attorney to deposit

proceeds from the sale of the principal's property into a joint account that was titled in

the names of the principal and the attorney-in-fact." Antrim v. Wolken, 228 S.W.3d 50,

53 (Mo. App. 2007). There, this Court held that the sale proceeds were wrongfully

converted and belonged to the estate because the power of attorney did not expressly

authorize the attorney-in-fact to make gifts to himself. Estate of Herbert, 152 S.W.3d at

353.

       In reaching its decision, this Court noted that there is "[s]trong public policy" for

requiring express authorization from a principal for the attorney-in-fact to make a gift to

himself of the principal's property:

       "It is for the common security of mankind . . . that gifts procured by agents
       . . . from their principals, should be scrutinized with a close and vigilant
       suspicion." Without a limitation on an attorney in fact's power to make
       gifts to himself of the principal's property, the potential for abuse would be
       great. Without the limitation of § 404.710.6(3), an attorney in fact, if so
       inclined, would be allowed to make an unauthorized gift, based upon
       claimed oral authorization of the principal, and the only person who could
       refute the claim would be dead.

Id. at 353 (alterations in original) (citation omitted) (quoting Fender v. Fender, 329

S.E.2d 430, 431 (S.C. 1985)).

       Kirchhof argues that the rule articulated in Estate of Herbert does not apply here

because, unlike the attorney-in-fact in Estate of Herbert, she did not acquire an


                                              6
ownership interest in the auction proceeds when she deposited them in the Callaway

Account.     More simply, Kirchhof suggests that she did not make a gift to herself

because she was only a pay-on-death beneficiary of the Callaway Account, not an

owner.

         This Court has previously addressed and rejected the exact argument advanced

by Kirchhof. In Antrim, the attorney-in-fact used a power of attorney to name herself as

a transfer-on-death beneficiary of the principal's assets.

         [There, the attorney-in-fact] urge[d] this court to decline to follow . . .
         Estate of Herbert, because the TOD designations were contingent and
         uncertain and, therefore, d[id] not constitute gifts. More specifically, [the
         attorney-in-fact] assert[ed] that, when she made the TOD designations,
         she never named herself as the owner or took possession of the assets.

228 S.W.3d at 53. In rejecting the attorney-in-fact's argument, this Court explained that,

"[w]hether or not the change in the designation of [the principal's] assets is properly

characterized as a gift, it is clear that [the attorney-in-fact] profited from designating

herself as the TOD beneficiary of [the principal's] assets" and, thus, the attorney-in-

fact's TOD designations triggered "the same policy concerns that underlie the

requirements for express authorization articulated in . . . Estate of Herbert." Id. at 54.

         Likewise, here, although Kirchhof did not acquire any ownership interest in the

auction proceeds when she deposited the funds in the Callaway Account, she profited

from depositing the $80,240.00 into that account. Kirchhof stood to gain financially as a

result of the deposit, 4 and the ultimate effect of the deposit was to increase the amount

of Kirchhof's inheritance. See Id. ("'A fiduciary's acquisition of a right of survivorship in

4
  Kirchhof argues she was unaware that she was a pay-on-death beneficiary of the Callaway Account at
the time she deposited the auction proceeds. Yet, the probate court found that Kirchhof had constructive
knowledge of her beneficiary status because she signed the account's amended signature card
designating her as a beneficiary.

                                                   7
property, even absent a present possessory interest, is generally sufficient to establish

that a fiduciary has profited from a transaction." (quoting Crosby v. Luehrs, 669 N.W.2d

635, 645 (Neb. 2003))); see also In re state of Lambur, 397 S.W.3d 54, 63 (Mo. App.

2013) ("[A] deposit of a principal's proceeds into a joint bank account in which the

attorney-in-fact had a right of survivorship is a gift to the attorney-in-fact."). Accordingly,

for purposes of Section 404.710.6(3), by depositing the auction proceeds into an

account for which she was a pay-on-death beneficiary, Kirchhof gave a gift of the

decedent's property to herself. Thus, the next question we must answer is whether the

POA expressly authorized Kirchhof to do so.

       The POA the decedent executed stated:

       So long as the said DEBRA M KIRCHHOF, is personally acting as
       attorney hereunder, she is authorized to make gifts or transfers in my
       name out of my property and assets to such recipients as her sole
       discretion may seem appropriate and proper . . . . Said attorney-in-fact,
       may herself be a recipient as to gifts by my said attorney. If I have a
       current Will, the terms thereof shall be respected as to gifts by my said
       attorney.

(Emphasis added). The POA expressly authorized Kirchhof, as attorney-in-fact, to gift

the decedent's property to herself, so long as the gift respected the terms of the

decedent's Will. The circuit court found that Kirchhof's depositing of the auction

proceeds into the Callaway Account did not respect the provision of the decedent's Will

directing "all of [her] estate, whether real, personal or mixed, wheresoever situated

which [she] may own at the time of [her] death" to "be divided into three equal shares

and distributed" among Kirchhof, Qualls, and Williams.

       We find that there is substantial evidence to support the circuit court's

determination that Kirchhof exceeded her authority as attorney-in-fact in depositing the

                                               8
auction proceeds in the Callaway Account. "[W]hile a will speaks from the death of the

testator . . . when it is to be construed for the purpose of ascertaining the testator's

intention, the court should consider his situation and the circumstances surrounding

testator at the time of the execution of the will." Shackelford v. Fifer, 269 S.W.2d 30, 33

(Mo. 1954). Here, at the time the decedent executed her Will, she owned real and

personal property to pass under the general devise of her Will — which, in pertinent

part, granted Williams a one-third interest in the decedent's entire estate. After Kirchhof

held the auction, the decedent did not own any real property and had only a few items

of personal property. Kirchhof deposited the auction proceeds into the Calloway

Account, on which she was listed as a beneficiary entitled to fifty percent of the account

funds upon the decedent's death. By depositing the proceeds into the Callaway

Account, Kirchoff dramatically decreased Williams's inheritance under the Will and

frustrated the decedent's intent to have the bulk of her estate distributed in three equal

shares among Kirchoff, Qualls, and Williams. Accordingly, the circuit court did not err in

ordering the auction proceeds to be turned over to the decedent's estate. Point denied.



                                        CONCLUSION

       The judgment of the circuit court is affirmed.


                                               ___________________________________
                                               LISA WHITE HARDWICK, JUDGE


ALL CONCUR.




                                              9
