[Cite as Webb v. Anderson Children Trust,

.]

IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

KIMBERLY A. WEBB, INDIVIDUALLY : APPEAL NO. C-190600 AND AS BENEFICIARY OF THE TRIAL NO. 2017-00246 BETTY S. ANDERSON CHILDREN TRUST, : O P I N I O N. Plaintiff-Appellant, :

vs. : THE BETTY S. ANDERSON CHILDREN TRUST, :

and : MICHAEL R. WEBB, INDIVIDUALLY AND AS TRUSTEE, :

Defendants-Appellees. :

Appeal From: Hamilton County Court of Common Pleas, Probate Division

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: October 21, 2020

Robbins, Kelly, Patterson & Tucker, LPA, Robert M. Ernst and Jarrod M. Mohler, for Plaintiff-Appellant,

Haas & Haas Law, LLC, and Herbert J. Haas, for Defendants-Appellees. OHIO FIRST DISTRICT COURT OF APPEALS

MYERS, Presiding Judge.

{¶1} Kimberly A. Webb (“Kimberly”) appeals from the trial court’s

judgment in favor of her brother Michael R. Webb (“Michael”), individually and as

trustee of the Betty S. Anderson Children Trust, on her complaint asserting various

claims relating to their mother’s opening a new Individual Retirement Account

(“IRA”) and her designation of Michael as the sole beneficiary of that IRA.

{¶2} Because the trial court correctly determined that Kimberly failed to

prove by clear and convincing evidence that their mother Betty S. Anderson lacked

the mental capacity to enter into the IRA agreement and to designate a beneficiary

on her IRA, we affirm its judgment.

I. Background

{¶3} Several months after Anderson’s death in May 2012, Michael filed an

application in the probate court to relieve Anderson’s estate from administration,

alleging that she died intestate. He subsequently filed an application to admit a lost

will to probate, and the application was granted in August 2013.

{¶4} Under the terms of Anderson’s will, her net estate was to be

distributed in equal one-third shares to Michael, to the Betty S. Anderson Children

Trust, and to the Betty S. Anderson Grandson Trust. Anderson executed the will,

created the trusts, and appointed Michael her attorney-in-fact under a durable power

of attorney on June 25, 2003. She designated Michael as the successor trustee of

both trusts.

{¶5} According to the terms of the Children Trust, the primary beneficiaries

of the trust upon Anderson’s death were Kimberly and Michael. The trust stated that

Anderson’s intention was to create a supplemental needs trust for Kimberly, who was

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a recipient of government benefits, and that the trust property be used to

supplement, not supplant, Kimberly’s government benefits.

{¶6} Under the terms of the Grandson Trust, upon Anderson’s death, the

entire trust estate was to be maintained for the benefit of Kyle M. Webb (“Kyle”),

Anderson’s grandson. The trust would terminate and the balance of the trust estate

would be distributed to Kyle upon his reaching the age of 25.

{¶7} Anderson was the owner of a PaineWebber IRA. Initially, she

designated Kimberly and Michael as 50 percent beneficiaries of the IRA. On June 4,

2003, Anderson changed her beneficiary designation on the IRA so that Michael was

the sole primary beneficiary. On June 26, 2003 (one day after she executed her will

and created the trusts), Anderson again changed the IRA’s beneficiary designation.

This time she designated Michael, the Children Trust, and the Grandson Trust as

primary beneficiaries, each to receive 33 1/3 percent.

{¶8} When Anderson’s financial advisor left UBS PaineWebber and joined

the Stanford Financial Group, Anderson transferred her IRA to Stanford Financial

Group. The beneficiary designation on the account remained unchanged. In early

2009, Anderson learned that Stanford Financial Group was suffering financial

difficulties. Michael suggested moving the account to UBS and using his friend

Stephen Lee as her financial advisor.

{¶9} Anderson contacted Lee by phone about transferring her IRA. She

then met with Lee in person, by herself. Lee believes they may have met in person a

second time. Anderson provided Lee the information necessary to make this

transition, including filling out a form designating who she wanted as beneficiary.

UBS personnel then printed forms for her to sign, which included the information

she provided.

{¶10} On February 25, 2009, Anderson executed several documents in relation to opening an account at UBS and transferring her IRA there. At Anderson’s

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request, Michael assisted her with the execution of the forms at her home. Anderson

signed a UBS power-of-attorney form designating Michael as power of attorney with

respect to the UBS account. Kimberly signed the power-of-attorney form as a

witness. Anderson also signed a UBS account-transfer form authorizing the transfer

of her IRA from Stanford Financial Group to UBS.

{¶11} In addition, Anderson signed a UBS signature page acknowledging that she had read, understood, and agreed to the terms and conditions of the UBS

“Client Relationship Agreement” as well as the terms, conditions, and disclosures

included in her “New Account Booklet.” The “Client Relationship Agreement” was a

single-spaced seven-page document and the “New Account Booklet” incorporated

more than 60 pages of account documents pertaining to account information, terms,

conditions, and disclosures. The “Client Relationship Agreement” contained a

transfer-on-death designation, so that upon Anderson’s death, the IRA would be

transferred to Michael, the sole beneficiary. Michael delivered the executed

documents to Lee.

{¶12} Over a year later, and at Michael’s request, the probate court declared Anderson incompetent due to dementia and appointed Michael her guardian in June

2010.

{¶13} On July 20, 2012, two months after Anderson’s death, her UBS account, then valued at $433,379.87, was closed and the funds were transferred to

Michael.

Procedural History

{¶14} In June 2017, Kimberly filed a complaint for a declaratory judgment, trust accounting, money damages and removal of Michael as trustee of the Children

Trust. She alleged that Michael knew Anderson suffered from dementia at the time

she opened the UBS IRA in February 2009 and that he allowed himself to be

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designated as the account’s sole beneficiary in contravention of Anderson’s will and

overall estate plan. Kimberly alleged that Michael converted her share of the UBS

IRA, and that he breached his duty as financial power of attorney by designating

himself as sole beneficiary. Kimberly also alleged that Michael breached his

fiduciary duty when he acted in his own self-interest, failed to disclose his conflict of

interest, exerted undue influence on Anderson and/or caused her to execute

documents under a mistake of fact. She also alleged that Michael intentionally

interfered with her expected inheritance from the account.

{¶15} Kimberly sought a declaration that “the beneficiary designation of Michael as sole beneficiary of the February 25, 2009 UBS IRA account be struck as

void, and the beneficiary designations as set forth in the earlier UBS IRA account is

[sic] the correct, appropriate, and applicable designations and be applied to the

assets contained in [Anderson’s] February 25, 2009 UBS IRA.” (The earlier UBS IRA

that Kimberly referred to designated Michael, the Children Trust, and the Grandson

trust as primary beneficiaries, each to receive 33 1/3 percent.) She sought an order

that Michael provide an accounting of the IRA, that he be removed as trustee of the

Children Trust, and that a constructive trust be imposed over the trust assets.

{¶16} Stephen Lee testified by way of deposition that he met with Anderson alone in his office at least once before February 25, 2009. Anderson told Lee that she

needed to transfer her funds out of the Stanford firm as soon as she could in light of

its impending bankruptcy. She brought in copies of her Stanford account statements

and discussed with Lee her concern that her assets would be safe. Lee testified that

Anderson “was a lady that knew what she wanted to do” and that “her objective was

to get her assets initially out of the place where she was where she felt that it was in

danger and it was a risky situation for her to someplace where she could be

comfortable that the assets were being held.”

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{¶17} According to Lee, when he met with Anderson or talked with her on the phone, she was “sharp,” and “she had it together when I had conversations with

her.” Lee testified that when he met with Anderson, she was “a confident lady” who

was “strong in her will” and she “had together what she wanted to do.” According to

Lee, Anderson was “a capable person.”

{¶18} Lee testified that before February 25, 2009, neither Anderson nor Michael told him that she had been diagnosed with dementia in January 2009.

According to Lee, if he had felt that Anderson was not aware of what she was doing,

he would have referred the matter to his firm’s legal compliance department.

{¶19} According to Lee, he did not discuss Anderson’s beneficiary designations with Michael and those decisions were made by Anderson alone. Lee

testified:

In fact, what would have happened is, is that she and I would have

talked, she would have made a decision that she wanted to open an

account with UBS, and I would have instructed a secretary, an

assistant to prepare, you know, the documents, you know, for her and

they would have been sent to her and she would have filled them out,

and she would then sent them back.

{¶20} Michael testified that he and Kimberly were present in Anderson’s apartment on February 25, 2009, when Anderson executed the UBS documents. He

took the executed documents to Lee. He testified that, to his knowledge, Anderson

was not suffering from dementia and had not been diagnosed with dementia when

she signed the documents. Michael said that he had no discussions with Anderson or

Lee about making himself the sole beneficiary of the UBS IRA.

{¶21} Kimberly testified that she remembered being at Anderson’s apartment when Michael brought documents for Anderson to sign. She

acknowledged that her signature appears on the UBS power-of-attorney form, but

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stated that she had not read the document before she signed it. She said that her

mother was not in the apartment at the time. According to Kimberly, at the time the

documents were signed, her mother “absolutely” knew who Kimberly was. She also

knew who Michael and her grandson Kyle were.

{¶22} Kimberly testified that she remembered going to probate court with Anderson in 2010 when Michael applied to have Anderson declared incompetent.

She acknowledged that in a prior 2016 deposition she had testified that she thought

Michael was going to gain guardianship of Anderson and that, when asked whether

Anderson had needed a guardian at that time, she had responded, “No,” and when

asked, “Because she could take care of her own affairs?,” she had responded:

Basically. She was taking care of her own affairs. Mike would step in

periodically. I took her to the doctors. I took her to the bank. I made

sure she had her meds. I made sure she ate. I took care of her. * * *

She wrote her own checks.

{¶23} Kimberly acknowledged that when asked in the prior deposition whether Anderson was taking care of her own financial affairs in 2010 at the time

that Michael sought guardianship, she had responded, “Yes,” and had testified that

she thought that Anderson did not need a guardian.

{¶24} Barbara Brewer, Ph.D., testified that she first evaluated Anderson on April 2, 2009, because Michael was concerned that Anderson was experiencing a lot

of confusion. Dr. Brewer testified that Anderson performed a Mini Mental Status

Exam (“MMSE”), and scored 19 out of 30, which meant that she “was on the edge of

the mild” range of cognitive impairment.

{¶25} Dr. Brewer testified that she evaluated Anderson again about a year later on March 11, 2010, and that Anderson scored 17 out of 30 on an MMSE, which

indicated “severe cognitive impairment.” Dr. Brewer used a scoring instrument for

the MMSE that interpreted a score of 24-30 as “No cognitive impairment,” a score of

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18-23 as “Mild cognitive impairment,” and a score of 0-17 as “Severe cognitive

impairment.”

{¶26} In conjunction with Michael’s 2010 guardianship application, Dr. Brewer completed a “Statement of Expert Evaluation,” which recommended that

Michael’s application for guardianship be granted. In that statement, Dr. Brewer

noted that Anderson was mentally impaired by reason of “Dementia, NOS,” and that

her prognosis was “poor.”

{¶27} Dr. Brewer testified that she prepared an opinion letter for Kimberly’s counsel dated March 23, 2018, in which she gave the following opinions:

The answer to your first question: “On February 25, 2009, was Betty

Anderson mentally impaired by reason of Dementia, NOS?” is YES.

***

Based on my 2009 (and later, 2010), evaluation of Betty Anderson, it

is my opinion that she suffered significant impairments in cognitive

comprehension and judgment that make it extremely unlikely that she

was able to read or comprehend the Client Relationship Agreement

she signed on February 25, 2009.1

{¶28} At the conclusion of the trial, the magistrate entered judgment in favor of Michael. The magistrate pointed out that a diagnosis of dementia is not enough to

declare Anderson’s 2009 beneficiary designation invalid because there must be

evidence that the dementia actually affected Anderson’s ability to make the

designation. The magistrate concluded, therefore, that Dr. Brewer’s opinion that

Anderson suffered from dementia at the time she made the beneficiary designation

was not, in and of itself, determinative of whether the dementia actually affected

Anderson’s ability to make the designation. The magistrate found no evidence that

1 Dr. Brewer did not comment on Anderson’s ability to comprehend the power-of-attorney form or the account-transfer form.

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Michael manipulated Anderson into making the beneficiary designation. In

addition, the magistrate found no evidence that Michael unduly influenced Anderson

in making the beneficiary designation or that Michael acted out of self-interest when

he assisted her with the transfer of her IRA to UBS.

{¶29} Kimberly objected to the magistrate’s decision, specifically

challenging the magistrate’s conclusion that Kimberly did not present sufficient

evidence for the court to declare the 2009 beneficiary designation void.

{¶30} The trial court overruled Kimberly’s objections and adopted the magistrate’s decision as the judgment of the court. The court determined that

Kimberly failed to prove that Anderson lacked the mental capacity to execute the

2009 beneficiary designation. Kimberly now appeals.

{¶31} In a single assignment of error, Kimberly argues that the trial court erred in finding that she failed to present clear and convincing evidence of

Anderson’s lack of mental capacity to contract. She argues that the court applied the

wrong test for mental capacity to contract and that the court’s decision was against

the manifest weight of the evidence.

Mental Capacity

{¶32} First, Kimberly asserts that the trial court erred by applying the test for testamentary capacity to its determination that Anderson possessed the mental

capacity to contract to open the IRA with a transfer-on-death beneficiary

designation. She argues that under the Ohio Uniform Transfer-on-Death Security

Registration Act, the transfer on Anderson’s death was not testamentary so the test

for testamentary capacity did not apply to a determination of her capacity to enter

into the contract. Rather, she argues that the general test for capacity to enter into a

contract governs.

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{¶33} The Ohio Uniform Transfer-on-Death Security Registration Act provides for “designation of a beneficiary to take ownership of the security at the

time of the death of the owner.” R.C. 1709.04; Kropf v. Kropf, 6th Dist. Erie No. E-

09-068,

, ¶ 43. IRA proceeds transfer by virtue of the Act, which

provides:

Any transfer-on-death resulting from a registration in beneficiary form

is effective by reason of the contract regarding the registration between

the owner of the security and the registering entity by reason of

sections 1709.01 to 1709.11 of the Revised Code and is not

testamentary.

R.C. 1709.09(A); LeBlanc v. Wells Fargo,

,

,

. The Act establishes that upon the death of the owner, ownership of

the security shall pass to the designated beneficiary. R.C. 1709.07;

.

“Accordingly, the Act removes such transfers on death from the decedent’s

testamentary estate, and also from the purview of Ohio’s Statute of Wills, which

outlines the formalities that apply to testamentary dispositions.” (Emphasis

omitted.) Bielat v. Bielat,

,

(2000).

{¶34} The test for mental capacity to enter a contract is whether the person understood the nature of the transaction and the effects of her or his own actions and

is similar to the test used to determine testamentary capacity. Giurbino v. Giurbino,

,

(8th Dist. 1993). Even though the

transfer on death of IRA proceeds to a designated beneficiary is contractual and not

testamentary, Ohio courts have held that “the test of testamentary capacity can also

be used as a standard for mental capacity to execute a beneficiary designation.”

Stanek v. Stanek, 2d Dist. Greene No. 2018-CA-39,

, quoting In

re Estate of Flowers,

,

, ¶ 84 (6th Dist.). Similarly,

courts have applied the test for testamentary capacity to determine whether a

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decedent possessed the mental capacity to create a contract for a payable-on-death

bank account because such an account provides a vehicle for a person to make

dispositions similar to those made under a will.

; Davis v. Marshall,

10th Dist. Franklin No. 94APE02-158,

, *3 (Aug. 4, 1994); see

Schiavoni v. Roy, 9th Dist. Medina No. 11CA0108-M,

(annuities). Accordingly, we find no error in the trial court’s application of the test

for testamentary capacity in the case at bar.

{¶35} The test for testamentary capacity is whether the person “has sufficient mind and memory: First, to understand the nature of the business in which he is

engaged; Second, to comprehend generally the nature and extent of his property;

Third, to hold in his mind the names and identity of those who have natural claims

upon his bounty; [and] Fourth, to be able to appreciate his relation to the members

of his family.” Flowers at ¶ 84, quoting Niemes v. Niemes,

,

(1917).

{¶36} To prove a contract or beneficiary designation is voidable on the ground that a party lacked the mental capacity to enter into it, the complaining party

must establish the lack of mental capacity by clear and convincing evidence. Flowers

at ¶ 84;

. Evidence that a person had dementia is insufficient by

itself to establish the person’s lack of testamentary capacity; there must be evidence

that dementia actually affected the person’s capacity to make the testamentary

disposition. Flowers at ¶ 86; Stewart v. Boland,

,

, ¶ 15

(1st Dist.).

{¶37} Kimberly argues that the court improperly limited its review of Anderson’s mental capacity to her designation of a beneficiary and not the seven-

page “Client Relationship Agreement” as a whole, which incorporated the 60-plus

page “New Account Booklet.” Kimberly’s complaint, however, sought a declaration

striking only the beneficiary designation, not the entire contract, as void. And her

11 OHIO FIRST DISTRICT COURT OF APPEALS

objections to the magistrate’s decision were limited to the magistrate’s refusal to

declare the beneficiary designation void. Although Kimberly now asserts that the

trial court’s review should have taken into consideration the entire “Client

Relationship Agreement,” she really only challenges the beneficiary designation.

{¶38} Kimberly points to Dr. Brewer’s testimony that it was highly unlikely that Anderson was capable of reading and comprehending the entire agreement,

filled with legal clauses and detailed technical information. However, as the trial

court pointed out, Dr. Brewer’s testimony failed to address the elements of

testamentary capacity and whether Anderson’s dementia actually affected her ability

to make beneficiary designations. And neither the test for testamentary capacity nor

the test for capacity to contract generally requires that a person understand each

provision of a 60-page agreement.

{¶39} Here, the trial court properly applied the test for testamentary capacity in determining whether Anderson lacked the mental capacity to designate a

beneficiary on her IRA. The court determined that (1) Anderson contacted Lee to

move her IRA because the institution holding her account was having financial

difficulty; (2) Anderson met with Lee independently to open the account; (3)

according to Lee, Anderson appeared sharp and confident and knew what she

wanted to do; and (4) Anderson’s selection of Michael as beneficiary was not

inconsistent with at least one of Anderson’s prior estate plans and it continued to

fulfill Anderson’s objective of protecting Kimberly’s government benefits. The court

concluded that the factors supported a finding of testamentary capacity. Therefore,

even though there was evidence that Anderson may not have understood all of the

terms of the transfer documents, there was ample evidence that she was capable of

knowingly and competently executing the beneficiary designation.

12 OHIO FIRST DISTRICT COURT OF APPEALS

{¶40} Even applying the test for competency to contract generally, we reach the same result. It is clear that Anderson understood the nature of the transaction in

opening the UBS IRA and the effects of her actions in doing so.

Weight of the Evidence

{¶41} Kimberly next argues that the trial court’s decision was against the weight of the evidence because Dr. Brewer’s expert opinion testimony outweighed

the lay opinion testimony of Lee. When reviewing the manifest weight of the

evidence in a civil case, “[w]e weigh the evidence and all reasonable inferences,

consider the credibility of the witnesses, and determine whether in resolving

conflicts in the evidence, the trial court clearly lost its way and created such a

manifest miscarriage of justice that its judgment must be reversed and a new trial

ordered.” United States Fire Ins. v. Am. Bonding Co., Inc., 1st Dist. Hamilton Nos.

C-160307 and C-160317,

, citing Eastley v. Volkman,

,

,

, ¶ 20.

{¶42} Here, the trial court’s decision makes clear that the court gave careful consideration to the testimony of both Dr. Brewer and Lee. As the court pointed out,

while Dr. Brewer testified that she believed it was highly unlikely that Anderson was

capable of comprehending the “Client Relationship Agreement,” an MMSE

administered by Dr. Brewer five weeks after the agreement was signed indicated that

Anderson scored in the range of having only mild cognitive impairment. The court

also noted Dr. Brewer’s acknowledgement that a person with dementia may have

periods of lucidity. In addition, the court noted that Dr. Brewer’s opinion relied in

part on her second evaluation of Anderson, which was conducted more than a year

after the signing.

{¶43} The trial court noted Lee’s testimony that, in assisting Anderson with the opening of the UBS IRA, Anderson was sharp, confident, strong in her will, and

13 OHIO FIRST DISTRICT COURT OF APPEALS

knew what she wanted to do. The court noted Lee’s testimony that Anderson relayed

to him that she needed to move her IRA because the company that currently held the

account was having financial difficulty. The court pointed to Lee’s testimony that if

he had believed Anderson was not aware of what she was doing, he would have

referred the matter to their legal compliance department.

{¶44} We cannot say that the trial court clearly lost its way in evaluating the evidence. Therefore, we hold that the court reasonably concluded that Kimberly

failed to prove by clear and convincing evidence that Anderson lacked the mental

capacity to open the IRA and to make the beneficiary designation. See Flowers,

,

, at ¶ 96 (where conflicting evidence was presented as

to the decedent’s testamentary capacity and there was a difference of opinion as to

the weight to be given lay and expert witness evidence, the probate court, as the trier

of fact, did not lose its way in resolving those conflicts).

{¶45} Consequently, we overrule the assignment of error and affirm the trial court’s judgment.

Judgment affirmed.

BERGERON and CROUSE, JJ., concur.

Please note:

The court has recorded its own entry on the date of the release of this opinion.

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