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In re Conservatorship of T.K.

November 17, 2009

IN THE MATTER OF THE CONSERVATORSHIP OF T.K.
E.P., PETITIONER AND APPELLEE AND J.K., PETITIONER
v.
T.K., RESPONDENT AND APPELLANT AND ALERUS FINANCIAL, N.A., CONSERVATOR



Appeal from the District Court of Grand Forks County, Northeast Central Judicial District, the Honorable Joel D. Medd, Judge.

The opinion of the court was delivered by: Sandstrom, Justice.

AFFIRMED.

[¶1] T.K. appeals from a district court order appointing Alerus Financial as conservator of her estate. We affirm, concluding the district court did not clearly err in finding T.K. needed a conservator and did not abuse its discretion in appointing Alerus as her conservator.

I.

[¶2] T.K. was born in 1926 and has two adult daughters, E.P. and J.K. T.K.'s estate included farmland near Rochester, Minnesota, which she had been renting to a third party for about $8,000 per year, and about twenty acres near Manvel, where she lived from 1972 until February 2007. J.K. lived with T.K. on the Manvel property from December 2006 until February 2007, when T.K. went to St. Paul to live with E.P. while treating various medical ailments and complications from pneumonia. According to E.P., during that time T.K. stated she did not know what had happened to money in her bank accounts. In November 2007, T.K. returned to the Grand Forks area with J.K. T.K.'s house in Manvel was a converted airport building that had deteriorated over the years and was not then inhabitable, but J.K. purchased a mobile home for the premises with her mother's money and surrounded the mobile home with hay bales for insulation. On December 7, 2007, T.K. executed a durable power of attorney appointing J.K. as her attorney in fact.

[¶3] On December 20, 2007, E.P. petitioned to appoint Alerus as a temporary conservator for her mother. E.P.'s affidavit in support of the petition alleged that she believed J.K. was taking financial advantage of T.K. by dissipating assets and that T.K. did not have the mental capacity to understand the situation. The district court appointed Alerus as temporary conservator for T.K., but she thereafter asked the court to vacate the temporary conservatorship.

[¶4] At a February 2008 hearing, the parties agreed to allow Alerus to continue as temporary conservator while they negotiated a stipulation for a permanent conservator. When the parties failed to agree on the terms of a permanent conservatorship, the court appointed a guardian ad litem and a visitor. J.K. thereafter petitioned to be appointed permanent conservator of her mother's estate. T.K. claimed she did not need a conservator, but alternatively sought appointment of J.K. as her conservator.

[¶5] At an evidentiary hearing, a report from a neuropsychology consultation was introduced, which stated that T.K. had a measurable cognitive decline with memory loss and developing dementia. According to T.K.'s financial records, her assets consisted of monthly social security payments of $1,320, real property, bonds, and other investments. While the conservatorship proceeding was pending, Alerus had assisted T.K. in selling her farmland near Rochester for $824,000, with $600,000 paid upon sale and $224,000 to be paid annually at the rate of $11,200 per year for 20 years. As part of a tax deferred exchange, about $300,000 from the land sale was invested in rental property in Grand Forks, and the remainder was placed in a savings account with Alerus. According to an Alerus representative, the rental property will provide T.K. about $22,000 per year in gross income. At the time of the evidentiary hearing, T.K. and J.K. were living in a home T.K. had purchased in Mayville with the assistance of Alerus, but there was evidence T.K. wanted to clean up and repair the Manvel property so she could live there.

[¶6] At the hearing, the guardian ad litem and the visitor filed their reports. The visitor recommended that Alerus continue as T.K.'s conservator; that T.K. be allowed to manage her social security payments; that Alerus prepare a personal services contract for J.K. to provide care for T.K.; and that Alerus oversee renovation of the Manvel home. The guardian ad litem recommended a limited conservatorship with Alerus managing T.K.'s rental property and the $11,200 in annual payments from the sale of the Rochester land; Alerus paying J.K. under a personal services contract for her care of T.K.; T.K. directly receiving and having access to her monthly social security payment; and Alerus paying T.K.'s extraordinary expenses upon approval by its manager. The guardian ad litem's report also recommended that the remaining money from the sale of the Rochester land be put in an account for T.K.'s unlimited access to secure a suitable home for her on the Manvel property with J.K. designated as supervisor for renovation of the Manvel homestead project.

[¶7] At the conclusion of the hearing, the guardian ad litem stated that she believed a conservatorship was appropriate but expressed concerns about appointing J.K. as conservator. The guardian ad litem identified concerns about J.K.'s ability to handle large sums of money, her history for making poor decisions, her failure to timely pay taxes, and her recent criminal charge for driving without liability insurance. The guardian ad litem also described a conversation with T.K. in which T.K. stated that she no longer wanted the burden of dealing with her financial affairs. The guardian ad litem stated the "tension" between J.K. and E.P. required a neutral third party conservator with a "good portion of the money accessible" by T.K. The guardian ad litem questioned J.K.'s ability to manage T.K.'s property and stated Alerus was "better qualified" to manage T.K.'s rental property, but "its really important to [T.K.] that [her savings account] be used to provide an appropriate and adequate home for her out on her Manvel property." The guardian ad litem recommended a partial conservatorship and that T.K. have as much input as possible in providing a suitable home on the Manvel property.

[¶8] The district court decided T.K. needed a conservator "based on [her] advanced age and mental capacity [and] [s]he could be taken advantage of and is vulnerable." The court decided there was good cause to appoint a neutral conservator, because appointing J.K. presented a natural conflict of interest and a neutral conservator could help eliminate conflict between two disagreeing siblings. The court found that, considering the amount and nature of T.K.'s estate, J.K. did not have the qualifications to manage her mother's property, and the court appointed Alerus as T.K.'s conservator. The court allowed T.K. to directly receive her monthly social security and additional funds as determined by Alerus; required Alerus to draft a personal service contract for J.K.'s care and services for T.K. in the amount of $1,500 per month; authorized Alerus to manage the property restoration in Manvel as financially feasible in consultation with T.K.; and ordered fees for the guardian ad litem, visitor, and attorneys to be paid from TK.'s estate. The court thereafter approved $9,090.32 in attorney fees for E.P.

[¶9] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. §§ 27-05-06 and 30.1-02-02. T.K.'s appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. §§ 28-27-02 and 30.1-02-06.1.

II.

[¶10] In Guardianship and Conservatorship of Thomas, 2006 ND 219, ¶ 7, 723 N.W.2d 384, we said the clearly erroneous standard of review applies to a district court's findings of fact in a conservatorship proceeding and the abuse of discretion standard applies to the court's selection of a conservator. "A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support the finding, or if, on the entire record, we are left with a definite and firm conviction a mistake has been made." Id. "A court abuses its discretion if it acts in an arbitrary, unreasonable, or ...


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