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This opinion
examines the actions of a successor trustee in her management of
a trust following the death of the grantor/trustee regarding assets
and fees.
In
re Trust of Rosenberg, 273 Neb. 59 (2007)
Supreme
Court Headnotes
Trusts:
- Whether a
trust has been created is a question of fact. The interpretation
of the words of such a trust is a question of law.
- [Equity:]
(Appeal and Error.) Appeals involving the administration of
a trust are equity matters and are reviewable in an appellate court
de novo on the record.
- [Attorney
Fees:] (Costs.) In a judicial proceeding involving the administration
of a trust, the court, as justice and equity may require, may award
costs and expenses, including reasonable attorney fees, to any party,
to be paid by another party or from the trust that is the subject
of the controversy. ••• Where a trustee's defense
of his or her acts is substantially successful, the trustee is ordinarily
entitled to recover the reasonable costs necessarily incurred in
preparing his or her final account and in defending it against objections.
Decedents'
Estates:
- [Appeal
and Error.] In the absence of an equity question, an appellate
court, reviewing probate matters, examines for error appearing on
the record made in the county court.
Judgments:
- [Appeal
and Error.] When reviewing a judgment for errors appearing on
the record, the inquiry is whether the decision conforms to the
law, is supported by competent evidence, and is neither arbitrary,
capricious, nor unreasonable. ••• In instances when
an appellate court is required to review cases for error appearing
on the record, questions of law are nonetheless reviewed de novo
on the record. ••• An appellate court, in reviewing
a district court judgment for errors appearing on the record, will
not substitute its factual findings for those of the district court
where competent evidence supports those findings.
Attorney
Fees:
- [Appeal
and Error.] On appeal, a trial court's decision awarding or
denying attorney fees will be upheld absent an abuse of discretion.
••• When an attorney fee is authorized, the amount
of the fee is addressed to the discretion of the trial court, whose
ruling will not be disturbed on appeal in the absence of an abuse
of discretion.
Wills:
- [Joint
Tenancy.] Property owned in joint tenancy passes by reason of
the nature of the title to the surviving joint tenant upon the death
of the other and does not pass by virtue of the provisions of the
will of the first joint tenant to die.
Appeal and
Error.
- In the absence
of plain error, an appellate court considers only claimed errors
which are both assigned and discussed.
Decedents'
Estates.
- The owner
retains sole ownership of an account having a payable on with him
the death designation, and only the owner may withdraw the proceeds
or change the named beneficiary during the owner's lifetime.
- [Attorney
Fees:] (Costs.) Attorney fees and expenses will ordinarily be
allowed a trustee where they were incurred for the benefit of the
estate.
Rules of
Evidence.
- In proceedings
where the Nebraska evidence Rules apply, the admissibility of evidence
is controlled by such rules; judicial discretion is involved only
when the rules make such discretion a factor in determining admissibility.
Trial:
- [Expert
Witnesses:] (Appeal and Error.) The admission of expert testimony
is ordinarily within the trial court's discretion, and its ruling
will be upheld absent an abuse of discretion.
Date Filed
and Case No.: February 9, 2007. No. S-05-757.
Internet
Address: http://www.supremecourt.ne.gov/opinions/2007/february/feb9/s05-757.pdf
Court Appealed
From: County Court for Douglas County: Lawrence Barrett, Judge.
Attorneys
for the Appeal: Jerry W. Katskee and Melvin R. Katskee for Marilyn
J. Tipp, appellant and cross-appellee. Howard N. Epstein and Steven
J. Riekes for Maynard Rosenberg, appellee and cross-appellant. William
L. Reinbrecht, Successor Trustee and Personal Representative, appellee
and cross-appellee, pro se.
Justices:
Heavican, C.J., Wright, Gerrard, Stephan, McCormack, and Miller-Lerman,
JJ.
Participating
on Briefs: Connolly, J.
Authored
By: Stephan, J.
Summary:
In 1984, Monroe D. Rosenberg executed a last will and testament
and a trust agreement. In the trust agreement, Munroe named himself
as both grantor and trustee, executing the document in both capacities.
The trust agreement provided that an adult child from a previous
marriage, Marilyn Tipp, was the successor trustee. He died on 12/15/01,
survived by his wife, Helen Brown Rosenberg, and his three adult
children from a previous marriage: Tipp, Maynard Rosenberg, and
Howard Rosenberg. This case involves a dispute among the three children
regarding Tipp's handling of various assets in her capacity as successor
trustee. Trust administration proceedings initiated by Maynard,
led to an order, which was initially appealed. In re Trust of Rosenberg,
269 Neb. 310, 693 N.W.2d 500 (2005) (Rosenberg I) and the Nebraska
Supreme Court concluded that the county court failed to hold a formal
evidentiary hearing prior to entry of its order, and therefore held
the order was not supported by competent evidence. The Court vacated,
and remanded to the county court with directions to hold an evidentiary
hearing. On remand, the county court held an evidentiary hearing
and removed Tipp as trustee, appointed a successor trustee, William
L. Reinbrecht and determined that certain life insurance proceeds,
accounts payable on death to Tipp, and assets held jointly by Monroe
and Tipp became trust assets upon Monroe's death. Tipp appealed
and the Nebraska Supreme Court moved the appeal to their docket.
Maynard cross-appealed.
Did the county
court err in finding that the proceeds which Tipp received and retained
as the benefciary of an insurance policy were assets of the trust
and ordering her to reimburse the trust estate in that amount? The
Court said the issue here is whether a trust was created with respect
to the life insurance proceeds. With regard to life insurance, the
Court has generally recognized that a trust may be created in the
death benefits. Likewise, a policy benefciary may expressly agree
to hold the death benefts as trustee for the benefit of others.
Here, the Court found nothing in the record refecting a declaration
by Monroe that Tipp was to hold the life insurance benefts as trustee.
"There is no competent evidence upon which to conclude that
the life insurance benefts paid to Tipp were a part of the 'trust
estate' as defned in the trust agreement, and the county court therefore
erred in ordering Tipp to pay the proceeds to Monroe's estate"
ruled the Court.
Whether the
county court erred in finding that the bonds, treasury notes, and
accounts held jointly by Tipp and Monroe at the time of Monroe's
death and retained by Tipp were assets of the trust and ordering
Tipp to reimburse the trust estate? Neb. Rev. Stat. § 30-2723(a)
(Reissue 1995) provides in pertinent part that "on death of
a party sums on deposit in a multiple party account belong to the
surviving party or parties." Under Neb. Rev. Stat. § 30-2716(1)
(Reissue 1995), an "account" is defined as "a contract
of deposit between a depositor and a financial institution"
and includes checking accounts and certificates of deposit. Such
accounts may have a payable on death (POD) designation. Neb. Rev.
Stat. § 30-2718(a) (Reissue 1995). When an account bears a
POD designation, "[o]n death of the sole party . . . sums on
deposit belong to the surviving beneficiary . . . ." §
30-2723(b)(2). "A right of survivorship arising from . . .
a POD designation . . . may not be altered by will." Neb. Rev.
Stat. § 30-2724(b) (Reissue 1995). As to jointly held property
not subject to these provisions, the common law rule is that property
owned in joint tenancy passes by reason of the nature of the title
to the surviving joint tenant upon the death of the other and does
not pass by virtue of the provisions of the will of the frst joint
tenant to die. The Court ruled that based on these principles, the
bonds, notes and POD accounts passed to Tipp immediately upon Monroe's
death and did not become a part of his residuary estate. There is
no evidence that Tipp acquired these assets in question in her capacity
as trustee. "There is no competent evidence upon which to conclude
that the assets held jointly in the names of Monroe and Tipp were
intended by Monroe to be a part of the trust estate upon his death,"
said the Court "and the county court therefore erred in ordering
Tipp to pay the proceeds of these bonds and notes to the trust estate."
Regarding the POD accounts the Court concluded that there is no
competent evidence upon which to find that the assets held in the
two POD accounts were intended by Monroe to be a part of the trust
estate upon his death. Therefore the Court ruled that the county
court therefore erred in ordering Tipp to pay the proceeds of these
accounts to the estate.
A report in
the record further identified a joint account in the names of Monroe,
Helen, and Tipp. The court ordered Tipp to pay the proceeds of this
account to Helen, as Monroe's surviving spouse. The Court concluded
that the county court did not err in requiring Tipp to pay the proceeds
of this account to Helen, as she represented has already been done.
Did the county
court err in finding that the accounts owned by Monroe and payable
or transferable to Tipp on his death and retained by Tipp were assets
of the trust and ordering Tipp to reimburse the trust estate for
such property? The Court found that none of Tipp's assignments
of error raise any issue with respect to tangible personal property,
and therefore did not address her argument on that subject.
Was there
error in the county court's ordering Tipp to reimburse the trust
estate for a $10,000 transfer she made to herself as "reimbursement"
for a gift Monroe made to Helen, days before his death. Monroe's
$10,000 check payable to Helen was drawn on a POD account to Tipp.
Under Neb. Rev. Stat. § 30-2722(c) (Reissue 1995), "[a]
beneficiary in an account having a POD designation has no right
to sums on deposit during the lifetime of any party." The owner
retains sole ownership, and only the owner may withdraw the proceeds
or change the named benefciary during the owner's lifetime. Thus,
Monroe's act of making a gift from a POD account created no right
of reimbursement in Tipp, the POD benefciary, after Monroe's death.
The county court did not err in ordering Tipp to repay the $10,000
reimbursement she made to herself from the assets of the trust.
Did the County
Court err in failing to remove a successor trustee (Reinbrecht)
and replacing him with a successor trustee? The
Court said that Tipp does not point to any evidence indicating that
Reinbrecht had violated his duty of impartially with respect to
the three trust beneficiaries, and the Court found none in their
review of the record. "There is no indication, nor does Tipp
argue, that Reinbrecht has or will divide the trust assets in any
other way than equally between Tipp, Maynard, and Howard."
The Court wrote that Tipp's disagreement with Reinbrecht arose from
his efforts to marshal assets into the trust that Tipp believes
belong to her personally. "While we agree with most of Tipp's
arguments in this regard, as noted above, this does not lead to
a conclusion that Reinbrecht violated his duty of impartiality in
arguing to the contrary." The Court said that Reinbrecht owes
no duty of impartiality to Tipp in her individual capacity, only
as a cobenefciary of the trust and concluded that there is competent
evidence to support the decision of the county court to deny Tipp's
motion to remove Reinbrecht as trustee.
Was there
error in approving Reinbrecht's fees? The Court found no error
in the approval of Reinbrecht's fees.
Did the county
court erred in excluding the testimony of Moore, Tipp's designated
expert witness? Tipp had designated Moore an expert witness
based on his background as a long time trust administrator and head
of a commercial trust department. Maynard objected to Moore's testimony,
claiming that his testimony would not address factual issues that
would assist the trier of fact and that he was not qualifed as an
expert due to his absence from trust administration. The court sustained
the objection but allowed Moore to testify as an offer of proof.
In a written order, the court excluded Moore's testimony, finding
Moore's testimony will not be helpful to the trier of fact because
it consists only of an opinion which is nothing more than an expression
of how the Court should decide the case. The Court concluded that
the county court did not abuse its discretion in excluding Moore's
testimony.
On cross-appeal
Was there
error in the county court's ordering Tipp's attorney fees to be
paid from the trust? The county court said that the real problem
in this case was the Trustee was put in the really bad position
of trying to decipher which assets were hers individually and those
which belonged to the Trust. The Supreme Court noted that although
in deciding to remove Tipp as trustee it appears that the county
court was motivated by Tipp's lack of urgency, it did not find an
intentional breach of her fiduciary duties. The record disclosed
that Tipp did marshal those assets which she believed to be trust
property and caused partial distributions to be made to the trust
beneficiaries. "We conclude that the court did not abuse its
discretion in ordering that Tipp's attorney fees incurred while
acting as successor trustee be paid from the trust."
Maynard's
Attorney Fees? Next, Maynard argued that the county court erred
in not ordering that his attorney fees be paid from trust funds.
Again, reviewing for abuse of discretion the Court found none.
Did the county
court err in failing to surcharge Tipp for her mismanagement of
the trust's real estate? Maynard argued that because Tipp failed
to rent trust property for fair market value, the trust lost a minimum
of $9,000 in income, and that Tipp should therefore be surcharged.
The Court said it was clear from the record that the property required
significant repairs and cleaning before it could be rented. After
reviewing Tipp's performance in this regard in considerable detail,
Reinbrecht determined that she fulfilled her duties as trustee and
recommended that she not be surcharged. The county court accepted
this recommendation and based upon its de novo review of the record,
the Court concluded that this was not error.
Conclusion:
The Court reversed the judgment of the county court with respect
to most of the assets, but affirmed in all other respects. The Court
remanded the cause to that court for further proceedings with respect
to the administration of the trust. AFFIRMED IN PART, AND IN PART
REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.
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