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Probate and Trust Law

Dawn T. Christoffersen, Esquire
Bhavik R. Patel, Esquire
Mara Ising

Appeal by Spicer from a judgment enforcing a settlement agreement dismissed where the the trial court lacked jurisdiction to grant the trustee's motion to vacate the initial judgment setting aside the conveyance, because the initial judgment had become final. Spicer v. Donald N. Spicer Revocable Living Trust, et. al., No. 91117 (Mo. banc, March 29, 2011), Price, Jr., C.J.
Gwen and Donald Spicer owned certain property together.  After experiencing marital difficulties, Donald conveyed his one-half interest in the property to his trust.  Upon his death, Gwen Spicer sought to set aside the conveyance based on the argument that they owned the property together as tenants by the entirety.  In her suit to set aside the conveyance, Spicer named only the trust itself.  The court agreed with Spicer that the property was owned as a tenancy by the entirety and set aside the conveyance.  However, the trustee of the trust, more than thirty days after the initial judgment, filed a motion to vacate and the judge granted the trustee's motion.  Eventually, Spicer and the trustee of Donald's trust reached a settlement agreement.  However, Spicer refused to sign the agreement and appeals the judgment of the court ordering her to do so.
Held: Appeal dismissed.  The court lacked jurisdiction to grant the trustee's motion to vacate the initial judgment setting aside the conveyance.  Pursuant to Rule 75.01, judgment becomes final after 30 days unless a party files some post-trial motion.  Because the trustee of the trust was not a party to the original suit, the fact the trustee filed the motion to vacate the court's decision to set aside the conveyance was irrelevant to the finality of the decision.  At the time the court set aside the lower court's decision in favor of Spicer, the court lacked jurisdiction to do so since the initial judgment had become final.  As such, the settlement is invalid and the conveyance of the property to the trust was set aside.

James H. Wild, College of the Ozarks, and Cottey College appeal the trial court's judgment in favor of Katherine and Laura Cunningham in a case seeking a declaration regarding how to distribute the balance of an insurance trust.  Judgment reversed where the trial court incorrectly found that the Cunninghams were the only parties entitled to a distribution. In the Matter of Gene Wild Insurance Trust and U.S. Bank v. James H. Wild, et al., Nos. 30449, SD30457, and SD30459 (Mo. App. S.D., February 22, 2011), Lynch, J. 
Decedent created both a revocable trust and an insurance trust.  The revocable trust directed the trustee to make specific distributions first and residual distributions to two charitable remainder annuity trusts ("CRAT").  Each CRAT provided for James H. Wild to be the lifetime beneficiary and two colleges to be the remainder beneficiaries.  Furthermore, the revocable trust gave the trustee discretion to pay federal and estate taxes owed as a result of decedent's death and assets received as a result thereof.  Such payments were to be charged to the residue prior to funding the CRATs.  Further, if such payment was made, it was "without reimbursement from Grantor's Personal Representative, from any beneficiary of insurance from Grantor's life or any other person."
The insurance trust included a provision title "Outright Gifts," stating, "[t]he Trustee shall distribute, outright and free of trust, to each person who is determined under Missouri law to be ultimately responsible for any federal estate tax, state estate or inheritance tax or any other death tax as a result of Grantor's death, an amount equal to such death taxes for which such person is determined by the Trustee to be responsible."  All other funds remaining were to be distributed first to James H. Wild and then to Katherine and Laura Cunningham (the "Cunninghams").   
Upon decedent's death, U.S. Bank filed suit to seek a declaration as to how funds from the insurance trust should be distributed.  Respondents, the Cunninghams, and both colleges filed cross motions for judgment on the pleadings.  The court granted only the Cunninghams' motion finding they were the only party entitled to a distribution for taxes owed. 
Held: Reversed and Remanded.  The trial court misapplied the law when it found the Cunninghams to be the only parties entitled to a distribution.  The Cunninghams asserted two positions:  (1) that "reimbursement" as used in the revocable trust and "gift" as used in the insurance trust are terms with the same meaning and (2) that the revocable trust and insurance trust were inconsistent with one another. 
The Cunninghams' first position fails to abide by the plain meaning of the words used.  The mere fact that the documents were created at the same time but used different words demonstrates the decedent's intent for the two words to have separate meanings.  While the trustee had no right to reimbursement from the insurance trust, he was still entitled to receive a gift from the Insurance Trust. 
The court also disagreed with the Cunninghams' second position that the revocable trust was inconsistent with the insurance trust.  "The paramount rule in construing a trust is that the intent of the grantor is supreme."  Where the trust includes clear and unambiguous language as to the grantor's intent, the court should give effect thereto.  Grantor's language in the insurance trust here clearly and unambiguously expressed intent to provide an outright gift to each person determined under Missouri law to be responsible for any federal or state estate or inheritance tax.  Nothing in the revocable trust was inconsistent with grantor's intent in executing the insurance trust.  Consequently, the court should have given effect to grantor's intent and ordered distribution to all parties responsible for federal or state taxes, including the Cunninghams.  As such, the court reversed and remanded the case to the trial court for further determination.

Appeal by Reed from a decision of the probate court determining that Reed was unfit to care for K.J.R.H. and appointing grandfather as guardian.  The presumption that the natural parent is the appropriate custodian for a minor child may be overcome by evidence that the parent is unfit to care for the child. In Re The Matter of K.J.R.H. v. Reed, No. 30309 (Mo. App. S.D., January 19, 2011), Rahmeyer, P.J. 
Reed was previously in a relationship with decedent and allegedly conceived K.J.R.H., although paternity was never established.  In granting decedent's father guardianship over K.J.R.H. over Reed, the court found that Reed abused alcohol and drugs, experienced anger issues, admitted to not being a father to K.J.R.H., and failed to provide any care for the child. 
Held:  Affirmed.  Reed's lack of planning, anger management, inability to provide as a father, and substance abuse constitutes sufficient evidence to support a finding that Reed is unfit as a parent.  "Although there is a rebuttable presumption that a natural parent is the appropriate custodian for a minor child, it may be overcome by evidence that the parent is unfit, unable, or unwilling to take care of the child."

Appeal by United Asset Management Trust Co. ("United Asset"), as trustee of The Coast to Coast Holding Trust (the "Trust"), from a judgment holding that a piece of property formerly held by the Trust was properly transferred to the Clarks by tax sale.  Judgment affirmed where the Collector and the Clarks provided notice reasonably practical under the circumstances.United Asset Management Trust Co. v. Clark, No. 71589 (Mo. App. W.D., November 30, 2010), Ellis, P.J. 
The trust failed to pay taxes owing on property belonging to the trust.  Although the county tax collector attempted to notify the trust, through both mail and publication, of its intent to sell the property via tax sale, the trust never received notice and the property was sold to the Clarks.  The Clarks thereafter attempted to notify the trust of their purchase of the property via tax sale and intent to request a collector's deed.  Again, the trust never received notice until after the deed was issued.  Once the trust received notice of the sale, United Asset filed a petition to set aside the tax sale.  United Asset claimed the tax collector's notice was insufficient for the following reasons:  (1) the notices of sale were returned as undeliverable; (2) the notice of sale was published for only one week, and (3) there was never a notice of sale posted on the property itself.  United Asset additionally asserted the Clarks' notice was insufficient for the following reasons:  (1) the notice was returned as undeliverable and (2) the Clarks took no additional steps to notify the trust.  The court disagreed and quieted title to the Clarks. 
Held: Affirmed.  While parties whose rights would be affected by a tax sale are entitled to reasonable notice, notice is required only when "it is practicable to do so."  "Due process does not require that a property owner receive actual notice before the government may take his property."  Rather, due process requires only that notice reasonably practicable under the circumstances of the case. Because the tax collector and the Clarks had no known address to send the notices upon receiving knowledge that the notices were undeliverable, neither party was required to take additional steps.  Additional steps would have been futile given the following facts: United Asset failed to (1) register to do business in Missouri; (2) file a document establishing Mr. Tracy as the trust manager; (3) file a change of address with the county; (4) own personal property; and (5) list itself with directory assistance or in the white or yellow pages.  As such, notice was sufficient and the court properly quieted title to the Clarks.

The Missouri Bar Courts Bulletin, 11-May