Cresto v. Cresto
| Decision Date | 09 October 2015 |
| Docket Number | 108,547,109,059. |
| Parties | Steven G. CRESTO and Terese Jones, Appellees/Cross-appellants, v. Mary K. Koehler CRESTO, Individually and as Trustee of the Francis E. Cresto Trust, Appellant/Cross-appellee. In the Matter of the Estate of Francis E. Cresto, Deceased. |
| Court | Kansas Supreme Court |
James D. Oliver, of Foulston Siefkin LLP, of Overland Park, argued the cause, and Matthew Stromberg, of the same firm, and Jay Fowler, of the same firm, of Wichita, were with him on the briefs for appellant/cross-appellee.
Michael R. Ong, of Ong Law Firm, P.A., of Leawood, argued the cause and was on the briefs for appellees/cross-appellants.
Steven Cresto (Steven) and Terese Jones (Terese), collectively referred to herein as “children,” were the natural children of Francis E. Cresto, deceased (Decedent). The children challenged Decedent's 2008 last will and testament and inter vivos trust which changed his prior estate plan to leave full ownership of all of his property to his third wife and the children's second stepmother, Mary K. Koehler Cresto (Kathleen), and her children, thereby effectively disinheriting the children. The district court ruled that Kathleen, through the actions of her daughter's paramour, had exerted undue influence over Decedent's preparation and execution of the 2008 testamentary documents. Consequently, the district court reinstated Decedent's 2004 estate plan, but the court refused to award the children attorney fees from Decedent's estate.
Kathleen appealed the undue influence ruling, and the children cross-appealed the denial of attorney fees. The Court of Appeals reversed the district court, finding insufficient evidence to support the lower court's finding of suspicious circumstances with respect to the 2008 documents. The children petitioned for our review, claiming that the panel exceeded its standard of review by making its own findings of fact and reweighing the evidence and asking this court to consider the attorney fees issue. We agree with the children's argument that the panel impermissibly reassessed witness credibility and reweighed the evidence on the undue influence issue, but we decline to find that the district court abused its discretion in refusing to award attorney fees. Accordingly, the Court of Appeals is reversed and the district court is affirmed.
The Court of Appeals set forth a detailed recitation of the facts in this case, but we will not repeat all of those facts here. Our goal is to provide an overview that will give our opinion proper context, while adding additional facts in the analysis as needed.
Decedent, an IBM executive, first married in 1952. That union produced three children: Steven, Terese and Jeanne. Those children were still young when Decedent and his first wife divorced. Decedent later married Janet, who had two children, Kelly and Lauri. In 1971, Decedent and Janet relocated to Connecticut where they resided until Decedent's retirement from IBM in 1985. After retiring, Decedent and Janet moved to New Mexico where they lived until Janet's death in 1992. Decedent then returned to the Kansas City area in order to be close to his children and his brother, Jack.
In 2003, Decedent married Kathleen, whom he had met at church. Kathleen had been single since her 1974 divorce, and she had seven adult children. One of Kathleen's children, Rita, was in a romantic relationship with Patricia Hackett, an Indiana attorney with extensive experience in estate planning. Decedent met Hackett at his wedding to Kathleen, and Hackett cultivated a close relationship with Decedent based on their common interests in theology, history, and politics.
Witnesses testified that it appeared that Decedent and Kathleen had a loving marriage and that Decedent had developed a relationship with Kathleen's children and grandchildren. Steven and Terese continued to maintain their relationship with their father, even after his marriage to Kathleen.
In November 1997, Decedent established a revocable trust titled the Francis E. Cresto Trust (Trust), which was prepared by his attorney, Edward J. White. Pursuant to the Trust terms, Decedent's three children and two stepchildren were to receive the balance of the Trust after his death. The Trust included Decedent's one-half interest in Florida real estate that he inherited from his parents and co-owned with his brother, Jack. The Trust referenced a personal property list maintained by Decedent providing for the specific distribution of those listed items. The list included several valuable paintings and clocks that had been originally purchased by Decedent's parents and that were considered to be “family heirlooms” by Steven and Terese. Consistent with Decedent's characteristics, the list contained meticulous descriptions of the personal property with specific instructions as to whom and how the property should be distributed.
In May 2000, Decedent executed a First Amendment to the Trust, which was once again prepared by White. That amendment updated the Trust beneficiaries in light of his stepdaughter Kelly's death and added a specific bequest of $100,000 to the hospital where Janet had received cancer
treatment. Decedent also updated his personal property list at that time.
Prior to Decedent's marriage to Kathleen, White prepared a prenuptial agreement wherein Kathleen was granted a life estate in Decedent's residence. The agreement also provided that if Kathleen survived Decedent, she would receive a beneficial interest in the Trust income during her lifetime but that she could also receive distributions from the Trust principal when needed for her health, support, maintenance, and education, as determined by the trustee. The agreement also addressed Decedent's and Kathleen's permissive use of each other's personal property upon surviving the other but expressly provided “ ‘the surviving spouse shall not be allowed to dispose of the deceased spouse's tangible personal property except and other than by gifts to the deceased spouse's descendants.’ ” At the time the premarital agreement was executed, Decedent's estate was valued at approximately $1,058,000, while Kathleen's estate was valued at approximately $142,000.
Shortly after his May 2003 wedding, Decedent executed a Second Amendment to the Trust Agreement (Second Amendment) incorporating the premarital agreement provisions, and retaining Steven, Terese, Jeanne, and Lauri as the Trust's ultimate beneficiaries. Once again, White prepared the estate documents. The Second Amendment allowed Kathleen the option of choosing a different successor trustee if she survived Decedent, subject to unanimous consent by the Trust beneficiaries. At this time, Decedent also executed a general durable power of attorney designating Kathleen as his attorney-in-fact, together with White.
In May 2004, Decedent spoke to Hackett, who practiced law in Indiana, about making some changes to his estate plans. Contemporaneously written notes from Hackett's May 2004 conversation with her associate stated that Decedent wanted to change his plans because “ ‘[h]is kids are less stable than hers[,] [w]ants Kathleen to be cared for for life and avoid fight[s] with kids.’ ”
Hackett agreed to represent Decedent by drafting the necessary estate planning documents but told Decedent that he would need to retain a Kansas attorney to review the documents and ensure they were executed properly. According to Hackett, although Decedent still held a high regard for White, he wanted to use someone else because White was nearing retirement. Using an attorney referral service, Hackett contacted retired federal circuit Court of Appeals judge James K. Logan (Logan), who was considered a highly qualified and experienced estate planning attorney, to serve as local counsel.
On September 22, 2004, Decedent met with Logan and executed his First Codicil to the Last Will and Testament of Francis E. Cresto (“the 2004 Will”) and the Third Amendment to the Trust Agreement of Francis E. Cresto Dated the 3rd Day of November 1997 (“the 2004 Trust”). The 2004 Will continued to allow Kathleen the right to use all of Decedent's tangible property during her lifetime and added an in terrorem, i.e., no contest, clause intended to protect Kathleen's life estate interest against any challenge from his children and stepdaughter. The 2004 Trust amended the bequest to the hospital to be an amount that would not exceed 10 percent of the estate. The 2004 Trust continued Kathleen's life interest in Decedent's residence but also allowed her to sell the residence if she wished to purchase a replacement residence. Steven and Terese do not challenge the efficacy of the 2004 Will or Trust.
On December 29, 2007, Decedent again contacted Hackett and allegedly informed her that he now wanted to remove his children and stepdaughter as beneficiaries from his estate plans. Decedent explained that his children did not need the resources and that his relationship had changed with his stepdaughter. Hackett started to work on the changes but did not consider Decedent to be in any rush at that time.
In April 2008, Decedent was diagnosed with prostate cancer
. After the diagnosis, he contacted Hackett and said he wanted to finish the changes to his estate plans before he began treatment. Consequently, on April 25, 2008, Hackett sent Logan a letter enclosing drafts of Decedent's new will, trust, and general durable power of attorney for his review. The letter to Logan stated: “Mr. Cresto's requested changes to his Will and Trust are designed to benefit his spouse, Mary Kathleen Koehler Cresto,” and “Mr. Cresto's contingent dispositive provisions, should Kathleen predecease him, also have been...
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Death Can Bring Out the Worst in Us
...to any petition to probate a previous or late will pursuant to K.S.A. 59-2225 or 59-2226. [27] K.S.A. 59-2212. [28] Cresto v. Cresto, 302 Kan. 820, 831, 358 P.3d 831 (2015). [29] K.S.A. 59-601. [30] K.S.A. 59-606. [31] In re Perkins' Estate, 210 Kan. 619, 624, 504 P.2d 564, (1972) (citing K......
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Death Can Bring Out the Worst
...to any petition to probate a previous or late will pursuant to K.SA. 59-2225 or 59-2226. [27] KSA. 59-2212. [28] Cresto v. Cresto, 302 Kan. 820, 831, 358 P.3d 831 (2015). [29] KSA. 59-601. [30] KSA. 59-606. [31] In re Perkins'Estate, 210 Kan. 619, 624, 504 P.2d 564, (1972) (citing Kitchell ......