Russo v. Union Bank & Trust Co. (In re Trust of Margie E. Cook)

Citation947 N.W.2d 870,28 Neb.App. 624
Decision Date14 July 2020
Docket NumberNo. A-19-755.,A-19-755.
Parties IN RE TRUST OF MARGIE E. COOK, deceased. Lloyd Russo and Betty Russo, husband and wife, appellants, v. Union Bank and Trust Co., Trustee of the Margie E. Cook Revocable Trust, appellee.
CourtCourt of Appeals of Nebraska

Tiernan T. Siems, of Erickson & Sederstrom, P.C., Omaha, for appellants.

Darren R. Carlson and Terry A. White, of Carlson & Burnett, L.L.P., Omaha, for appellee.

Pirtle, Bishop, and Arterburn, Judges.

Pirtle, Judge.

INTRODUCTION

Lloyd Russo and Betty Russo appeal from an order of the county court for Douglas County, finding that they lacked standing to assert a claim for the distribution of trust proceeds from the Margie E. Cook Revocable Trust. Based on this conclusion, the county court additionally denied the Russos’ motion to disallow attorney fees. The county court also found that the issue of Margie E. Cook's capacity was not relevant to the issue of standing.

BACKGROUND

Union Bank and Trust Company (Union Bank), acting as trustee of the Margie E. Cook Revocable Trust, filed its petition for instruction in trust administration on September 6, 2018, requesting direction from the county court on how to distribute the proceeds from the sale of an Arizona condominium (condo) previously owned by Cook. On October 12, the Russos filed a motion to intervene and requested an order requiring Union Bank to distribute the trust proceeds from the Arizona condo to them, pursuant to a beneficiary deed executed in their favor by Cook in 2015. The Russos apparently also filed a separate civil complaint against Union Bank that same day, but that pleading is not contained in the record before us.

On October 25, 2018, Union Bank filed an objection to the Russos’ motion to intervene, alleging that the Russos’ civil complaint failed to state a claim and that the Russos nevertheless lacked standing to assert such claims. Alternatively, Union Bank sought to consolidate the Russos’ civil complaint with the pending probate matter. The two matters were consolidated for a bench trial.

On March 8, 2019, the Russos filed a motion to disallow attorney fees, requesting the county court to order the law firm of Carlson & Burnett to disgorge fees previously paid to it. The Russos argued that one of the firm's attorneys, Adam Wintz, served as Cook's personal attorney and drafted certain documents at issue in the case and that therefore, Carlson & Burnett had an ethical conflict representing Union Bank and should not receive attorney fees in the matter.

On March 15, 2019, Union Bank filed a motion to dismiss the Russos’ civil complaint against Union Bank, alleging that the Russos lacked standing as contingent beneficiaries of a revocable trust and that the probate court had exclusive jurisdiction over the matter. The civil court granted Union Bank's motion to dismiss, finding that it did not have subject matter jurisdiction over the Russos’ claim.

A bench trial was held on June 25 and 26, 2019, regarding Union Bank's petition for instruction in trust administration and the Russos’ motion to intervene.

John Atkins, vice president and senior trust officer of Union Bank, was called to testify on Union Bank's behalf. Atkins testified that he is responsible for administering fiduciary documents such as financial powers of attorney, conservatorships, revocable and irrevocable trusts, and "virtually any type of fiduciary capacity."

Atkins testified that Union Bank first became involved in Cook's affairs when he was contacted by Wintz, an attorney then with Elder Law of Omaha, who asked Atkins whether Union Bank would be willing to serve under a financial power of attorney for Cook. Atkins testified that he became aware Lloyd was serving as Cook's attorney in fact and that Atkins first met him in late June or early July 2017. Lloyd was coincidentally referred to Atkins and Union Bank as a possible replacement attorney in fact by an attorney in Bellevue, Nebraska.

A meeting was arranged between representatives of Union Bank and Cook at her assisted living residence at Brighton Gardens (Brighton) in Omaha, Nebraska, on July 7, 2017. Along with Atkins and his assistant, Wintz and Denise Craft were also present at the meeting. Atkins testified that Craft is a "transition specialist" for elder care whom he has worked with on a number of occasions since they met in the early 2000's. Atkins testified that Lloyd was present at the Brighton facility on that date, but he did not participate in the meeting.

Atkins testified that Cook was "very clear ... that she was very upset with the Russos. She did not want them involved as beneficiaries of her estate, and she did not want them to receive the Scottsdale villa." He indicated that Cook appeared comfortable with him and that she was clear about her wishes regarding the condo and did not appear to be confused at the time.

A new financial power of attorney for Cook, naming Union Bank as Cook's agent, was signed at the July meeting. Atkins indicated that Union Bank does not serve as agent under health care powers of attorney, but Cook asked Craft whether she would serve in that role, which Craft accepted. After the documents had been signed, Cook was taken back to her room and Lloyd entered the meeting to sign his resignation of all fiduciary positions he held for Cook.

At a later date, Atkins spoke to Lloyd regarding whether Cook had an estate plan in place. Lloyd indicated that Cook had worked with an Omaha attorney, Niel Nielsen, on an estate plan. Nielsen provided Atkins with Cook's last will and testament, her revocable trust, and a competency checklist he had completed with Cook.

Exhibit 8, the trust agreement for the Margie E. Cook Revocable Trust, dated March 9, 2017, was introduced. Article IX of the trust agreement provided that any interest in Cook's Arizona condo that she retained at her death was to go to the Russos.

Exhibit 9, an "execution checklist" signed by Cook and Nielsen on March 9, 2017, was the only information Atkins received related to Cook's competency at the time. Atkins testified that Cook appeared to him to be "cognitive in every respect" when she signed the power of attorney documents on July 7.

Exhibit 5, a beneficiary deed dated March 30, 2015, names the Russos as beneficiaries of Cook's Arizona condo. Atkins testified that exhibit 5 appeared to supersede a prior beneficiary deed dated May 18, 2012, naming "Jack E. Stewart" as beneficiary of the same Arizona condo. Exhibit 7, a last will and testament for Cook dated November 17, 2010, named "Lynn K. Scott M.D." as the beneficiary of the Arizona condo.

Atkins testified that exhibit 10 was a handwritten amendment to Cook's trust, which in essence states that Cook did not want the Russos to receive the Arizona condo at her death. That amendment is dated July 20, 2017, and was signed by Cook. Atkins testified that he received the handwritten amendment from Craft and was satisfied that it met the requirements for amending Cook's trust. Exhibit 11 reflected another amendment to Cook's trust, under which Union Bank was to assume the position of trustee. Exhibit 12 is a revocation of the May 2012 beneficiary deed.

Atkins testified that Union Bank, as trustee, moved Cook's assets that otherwise would have been subject to probate into the trust. Prior to Union Bank's assuming the role of trustee, Cook told Atkins that she did not think she would ever return to Arizona. Atkins contacted a real estate agent to list the Arizona condo for sale because Union Bank "felt it was in [Cook's] best interest not to keep a piece of real estate that would be unoccupied." Atkins testified that the condo had costs associated with insurance, real estate taxes, homeowner association dues, and maintenance and upkeep if Cook retained the condo. Exhibit 13 is the settlement statement that was prepared once the Arizona condo was sold, and it reflects the $136,164.84 in net proceeds Union Bank received as trustee from the sale.

On cross-examination, Atkins testified that he did not become aware of any dementia or other memory problems with Cook until after July 7, 2017, when Union Bank took over under the financial power of attorney. Atkins conceded that he did not look further into competency issues after Union Bank became Cook's financial attorney in fact.

Atkins testified that he was not present when Craft drafted the handwritten trust amendment. He agreed that it was not Craft's role to be preparing documents that attempted to amend the trust. At no point during the July 2017 meeting did Cook mention that she had previously signed similar estate plan documents with Nielsen in March 2017. Atkins never conducted any sort of competency evaluation with Cook and was unable to say whether Wintz or Craft did so.

On redirect examination, Atkins testified that Union Bank did not have any concerns regarding Cook's competency after she had appointed Union Bank under the financial power of attorney because "if [Cook] became incapacitated at that time was not relevant to what [Union Bank's] role was as attorney-in-fact and eventual trustee of her trust." At that point, Union Bank was already acting as attorney in fact under what it believed to be a valid document. Atkins perceived Cook to be competent during both the July 7 and July 20 meetings in 2017. He also did not believe that Lloyd raised any concerns about Cook's competency when they met in July 2017.

Craft, owner of Craft Lifestyle Management (CLM), testified that CLM works to transition special needs adults and senior citizens into accommodating living arrangements, whether by modifying their home or assisting with placement in other communities. Cook was referred to CLM in March 2017. Lloyd previously contacted CLM in December 2016, inquiring about the cost of assisted living for Cook. Craft was called upon to visit Cook at her Bloomfield apartment, an independent living apartment in Omaha. There, Craft found that Cook's medications were scattered...

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4 cases
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    ...484, 488, 856 N.W.2d 106, 109 (2014).2 In re Trust Created by McGregor , 308 Neb. 405, 954 N.W.2d 612 (2021). See In re Trust of Cook , 28 Neb. App. 624, 947 N.W.2d 870 (2020).3 Id.4 Manon , supra note 1.5 Id.6 In re Trust Created by McGregor , supra note 2.7 Id.8 In re Conservatorship of A......
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