Bank v. Bolander
| Decision Date | 30 July 2010 |
| Docket Number | No. 94,569,94,569 |
| Parties | Commerce Bank, N.A., Appellee, v. Crystal L. Bolander, Executor of the Estate of Wanda J. Bennett-Rodgers, Deceased, Douglas R. Cook, and Sandra R. Cook, Appellees, and Harold James Whittet, Trustee of the Wanda J. Bennett-Rodgers Trust, dated February 19, 1998, Appellant. |
| Court | Kansas Court of Appeals |
Robert E. Keeshan, of Scott, Quinlan, Willard, Barnes & Keeshan, of Topeka, for appellant Harold James Whittet.
William J. Kelly, of Independence, for appellee Commerce Bank, N.A.
SYLLABUS BY THE COURT
1. K.S.A. 58a-107 sets forth the standards under the Kansas Uniform Trust Code by which the meaning and effect of the terms of a trust are determined (1) The law of the jurisdiction designated in the terms of the trust unless the designation of that jurisdiction's law is contrary to the law of the jurisdiction having the most significant relationship to the matter at issue; or (2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.
2. K.S.A. 58a-108 provides the following guidelines regarding the administration of a trust under the Kansas Uniform Trust Code: (a) Without precluding other means forestablishing a sufficient connection with the designated jurisdiction, terms of a trust designating the principal place of administration are valid and controlling if: (1) A trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction; or (2) all or part of the administration occurs in the designated jurisdiction.
3. If the language of a written instrument is clear and can be carried out as written, there is no room for rules of construction. Where contract terms are plain and unambiguous, the intention of the parties and the meaning of the contract are determined from the contract itself.
4. K.S.A. 58a-107 is analyzed and applied.
5. The resolution of the question of the state with the most significant relationship to the trust under K.S.A. 58a-107 is both a question of fact and law. This issue is very fact specific since each determination under K.S.A. 58a-107 presents a unique set of facts. The function of an appellate court is to determine whether the trial court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion.
6. A party is not permitted to invoke the jurisdiction and power of a court for the purpose of securing important rights from an adversary through its judgment and then, after obtaining the benefits sought, to repudiate or question the validity of that adjudication on the ground the court was without jurisdiction.
7. When there is no dispute by any of the parties that a trust is clearly a revocable trust, K.S.A. 58a-505(a)(1) provides that during the lifetime of a settlor, the property of a revocable trust is subject to the claims of the settlor's creditors.
8. K.S.A. 58a-505(a)(3) controls the limitations on assets held in trust: After the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains, the homestead, the homestead allowance, the elective share rights of the surviving spouse pursuant to K.S.A. 59-6a209, and amendments thereto, and the statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances.
9. A revocable living trust is a trust established during the settlor's lifetime in which the settlor reserves the right to alter, amend, or revoke the trust and may retain the right during his or her lifetime to direct the disposition of principal and income. At the death of the settlor, the trust assets are disposed of in accordance with the terms of the trust document. When a trust is created for the settlor's own benefit, the settlor's creditors can reach any trust assets and, for purpose of the present case, those nonexempt assets available to the settlor. This rule promotes a valid public policy that a person ought not to be able to shelter his or her assets from creditors in a discretionary trust of which he orshe is the beneficiary and thus be able to enjoy all the benefits of ownership of the property without any of the burdens.
10. Pursuant to K.S.A. 58a-505(a)(3), when the settlor of a revocable living trust dies, the property in the revocable trust is subject to the claims of the settlor's creditors
11. The exemptions that surround an individual retirement account (IRA) or its benefits to the settlor are personal to the settlor.
12. The assets in a revocable trust are subject to the claims of the settlor's creditors pursuant to K.S.A. 58a-505. Although IRA benefits are not available to a settlor's creditors during his or her lifetime, they are available to the settlor's creditors upon his or her death because the settlor placed them in an inter vivos revocable trust.
Appeal from Montgomery District Court; ROGER L. GOSSARD, judge. Opinion filed April 6, 2007. Affirmed.
Before MCANANY, P.J., PIERRON, J., and BUKATY, S.J.
Harold James Whittet, trustee of the Wanda J. Bennett-Rodgers Trust (Trust), appeals the summary judgment decision of the district court that Commerce Bank, N.A. (Commerce), could attach assets in the Trust to satisfy its judgment entered for a promissory note Wanda executed before her death. We affirm.
On February 19, 1998, Wanda resided in Independence, Kansas, and executed the Trust. She was the beneficiary of the Trust during her lifetime and reserved the right to amend or revoke the Trust at any time. The purpose of the Trust was to provide for the educational expenses of her lineal descendants. Wanda's son, Whittet, was named as first successor trustee. The initial Trust documents indicated that the Trust property consisted of a Merrill Lynch individual retirement account (IRA) and also real estate in Montgomery County. However, the Trust was not funded with these assets upon its execution. At the time of Wanda's death, no property was owned by the Trust.
On June 22, 2000, Wanda executed her last will and testament. The will provided for specific bequests of $2,000 to $8,000 to certain grandchildren and individuals, $10,000 to each of her three children, and assigned the residue to the Trust for educational purposes.
On May 25, 2002, Wanda executed a promissory note, payable to the order of Commerce in the principal amount of $93,314.48. The promissory note was secured by a security interest in real property and personal property. The promissory note indicated that Commerce had a right of setoff but "this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law."
Wanda remained in Kansas until December 2002, when she moved to Friendswood, Texas, and took all her personal belongings and effects. She contracted to sell her house in Independence. On December 6, 2002, Wanda voluntarily moved into the Park Place Retirement Home in Friendswood. She received Medicaid from the State of Texas.
Wanda died in Houston, Texas, on January 17, 2003. Upon her death, a Texas death certificate was issued. Pursuant to Wanda's will, Crystal Bolander was named as the executor of Wanda's estate (Estate), and the will was admitted for probate in April 2003. The inventory and valuation filed in the estate case listed real estate valued at $246,000, personal property valued at $10,000, and stock valued at $40,113.83, for a total valuation of $296,113.85. The valuation also listed jointly owned property in the amount of $39,986.16, and for the Trust in question it listed $7,320.11 in a Merill Lynch IRA and $205,225.69 in a Solomon Smith Barney IRA for a total value of $212,545.80 in the Trust. The petition listed Whittet as residing at 3185 N. 24th, Independence, Kansas.
On June 2, 2003, Commerce filed a chapter 60 petition seeking a money judgment against the Estate for the unpaid balance of the promissory note, plus costs and fees, and for foreclosure of its security interests and mortgage. Commerce later amended its petition to add Whittet, as trustee, as an additional defendant, claiming that since the Trust was revocable at the time of Wanda's death, the Trust property was subject to Commerce's claim as well.
Whittet was personally served at 3185 N. 24th St., Independence, Kansas, with a summons and a copy of the petition on November 24, 2003. Whittet, as trustee, filed an answer and "counter petition" (counterclaim) in the chapter 60 action. He raised affirmative defenses, inter alia, that Commerce could not attach the Trust assets and that the Kansas court lacked personal jurisdiction over the Trust or any Trust property because the situs of the Trust and all property was in Oklahoma. In the counterclaim, Whittet challenged the validity of Commerce's real estate collateral claim and the legality of the promissory note.
On July 30, 2004, the Estate advised the district court that Wanda had not filed income tax returns or paid taxes for the years 2000-2003 and combined with the other liabilities the Estate was insolvent, with $94,054.42 in assets and $206,928.33 inliabilities. Commerce filed for summary judgment against the Trust in August 2004. Commerce claimed the Estate was insolvent and that under the Kansas Uniform Trust Code, K.S.A. 58a-101 et seq., it was entitled to judgment against the Estate and the Trust, jointly and severally, for the full amount of the indebtedness regardless of any...
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