Estate of McMillen v. Kane
| Decision Date | 10 May 2012 |
| Docket Number | No. 71A03–1107–ES–324.,71A03–1107–ES–324. |
| Citation | 968 N.E.2d 342 |
| Parties | In re the ESTATE OF Nancy Jean McMILLEN, Donna McMillen, Appellant, v. Thomas Kane, Appellee. |
| Court | Indiana Appellate Court |
OPINION TEXT STARTS HERE
Appeal from the St. Joseph Probate Court; The Honorable Peter J. Nemeth, Judge; Cause No. 71J01–1107–ES–180.
Robert J. Palmer, May Oberfell Lorber, Mishawaka, IN, Attorney for Appellant.
James P. Knepp, Andrea Kurek Slagh, Hahn, Walz, and Knepp, South Bend, IN, Attorneys for Appellee.
The St. Joseph Probate Court denied a petition filed by Donna McMillen (“Donna”) in which she sought to remove Thomas Kane (“Kane”) as the personal representative of the Estate of Nancy McMillen (“the Estate”) and as trustee of a trust established by Nancy's will, of which Donna was the named beneficiary. Donna appeals and presents two issues, which we restate as: (1) whether the trial court abused its discretion in denying Donna's request to remove Kane as trustee, and (2) whether the trial court abused its discretion in denying Donna's request to remove Kane as personal representative of the Estate.
We affirm.
Kane and Nancy McMillen (“Nancy”) were the children of Ted Kanczucewski and the late Jean Kanczucewski.1 Before she died, Jean spent over $200,000 for care in a nursing facility. While his mother was in the nursing facility, Kane spoke with an estate planner and attended seminars, where he was informed that the cost of his mother's care could potentially leave insufficient funds remaining for the care of his father. Kane was also advised that, as his father's attorney-in-fact, he could transfer money from his father's account. Kane therefore transferred money out of his father's account, including $132,800 he transferred to his sister Nancy.
Nancy died on June 28, 2010, and a will she executed in 1999 was submitted to probate without objection.2 The pertinent portions of Nancy's will provided that the residuary of her estate be held in a trust (“the Trust”) for the benefit of her daughter Donna as follows:
3.1 I hereby request that my Personal Representative sell the remainder of my estate property, including my home, and that the net proceeds, after the payment of debts, taxes and the administration of my estate, be held in Trust and prudently invested for the benefit of my daughter, Donna McMillen, hereinafter “my daughter.”
3.2 The Trustee shall pay all of the net income of the Trust to my daughter in convenient installments, not less frequently than quarterly.
3.3 The Trustee shall distribute so much of the trust principal to my daughter, at the Trustee's sole and absolute discretion for her health and support taking into consideration all other income available to my daughter.
* * *
3.5 No interest in any Trust created by this instrument shall be transferable or assignable to my daughter, or be subject during her life to the claims of her creditors, including alimony, property settlement, or support claims.
3.6 If my daughter dies before the termination of a Trust created for her benefit, the balance remaining in said Trust shall be distributed to my brother, Thomas T. Kane.
3.7 The Trustee shall provide an accounting to my daughter each year.
3.8 The Trustee shall distribute all remaining income and principal to my daughter no later than ten (10) years after my death.
Appellant's App. pp. 16–17. Kane was named as the trustee of the Trust and as personal representative of Nancy's Estate.
Following Nancy's death, Kane attempted to remove the $132,800 of their father's money that he had previously transferred from their father's account to Nancy. Kane did not consider this money to be a legitimate part of Nancy's Estate and believed that this money could, or at least should, be used for the care of his father. After speaking with the Estate's attorney, however, Kane discovered that he was legally unable to transfer the money out of Nancy's Estate.
Although Donna lived in Oregon, during the administration of her mother's Estate, she temporarily moved to her mother's home in Indiana to help prepare it for sale. Kane, as personal representative of the Estate, paid for the real estate taxes, utilities, and insurance. Donna submitted invoices to the Estate to reimburse her for costs she incurred while repairing and maintaining the home. Kane, as personal representative of the Estate, authorized payment of Donna's invoices until shortly before the hearing on Donna's petition to remove him as personal representative and trustee, at which point he refused to pay a $900 invoice Donna had submitted for lawn work. Kane claimed that he had confirmed that the lawn had not been properly mowed by Donna or anyone else. Thereafter, Kane informed Donna that he would not pay any other expenses she submitted to the Estate unless he preapproved them.
Donna also attempted to find a buyer for the house, and in September 2010, Donna found buyers willing to purchase the house. Kane executed a purchase agreement with these buyers, but the deal fell through when the buyers were unable to sell their home. Donna then wished to use a specific real estate agent to help sell the home. Kane, however, chose another real estate agent that he had used in the past.
On August 16, 2010, Donna filed a verified petition to remove Kane as personal representative of Nancy's Estate. On February 28, 2011, Donna filed an amended petition seeking to remove Kane as personal representative and as trustee. A hearing on the petition was held on June 20, 2011. On June 22, 2011, the trial court denied Donna's petition. Donna filed a notice of appeal on July 22, 2011, and this appeal ensued.
Pursuant to Indiana Code section 30–4–3–22(a)(4) (2009), “[a] beneficiary of a trust may maintain an action ... to remove a trustee for cause and to appoint a successor trustee.” Indiana Code section 30–4–3–29(a)(1) (2009) also provides that “[a] trustee may be removed ... [b]y the court.” The decision to remove a trustee is within the sound discretion of the trial court, and we will reverse the trial court only when the court clearly abuses its discretion. Massey v. St. Joseph Bank & Trust Co., 411 N.E.2d 751, 753 (Ind.Ct.App.1980). As explained in Massey:
An abuse of discretion is an erroneous conclusion and judgment, one clearly against the logic and effect of the facts and circumstances before the court or the reasonable, probable and actual deductions to be drawn therefrom. The exercise of a lower court's discretion is not reviewable, rather it is only the alleged abuse of the power which is reviewable on appeal[.]
Id. (quoting Dunbar v. Dunbar, 145 Ind.App. 479, 483, 251 N.E.2d 468, 471 (1969)).
When reviewing a trial court's decision for an abuse of discretion, we will not reweigh evidence or judge the credibility of the witnesses. See Swartz v. Swartz, 720 N.E.2d 1219, 1221 (Ind .Ct.App.1999). Furthermore, Donna, as the petitioner, is appealing from a negative judgment. See Massey, 411 N.E.2d at 753 (). As such, Donna must establish that the evidence is without conflict and leads but to one conclusion which was not reached by the trial court. Id. Upon the review of a negative judgment, we neither reweigh the evidence nor resolve issues of credibility, and instead we consider only the evidence favorable to the trial court's judgment. Id. With this standard of review in mind, we address Donna's arguments.
Donna claims that, because of an alleged conflict of interest and because of personal animosity between her and Kane, the trial court should have removed Kane as trustee. With regard to the first claim, Donna notes that Nancy's will provides that the trust principal must be distributed to Donna no later than ten years after Nancy's death. Nancy's will also provides that, if Donna should die before the termination of the trust, the balance remaining in the trust shall be distributed to Kane. Donna therefore claims that Kane could distribute the entire value of the trust to Donna immediately without violating the terms of the trust. Donna also claims that, because of Kane's status as a contingent beneficiary, he has an incentive to distribute as little as possible of the trust to Donna in order to maximize the value of the trust to ensure a greater value of the trust should Donna die before the end of the ten-year trust period.
In support of her claim, Donna refers to the non-probated will she claims Nancy prepared in 2008 which would have given the residuary of Nancy's Estate directly to Donna. Unfortunately for Donna, this will was not probated, and we fail to see how this will is relevant to a trust created under the will that was submitted to probate. In fact, Donna made no objection when the 1999 will was probated. Donna refers us to no evidence which would indicate that Kane failed to distribute the income of the trust to Donna with the hope of maximizing the value of the trust should Donna die before the end of the ten-year trust period. The fact that he has not immediately distributed the entire value of the trust does not indicate that Kane is hoping to receive the trust should Donna predecease him. Instead, it is consistent with the language of the will creating the trust, i.e. that Donna receive income from the trust for no more than ten years after Nancy's death, at which time the entire value of the trust was to be distributed to Donna.
Donna acknowledges that a breach of loyalty does not exist in every situation where a trustee is also a contingent beneficiary under the trust. But she claims that Kane demonstrated a breach of his duties to maintain trust property when he attempted to remove the $132,800 he had previously given to Nancy from their father's funds and when he insisted that these funds were not a legitimate part of...
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