Hull v. Wilcock (In re Estate of Wilcock)

• Decision Date: 16 August 2012
• Docket Number: No. 20110095–CA.,20110095–CA.
• Citation: 2012 UT App 223,285 P.3d 815
• Parties: In the Matter of the Estate of Joseph R. Wilcock, Deceased. Teri Jo Wilcock HULL, Petitioner and Appellant, v. Tamara L. WILCOCK aka Tamara Sanderson, Todd J. Wilcock, and Joann S. Wilcock, Heirs and Appellees.
• Court: Utah Court of Appeals

285 P.3d 815

2012 UT App 223

In the Matter of the Estate of Joseph R. Wilcock, Deceased.

Teri Jo Wilcock HULL, Petitioner and Appellant,

v.Tamara L. WILCOCK aka Tamara Sanderson, Todd J. Wilcock, and Joann S. Wilcock, Heirs and Appellees.

No. 20110095–CA.

Court of Appeals of Utah.

Aug. 16, 2012.

Justin D. Heideman and Bradley J. Weber, Provo, for Appellant.

Mitchell D. Maughan and Todd A. Bradford, Spanish Fork, for Appellees.

Before Judges McHUGH, VOROS, and CHRISTIANSEN.

OPINION

McHUGH, Presiding Judge:

¶ 1 Teri Jo Wilcock Hull (TJ) appeals the trial court's ruling that her brother Todd J. Wilcock (Todd) is not required to reimburse $50,000 in life insurance proceeds and $250,000 in investment losses to the Wilcock Family Trust (the Trust). In particular, TJ challenges the trial court's denial of her motion for a new trial based on newly discovered evidence and the trial court's failure to impose discovery sanctions on Todd and their sister, Tamara L. Sanderson (Tam). TJ also argues that the trial court erred in admitting testimony relating statements of the decedent, Joseph R. Wilcock (Father), and by not awarding her attorney fees under Utah Code section 75–7–1004. See generallyUtah Code Ann. § 75–7–1004 (Supp.2012).¹ We affirm.

BACKGROUND

¶ 2 On April 14, 1997, Father and Shirlee D. Wilcock (Mother) created the Trust and, acting as the original trustees, transferred all of their real and personal property into it. Thereafter, Father and Mother used the Trust to manage all of their assets. TJ, Tam, and Todd (collectively, the siblings) are the only living children of Father and Mother and the only beneficiaries of the Trust. Mother died in 1997, and Father died in 2007.²

¶ 3 During Father's lifetime, the Trust owned a portfolio of stocks managed by Merrill Lynch. Father became disappointed with the rate of return earned by Merrill Lynch and approached each of his three children for help in managing the portfolio. Both TJ and Tam declined Father's request, but Todd agreed to assist with management of the portfolio. Thereafter, Todd “took an active role in managing, investing, trading, and selling stock, eventually losing approximately $250,000[ ].” TJ and Tam (collectively, the sisters) learned about this loss in approximately April 2004. Todd explained that he lost $250,000 of Trust assets in the stock market, and according to TJ, Todd never indicated that he would repay the money or that it would otherwise be restored to the trust. TJ also acknowledged that she never characterized the losses from the portfolio as a loan to Todd during Father's life.

¶ 4 The siblings' maternal grandfather (Grandfather) owned a $50,000 life insurance policy, naming the siblings' uncle (Uncle) as beneficiary. Prior to Grandfather's death, Grandfather permitted Todd “to surrender the cash value of the life insurance and invest it in the stock market.” The trial court found that the insurance company paid Todd $41,357.25 as the surrender value of the policy and informed Todd that the IRS would send him a Form 1099R reflecting a taxable gain of $16,357.25. Todd testified that he paid capital gains tax on the amount reflected on the Form 1099R.

¶ 5 On April 5, 2004, TJ and Tam accompanied Father to a lawyer's office so that he could update his financial planning documents. While there, Father executed a document titled “Affidavit of Loans.” The Affidavit of Loans recites that Todd “borrowed over $250,000 from my Trust,” apparently referring to the funds Todd lost in the stock market, and also indicates that “[Todd] has received insurance monies in the amount of $50,000, which were to be divided with [TJ and Tam].” It then indicates that Todd did not distribute any of the $50,000 in insurance proceeds to the sisters or repay the $250,000 to the Trust and that the amounts are to be treated as interest-free loans from the Trust. The Affidavit of Loans also provides that the $82,000 Tam borrowed from the Trust shall be treated as a noninterest-bearing loan. The Affidavit of Loans concludes with a statement of Father's express intention that any loan amounts that remain unpaid at the time of his death “shall be taken from each child's share to the extent of his or her balance.”

¶ 6 The trial court found that after executing the Affidavit of Loans, Father “became concerned and encountered some sleepless nights” because he felt that he had made a mistake in executing the document. As a result, Father asked Tam to help him draft a new affidavit, but she declined. However, a longtime friend of the family (Friend), who knew Father most of her life and helped care for him in his later years, agreed to assist in drafting the new document. Father made several revisions to Friend's drafts. On April 15, 2004, Father read, approved, and signed the document titled “Affidavit of Trust.” The Affidavit of Trust states that Todd “was entrusted with over $250,000 from [the] Trust,” that he “lost this money and has not replaced” it, and that Father believed Todd should have taken “responsibility ... for this.” However, the Affidavit of Trust then recites that TJ and Tam “have decided that [Todd] would not be able to pay this back. But should admit his wrong doing.” The document also indicates that Todd received $50,000 in life insurance proceeds, “which were to be divided with [TJ and Tam].” The next sentence states, “To date he has not distributed these amounts [sic] shall be treated as loans in favor of my estate and shall not accrue interest.” The document further recites that the $82,000 Tam borrowed from the Trust “shall also be treated as a loan in favor of my Trust Estate and shall also not accrue interest.” At the end of the document, Father directs how the unpaid balance of the loans will be treated at the time of his death. Although the Affidavit of Trust gives specific instructions for the satisfaction of any unpaid balance of the insurance proceeds and the loan to Tam, it makes no mention of any repayment directions in the event that the $250,000 in stock losses remained unpaid at the time of Father's death. Instead, after Father's instructions concerning the insurance money and the unpaid balance of Tam's loan, the Affidavit of Trust states that “the amounts left [in the Trust] shall be divided between the three children.” Todd was not aware of the existence of either the Affidavit of Loans or the Affidavit of Trust until shortly before Father passed away.

¶ 7 On May 10, 2007, approximately three years after Father executed the Affidavit of Loans and the Affidavit of Trust, Todd drafted and Father executed a new document, titled Affidavit of Trust/Loans/Stewardship (Affidavit of Stewardship). In this document, Father indicates that Todd “was directed to manage [the Trust's] stocks in the amount of $250,000,” and despite his initial reluctance, he agreed to do so. The Affidavit of Stewardship further recites that Todd agreed to invest $44,000 from the life insurance policy surrendered by Grandfather, which he also lost in the stock market. The Affidavit of Stewardship then states in bold type that Todd “should not be held responsible for these losses and will receive equal Trust Assets along with his sisters.” When Father signed this document, on May 10, 2007, Todd and Tam were present, as was a banker and notary public (Banker), who had done business with Father for over twenty years.

¶ 8 Before notarizing the documents, Banker spoke with Father for fifteen to twenty minutes, and although Father was shaky and wobbly on his feet, Father did not appear to be confused. Banker also indicated that prior to notarizing the Affidavit of Stewardship, he asked Father several questions to ascertain whether Father had the requisite mental capacity to sign the document. Banker told the court that he would not have notarized the documents if he had any doubts as to Father's competency. Only after assuring himself of Father's competency did Banker allow Father to execute the Affidavit of Stewardship, which Banker then notarized.

¶ 9 Approximately a week later, Father fell, striking the left side of his chest and puncturing his lungs. Father chose to forego a painful procedure to drain his lungs, which likely would have saved his life. He made this decision himself, dealing directly with his treating physicians. Father died on May 19, 2007. At that time, he did not own any assets outside of the Trust, and the Trust owned six separate parcels of real property, several bank accounts, and various items of personal property.

¶ 10 After Father's death, TJ was appointed personal representative and brought a probate action, later converted to an action to dissolve the Trust and distribute its assets. Among other things the siblings disputed, TJ disagreed with Todd and Tam concerning the distribution of the Trust assets. According to TJ, Todd's share should be reduced by the $50,000 in life insurance proceeds and the $250,000 in investment losses.

¶ 11 A bench trial began on August 30 and was expected to conclude on September 2, 2010. On the third day of trial, the parties acknowledged that they would not finish in the time allotted. They asked the court to bifurcate the trial between issues it could decide based on the evidence already heard and those reserved for a second phase of trial. Although the parties were hopeful that they could resolve the reserved issues themselves, they agreed to a second phase trial date of September 17, 2010, in the event that those attempts were unsuccessful. The two issues to be decided in the first phase (Phase I) of trial, based on the three days of evidence already presented, were whether Todd was obligated to repay the trust the $250,000 and the $50,000 from the life insurance policy.

¶ 12 The trial court issued its written Findings of Fact and Conclusions of Law as to those Phase I issues on February 25, 2011. It found that during the course of Friend's interactions with Father while drafting the...