In re Estate of Pope

• Decision Date: 02 September 2008
• Docket Number: No. COA06-1644.,COA06-1644.
• Parties: In the Matter of the ESTATE OF John W. POPE, Jr., Deceased. Jane Forbes Pope, Petitioner, v. Thomas J. Rollins, Executor of the Estate of John W. Pope, Jr., Amanda Joyce Pope and James Arthur Pope, in their capacities as co-Trustees of the Pope Family Trust for the benefit of John W. Pope, Jr., and The John William Pope Foundation, Respondents.
• Court: North Carolina Court of Appeals

666 S.E.2d 140

In the Matter of the ESTATE OF John W. POPE, Jr., Deceased.

Jane Forbes Pope, Petitioner, v. Thomas J. Rollins, Executor of the Estate of John W. Pope, Jr., Amanda Joyce Pope and James Arthur Pope, in their capacities as co-Trustees of the Pope Family Trust for the benefit of John W. Pope, Jr., and The John William Pope Foundation, Respondents.

No. COA06-1644.

Court of Appeals of North Carolina.

September 2, 2008.

Appeal by petitioner and respondents from orders entered 1 September 2006 by Judge Howard E. Manning, Jr. in Wake County Superior Court. Heard in the Court of Appeals 20 September 2007.

Ward and Smith, P.A., by Alexander C. Dale, George K. Freeman, Jr., and Stuart B. Dorsett, Wilmington, for petitioner.

Womble, Carlyle, Sandridge & Rice, PLLC, by Johnny M. Loper, Jean T. Adams, Elizabeth Arias, and Sarah L. Buthe, Raleigh, for respondents.

GEER, Judge.

Petitioner Jane Forbes Pope appeals from the order granting respondents' motion for summary judgment and denying her claim for an elective share under N.C. Gen. Stat. § 30-3.1 et seq. (2007) (the "Elective Share Act"). We hold that Ms. Pope has failed to demonstrate that the clerk of superior court and, on appeal, the superior court deviated from the procedural requirements of the Elective Share Act. Further, we have concluded based on the undisputed facts that the trust assets at issue are not included in the "Total Net Assets," as defined by N.C. Gen. Stat. § 30-3.2(4) (2007), of Ms. Pope's husband's estate. Accordingly, we affirm the decision below, although on different grounds.

Facts

On 23 December 1986, John W. Pope, Jr. ("Mr. Pope"), together with his sister and brother, Amanda Joyce Pope and James Arthur Pope, entered into the Pope Family Trust Agreement ("the Trust Agreement"). Pursuant to the Trust Agreement, the siblings, as grantors, each transferred into the trust specified shares of preferred and common stock of Variety Wholesalers, Inc., a closely-held family business. The Trust Agreement named the siblings as the three trustees of the trust and expressed the purpose of the trust as being to receive, manage, and distribute any property that the siblings conveyed to the trustees during their lifetimes or upon their deaths or any other property distributed to the trustees. The trustees were granted the authority to act only upon the unanimous consent of all of the trustees.

The Trust Agreement required the trustees to divide the property held by the trust into equal shares, with each share to be held in a separate trust for Mr. Pope, Amanda Joyce Pope, and James Arthur Pope. The trustees were required to "pay over" to each of the siblings all of the income from his or her separate trust, or to use that income for that sibling's benefit, in at least annual installments. In addition, the Trust Agreement authorized the trustees "at any time and from time to time to distribute such part or all of the principal of the trust of any such Grantor in such amounts as they may deem best in their discretion to provide for the support and maintenance of such Grantor and to provide for the payment of such income tax liabilities as such Grantor shall incur as a result of such Grantor's beneficial interest in such trust, as such tax liability may be determined by the Trustees in their discretion from time to time." The Trust Agreement further authorized the trustees "in their discretion" to distribute trust principal to enable a grantor to purchase a home; to enter into a trade, profession, or business; or for other similar purposes.

The Trust Agreement stated that the trust "is irrevocable, and that this Trust may not be altered, amended or modified." According to the Trust Agreement, the trust could be terminated only "[a]t such time as: (1) no then-living Grantor is less than fifty (50) years of age; (2) each of John W. Pope, Sr. and Joyce W. Pope [the siblings' parents] are deceased; and (3) the Trustees then serving shall sign their unanimous written consent to the termination of each of the trusts existing hereunder for each of the then living Grantors ...." Upon the occurrence of those circumstances, the trustees were required to distribute the property held in each of the siblings' trusts to "the beneficiaries then entitled to the income therefrom."

Upon the death of one of the siblings, the trustees were required to divide the property in the trust for that sibling into as many equal shares as would allow the trustees to set apart one share for each of the sibling's living children and each deceased child with descendants surviving at the time of the division. The Trust Agreement further provided: "Should any Grantor die without lineal descendants, then the property in the trust of such Grantor shall be distributed by the Trustees to the John W. Pope Foundation provided that each such Grantor shall have the power to direct and appoint the property in the trust of such Grantor to the shares set apart for the other Grantors ... or their descendants ... to be held and distributed in all respects as if such property had originally been a part of such shares so set apart." The Trust Agreement specified the manner by which the grantor could exercise this power. The Trust Agreement then provided that "[s]hould any Grantor die without lineal descendants and without effectively exercising this power, then the property in the trust of such Grantor shall be distributed to the John W. Pope Foundation."

Mr. Pope married Jane Forbes Pope ("Ms. Pope") on 19 October 2000. Mr. Pope executed a will on 17 January 2002, naming Ms. Pope as his sole beneficiary. On 19 March 2004, Mr. Pope died testate survived by his wife and siblings. Mr. Pope had no children and had not exercised his power to have his trust's assets distributed to his siblings' trusts. On 5 May 2004, the surviving trustees of the Pope Family Trust transferred the principal of Mr. Pope's trust to the John W. Pope Foundation ("the Foundation"), relying upon the terms of the Trust Agreement. The Foundation is a tax-exempt charitable organization.

A week later, Ms. Pope filed a petition for elective share pursuant to N.C. Gen.Stat. § 30-3.1 (2007). On the same date, she also filed a motion for a standstill order pursuant to N.C. Gen.Stat. § 30-3.5(b) (2007), alleging that she is entitled as her elective share to a portion of the assets of Mr. Pope's trust and that James Arthur Pope and Amanda Joyce Pope, as trustees, had acted improperly in transferring the trust's assets to the Foundation. Ms. Pope sought an order: (1) staying any disposal of the property in the Pope Family Trust pending final determination of Ms. Pope's elective share; (2) staying any further action by the trustees of the Pope Family Trust until a trustee had been appointed as the third trustee of the Pope Family Trust in place of Mr. Pope; and (3) compelling the Foundation to reconvey any property transferred from the Pope Family Trust after Mr. Pope's death back into the name in which the assets were held prior to the transfer.

On 12 May 2004, an assistant clerk of superior court granted Ms. Pope's motion and entered a standstill order. In an order entered 19 July 2004, the clerk of superior court granted the Pope Family Trust's and the Foundation's motion for reconsideration and entered a revised standstill order, requiring only that the Foundation retain one-half of the assets received from Mr. Pope's trust or one-half of the proceeds of any sale of the Variety Wholesalers, Inc. stock transferred as part of those assets.

Upon the filing of Ms. Pope's elective share petition, the clerk designated the elective share claim as an estate matter. On 17 May 2005, Ms. Pope filed a petition to have her elective share claim re-designated as a special proceeding, representing that respondents (Amanda Joyce Pope and James Arthur Pope, as co-trustees of the Pope Family Trust, and the Foundation) had no objection to the petition. On 20 May 2005, the clerk entered an order granting the petition and ordering that the petition for elective share together with all subsequent pleadings be transferred to the special proceedings division of the Wake County Superior Court. In a letter to the clerk dated 20 May 2005, however, counsel for respondents indicated that he had done additional research and now believed that the matter was properly an estate proceeding.

On 6 September 2005, respondents filed a motion to dismiss the petition for elective share or, alternatively, for summary judgment, attaching various affidavits and other materials. On 12 September 2005, Ms. Pope also filed a motion for summary judgment. Although Ms. Pope did not attach any additional materials, she made "[r]eference ... to the pleadings, all of the discovery conducted in this matter, and to the Court's file."

On 24 March 2006, the clerk entered an order rescinding her 19 May 2005 order re-designating the case as a special proceeding, directing the special proceeding file closed, and directing that all filings in the special proceeding be transferred back to the estate file. On the same date, the clerk also entered an order on the parties' motions for summary judgment. The clerk determined that (1) the assets of Mr. Pope's trust were not part of his "Total Net Assets" as defined by N.C. Gen.Stat. § 30-3.2(4); (2) to the extent those assets should be included in Total Net Assets, the assets should be valued as of the date they were transferred to the trust; and (3) neither the Foundation nor the Pope Family Trust was subject to contribution to satisfy Ms. Pope's elective share. The clerk concluded that on those issues "there is no material fact at issue and ... Respondents are entitled to judgment as a matter of law." She nonetheless included findings of fact because "it can be helpful for a lower court to set out the undisputed facts and legal principles upon which the judgment is based where an appeal is anticipated."

Ms. Pope appealed...