In re Horton

• Decision Date: 26 August 2003
• Docket Number: No. C1-02-2266.,C1-02-2266.
• Citation: 668 N.W.2d 208
• Parties: In re The Matter of the John R. HORTON Irrevocable Trust Dated February, 1981.
• Court: Minnesota Court of Appeals

668 N.W.2d 208

In re The Matter of the John R. HORTON Irrevocable Trust Dated February, 1981.

No. C1-02-2266.

Court of Appeals of Minnesota.

August 26, 2003.

Donald F. Ryan, Crow Wing County Attorney, Candace Prigge, Assistant County Attorney, Brainerd, MN, for appellant Crow Wing County Social Services.

John H. Erickson, Erickson, Pearson & Aanes, Brainerd, MN, for respondent trustee Bernhard Warling.

Considered and decided by WILLIS, Presiding Judge, HUDSON, Judge, and FORSBERG, Judge.¹

OPINION

HUDSON, Judge.

Trust beneficiary John R. Horton is incapacitated and has been civilly committed by Crow Wing County to the Brainerd Regional Treatment Center. Crow Wing County Social Services (CWCSS) seeks review of a district court order concluding that the assets of the John R. Horton Irrevocable Trust were not "available" liquid assets, thus relieving the trustee from any obligation to fund Horton's placement in a less-restrictive, adult-care facility. Because we conclude that the John R. Horton Irrevocable Trust is a discretionary trust and the settlor did not intend for the trust to supplant public assistance, we affirm. Because our review is confined to statements supported by the record, CWCSS's motion to strike statements in respondent's brief as outside the trial record is denied.

FACTS

In the late 1970s, John R. Horton (Horton) was injured in a boating accident in which he sustained a severe head injury. In a subsequent trial, Horton was awarded damages. See Horton v. Orbeth, Inc., 342 N.W.2d 112 (Minn.1984)

. In 1981, the John R. Horton Irrevocable Trust (Horton Trust) was created, funded by the lawsuit damage award; Horton's parents, Edward and Francis Horton, served as the initial trustees of the Horton Trust. Bernhard Warling (respondent) became trustee approximately two years ago. Horton, though unmarried at the time the trust was created, subsequently married and has two children. Horton, his wife Rita Horton, and their two children are the trust beneficiaries. Currently, the trust has approximately $293,000 in assets.

In August 2001, Rita Horton lost her job; subsequently, she and John Horton applied to the Minnesota Department of Human Services for medical assistance but were denied assistance because of excess assets.² The Hortons appealed the denial. On December 12, 2001, the Minnesota Department of Human Services affirmed the denial of medical assistance, concluding that the assets in the Horton Trust, which exceeded the $3,000 (or $6,000 for a household) limit for personal assets,³ were available assets for the purpose of determining medical-assistance eligibility. The Horton children, who have special needs, continue to receive medical assistance.

Horton's medical condition deteriorated, and on February 19, 2002, Horton was civilly committed by petition of Crow Wing County to the Brainerd Regional Treatment Center. In compliance with the Minnesota civil-commitment statute,⁴ CWCSS determined that the least-restrictive alternative placement for Horton is an adult foster-care facility in Pequot Lakes, Minnesota. The monthly care cost is approximately $3,500.

CWCSS requested that respondent approve Horton's placement plan and guarantee payment for the monthly cost. Respondent has not agreed to expend funds for Horton's placement in the adult-care facility and believes authorizing such funds would exceed the scope of his authority as trustee. Respondent contends that CWCSS should be responsible for financing Horton's placement if it believes that such placement is in Horton's best interests. Respondent further contends that because the trustee currently owns a home in which Horton could reside, a separate housing expense is unnecessary.

On July 11, 2002, pursuant to Minn.Stat. § 501B.16 (2002), CWCSS petitioned the district court for an order directing respondent to make trust assets available for any placement it deemed medically necessary for Horton. Pursuant to Minn.Stat. § 501B.18 (2002), CWCSS published a copy of the order for hearing in a legal newspaper. CWCSS then mailed a copy of the hearing order to respondent's attorney and to Horton in care of the Brainerd Regional Human Services Center.

In respondent's answer to CWCSS's petition, he argued, among other things, that CWCSS lacked standing to petition the district court for an order; that CWCSS failed to state a claim on which relief could be granted; and that the district court lacked subject-matter jurisdiction and personal jurisdiction over respondent. Pursuant to stipulation, the parties agreed that the only issue the district court was to decide was whether respondent is obligated to expend monies for the care of John R. Horton. The district court decided in the negative, concluding that the Horton Trust assets are unavailable as Horton's liquid assets. This appeal follows.

ISSUES

I. Did CWCSS have standing as an "interested person" within the meaning of Minn.Stat. § 501B.16 (2002) to petition the district court for an order determining the availability of trust assets?

II. Did the district court err in concluding that the Horton Trust assets were unavailable?

ANALYSIS

I

Whether a party has standing is a question of law that appellate courts review de novo. Joel v. Wellman, 551 N.W.2d 729, 730 (Minn.App.1996), review denied (Minn. Oct. 29, 1996). This court is not bound by and need not give deference to the district court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984). Statutory construction is a question of law which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn.1998).

We begin by noting that, apparently because of the parties' stipulation, the district court did not address the standing issue in its order determining the availability of the Horton Trust assets. Generally, this court will not consider matters not argued and considered in the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988). But the question of standing cannot be waived and may be raised at anytime. See Patzner v. Schaefer, 551 N.W.2d 736, 737 (Minn.App.1996)

(stating "[t]he question of standing is not subject to waiver ...: we are required to address the issue even if the courts below have not passed on it, and even if the parties fail to raise the issue before us") (quoting United States v. Hays, 515 U.S. 737, 742, 115 S.Ct. 2431, 2435, 132 L.Ed.2d 635 (1995)); see also Cochrane v. Tudor Oaks Condo. Project, 529 N.W.2d 429, 433 (Minn.App.1995) (stating "[s]tanding may be raised at any time"), review denied (Minn. May 31, 1995).

A trustee of an express trust or a "person interested in the trust" may petition the district court for an order with respect to matters enumerated in the statute. Minn.Stat. § 501B.16 (2002). Specifically, for the purposes of this appeal, an "interested person" may petition the district court for an order to construe or interpret the terms of a trust, or to instruct the trustee, beneficiaries, and any other interested parties in any matter relating to the administration of the trust and the discharge of the trustee's duties. Id., (4)(23). Chapter 501B, however, does not define "interested person."

CWCSS argues that in its capacity as a "designated agency" under Minn.Stat. § 253B.15 (2002),⁵ and as an administrating agency of public-assistance programs, it is an "interested person" and may bring a petition for an order under section 501B.16. CWCSS also relies on the definition of "interested person" contained in the probate code, which provides, "`[i]nterested person' includes heirs, devisees, children, spouses, creditors, beneficiaries and any others having a property right in or claim against the estate of a decedent, ward or protected person which may be affected by the proceeding." Minn.Stat. § 524.1-201(24) (2002).

Respondent contends that CWCSS lacks standing because it is not a creditor of the Horton Trust or a trust beneficiary. Respondent argues further that the "interested person" definition in the probate code is inapplicable to an action involving a trust because there is no estate in question and the probate laws are significantly different from the law of trusts.

We agree with respondent that the definition of "interested person" contained in the probate code is inapplicable because this controversy concerns the availability of trust assets—there are no heirs, devisees, or a decedent's estate to consider. We conclude that in the context of chapter 501B, an "interested person" is more accurately defined as a person or entity with a specific financial stake in or a specific claim against the trust. Therefore, CWCSS has standing if it can be determined that, as a social-service agency coordinating Horton's discharge plans, it has a financial stake in or claim against the Horton Trust.

The record does not support a finding that CWCSS has a claim against the Horton Trust. There is no evidence, for example, that respondent, on behalf of the Trust, contracted with CWCSS for services and then failed to pay for those services. But CWCSS contends that as a designated agency, it has a financial stake in the determination of respondent's obligation under the Horton Trust as it relates to Horton's medical care. CWCSS argues that if the trustee is not required to pay for reasonable and necessary medical expenses, Horton has no other means of support, making Horton then eligible for public assistance. We are persuaded by CWCSS's argument. A finding that the Horton Trust assets are not available to pay for Horton's placement would place CWCSS in a position of having to locate alternative funding. Therefore, CWCSS does have a specific financial stake in whether the Horton Trust is an asset available to Horton. We conclude that CWCSS is an "interested person" for purposes of section 501B.16 and has standing to petition the district court for an order determining the...