Ingram's Estate, In re
| Decision Date | 22 May 1973 |
| Docket Number | No. 46728,46728 |
| Parties | In the Matter of the ESTATE of Pearl INGRAM, Deceased. Eunice INGRAM, Administratirx of the Estate of Harold W. Ingram, Deceased, Appellee, v. Frances Garner INGALLS, Appellant. |
| Court | Kansas Supreme Court |
1. Where a conservatee has died and a person representative for his estate has been duly appointed, thereafter a probate court in settling the conservatorship estate has no authority to order delivery of the remaining property on hand in the conservatorship estate to anyone other than the fiduciary for the decedent's estate.
2. An order of the probate court in a matter beyond its jurisdiction is void and subject to attack in a collateral proceeding.
3. A trust instrument executed in Kansas by a settlor who resides in Kansas, wherein property is to be held in Kansas by a trustee who is a resident of Kansas for the benefit of a Kansas resident, is to be governed by Kansas law.
4. The essential elements of an express trust are (1) an explicit declaration and intention to create a trust, (2) definite property or subject matter of the trust, and (3) the acceptance and handling of the subject matter by the trustee as a trust.
5. A settlor may create a valid trust in mutual fund stock purchased by him, and identified as trust property, by means of a declaration of trust in which he names himself as trustee for a named beneficiary, retains any income from the stock for his lifetime, and reserves the right to change the beneficiary or revoke the trust upon notice to the investment company issuing the stock, all as more fully described in the opinion (following In re Estate of Morrison, 189 Kan. 704, 371 P.2d 171).
6. As a general rule the mere fact that one declares a trust in property which may be acquired in the future does not automatically give rise to a trust in the property when it is acquired. However, where one declares a trust in property to be acquired in the future, and upon or after acquiring the property, he confirms his previously manifested intention to create the trust or repeatedly manifests an intention to the same ffect, a trust is then created in the property.
7. In a proceeding to determine ownership of mutual fund stock purchased by a decedent during her lifetime under a declaration of trust as above described, the record is examined and it is held: (1) A valid trust in the stock was created pursuant to the trust declaration, and (2) the trust was subsequently revoked upon the death of the beneficiary prior to the decease of the settlor-trustee and full ownership of the stock reverted to the latter in her individual capacity.
Charles D. Kugler, Carson, Mahoney & Fields, Kansas City, argued the cause and was on the briefs, for appellant.
Thomas E. Joyce, Kansas City, argued the cause, and Wash H. Brown, Kansas City, was with him on the brief, for appellee.
HARMAN, Commissioner:
This is a proceeding originating in probate court to determine ownership of 2400 shares of mutual fund stock purchased by Pearl Ingram. The principal question is whether the stock became an asset of her estate at her death, which issue turns upon the effect to be given a declaration of trust executed by Pearl in her lifetime.
The contest is between the administratrix of the estate of a predeceased son of Pearl Ingram and Pearl's daughter, who is now Frances Ingalls, formerly Frances Garner, named as a residuary legatee in Pearl's will. Trial in district court upon certification from probate court resulted in judgment for the administratrix and the daughter Frances has appealed.
There was no factual difference raised by the evidence. Events pertinent commenced September 2, 1959, at which time Pearl Ingram executed an instrument denominated 'Declaration of Trust-Revocable' in which he daughter Frances Garner was named as beneficiary. This document was on a standard form used by a brokerage firm, Waddell & Reed, Inc., Kansas City, Mo., to establish a trust account in mutual fund stock handled by them. On January 20, 1960, Pearl executed another such instrument identical in nature except it named her son Harold W. Ingram as beneficiary. This latter document was in pertinent part as follows:
'DECLARATION OF TRUST-REVOCABLE'
'I, the undersigned, having purchased or declared my intention to purchase shares of capital stock of UNITED FUNDS, INC. (the Company), and having directed that the certificate for said stock be issued in my name as trustee for Harold W. Ingram as beneficiary, whose address is X (Illegible) (Street) (City) (Zone) (State) under this Declaration of Trust, DO HEREBY DECLARE that the terms and conditions upon which I shall hold said stock in trust and any additional share of stock issued to me by way of a stock dividend or dividends upon such original shares shall be as follows:
'(1) During my lifetime all cash dividends are to be paid to me individually for my own personal account and use; provided, however, that any additional shares of stock issued to be by way of a stock dividend or dividends upon such original shares shall become a part of and be subject to this trust.
'(2) Upon my death the title to any stock subject hereto and the right to any subsequent payments or distributions shall be vested in the Successor Trustee, if any, otherwise in the beneficiary. The record date for the payment of dividends, rather than the date of declaration of the dividend, shall, with reference to my death, determine whether any particular dividend shall be payable to my estate.
'(3) During my lifetime I reserve the right, as trustee, to vote, sell, redeem, exchange or otherwise deal in or with the stock subject hereto, but upon any sale or demeption of said stock or any part thereof, the trust hereby declared shall terminate as to the stock sold or redeemed, and I shall be entitled to retain the proceeds of sale or redemption for my own personal account and use.
'(4) (Provides for appointment of Successor Trustee)
'(5) I reserve the right at any time to change the beneficiary or revoke this trust, but it is understood that no change of beneficiary and no revocation of this trust except by death of the beneficiary, shall be effective as to the Company for any purpose unless written notice thereof in such form as the company shall prescribe is delivered to the Company at Kansas City, Missouri. The decease of the beneficiary before my death shall operate as a revocation of this trust and in such event, the beneficiary shall be divested of all interest in the shares held hereunder, and the appointment of the Successor Trustee shall be revoked.
'(6) In the event this trust shall be revoked or otherwise terminated, said stock and all rights and privileges thereunder shall belong to and be exercised by me in my individual capacity.
as on the application.
'To be executed in duplicate, one copy to be retained by the Purchaser and the other to be retained in the files of the Company.'
Over a period of time Mrs. Ingram made a total of thirty purchases of United Income Fund stock. These purchases were made as a result of periodic calls upon her at her home in Bethel, Kansas, by a salesman for Waddell and Reed. She would sign a printed purchase order form designating the number of shares she wished to buy and indicating in whose name the shares should be issued. In every instance the particular purchase order directed that the shares be issued in the name of 'Pearl Ingram, Trustee for (either Harold W. Ingram or Frances Garner)' and stock certificates evidencing the purchases were so issued. Fifteen purchases were made for Harold and fifteen for Frances in this manner (thirteen for each being made on the same day), with a corresponding number of shares purchased for each so that eventually a total of 2400 shares were issued for each.
The first tow purchases of stock wherein Frances was named beneficiary occurred February 24, 1959, and September 4, 1959, and the first two with Harold as beneficiary occurred February 24, 1959, and January 20, 1960. The last two purchases were each made January 7, 1965. The first Waddell and Reed salesman who called on Pearl and established the account was deceased at the time of trial. The second salesman started calling on and selling stock to Pearl in 1960 or 1961. He was aware that trust declarations by Pearl had been in effect and he was never notified of any revocation.
On August 15, 1963, Pearl made her will. In this will she mentioned a third child, a daughter Helen, but left to her only one dollar saying that she had theretofore given real estate to her. She bequeathed a described tract of real estate to her daughter Frances and an adjacent tract to her son Harold. The will contained no other bequests or legacies and no other directions concerning disposition of property except a residuary clause which named Frances and Harold to take the remainder, share and share alike.
On January 21, 1965, upon the petition of the daughter Helen, incompetency proceedings were commenced against Pearl, then seventy-nine years of age. On February 11, 1965, Pearl was adjudged incompetent and a guardian (later called conservator), the Commercial National Bank of Kansas City, Kansas, was appointed for her estate. In Pearl's safety deposit box at this bank the 4800 shares of United Income Fund stock were found, 2400 in Pearl's name as trustee for Frances and 2400 in Pearl's name as trustee for Harold. The safety deposit box did not disclose the existence of the trust declarations nor did it contain any evidence that Pearl during her competency had ever attempted to revoke the trust declarations. An officer of the bank made inquiry of Waddell and Reed respecting trust declarations by Pearl but was advised none could be found. The conservator's inventory...
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