McDonald v. McDonald
| Decision Date | 02 August 1991 |
| Docket Number | 17048 and 17070,Nos. 17047,s. 17047 |
| Citation | 814 S.W.2d 939 |
| Parties | Matter of Revocable Trust of Carl E. McDONALD, Ted B. Evans, Trustee, C. Ross Rhoades, Successor Trustee, Respondent-Appellant, and Home of Hope, Inc., Respondent-Appellant, v. Betty L. McDONALD, Appellant-Respondent. |
| Court | Missouri Court of Appeals |
Abe R. Paul, Rhoades, Paul and Paul, Pineville, for respondent-appellant C. Ross Rhoades, Successor Trustee.
Mark Curnutte, Logan, Lowry, Johnston, West, McGeady, Curnutte & Logan, Vinita, Okl., for respondent-appellant Home of Hope, Inc.
Ron Mitchell, Blanchard, Van Fleet, Martin, Robertson & Dermott, Joplin, for appellant-respondent Betty L. McDonald.
The parties in the trial court to the attack upon the inter vivos revocable declaration of trust of Carl E. McDonald ("Carl"), now deceased, included the following. C. Ross Rhoades, Successor Trustee (Trustee); Betty Lee McDonald, as Personal Representative of the Estate of Carl E. McDonald, deceased (Personal Representative); Betty Lee McDonald, as widow of Carl E. McDonald, deceased (Betty); and Home of Hope, Inc., as residuary beneficiary of the trust.
The judgment appealed from determined all issues in favor of the Trustee and Home of Hope and included the following specific adjudications.
(1) That the declaration of trust and the first three amendments thereto are valid.
(2) The assets of the trust are not subject to the marital rights of Betty Lee McDonald.
(3) The fourth amendment to the declaration of trust is invalid.
(4) That Betty Lee McDonald account "to the court and the Successor Trustee, within 60 days", and that she receive 10% of the gross receipts of the trust she had collected and $10 per hour for the accounting.
(5) That the trust pay Betty Lee McDonald's attorney the sum of $25,764.86.
(6) That the trust hold Betty Lee McDonald harmless from each of a list of creditors contained in the judgment.
(7) That Betty Lee McDonald's challenge of the validity of the trust and her appeal shall not affect her rights as a beneficiary under the trust.
Betty appeals. She asserts the trial court erred in respect to adjudications (1) and (2). The Trustee and Home of Hope separately appeal. They assert the trial court erred in respect to adjudications (3), (4), (5), (6) and (7). An outline of the procedural history, as well as the evidence, is necessary for the consideration and resolution of the issues raised by these appeals. Additional details will be stated as necessary for consideration of each point.
Carl and Betty were married December 17, 1974. Each had been previously married. Betty had three children by her prior marriage. Carl had no children. His former wife, Grace, had a retarded daughter, Annette Allen. Annette lived in the Home of Hope. Carl provided part of the expense for her care. Carl promised Grace that he would always provide care for Annette.
The day before his marriage to Betty, Carl took her to his lawyer's office. There she was presented with a Prenuptial Agreement. That agreement recited "that his net worth, depending on values of real estate, is approximately Two Hundred Fifty Thousand Dollars ($250,000.00)". It also acknowledged Carl's responsibility to Annette and Betty's obligations to her three children. The agreement provided that upon the death of Carl, if she survived him as his widow, Betty would receive "either the lump sum of Twenty-five Thousand Dollars ($25,000.00) or the monthly income of One Thousand Dollars ($1,000.00) per month for her lifetime as she may elect." She was also to receive the proceeds of a $25,000.00 life insurance policy. These benefits were declared to be in lieu of any and all other rights which Betty might have as widow in the estate of Carl. Carl also agreed to make the payments due on a note secured by a deed of trust on a home owned by Betty.
By the agreement, each of the parties agreed that the other would hold free from any marital right any and all property, which he or she may own or hereafter own, and each would join and execute as a party any instrument requested by the other spouse for the purpose of transferring property. The parties signed that agreement.
Carl was a real estate broker and developer. He owned several tracts of real property, including the Mickey Mantle Holiday Inn property. A financial statement dated February 26, 1973, given by Carl to a bank, showed his net worth to be $571,657.30. Betty owned a home which was encumbered by a deed of trust. She had worked for a number of years for the Gas Service Company as a bookkeeper. After the marriage, at Carl's insistence, she quit that job and thereafter worked as property manager and bookkeeper for Carl.
Carl was described as "moody". At times he became very depressed. Also at times he drank to excess. However, until 1985, the parties got along well. Carl was hospitalized for severe depression in early 1986. At one time Betty sought to have him determined incompetent. The parties later separated. Carl asked Betty for a divorce. At first she refused. On April 13, 1987, she filed an action for dissolution of the marriage. Before Carl's death, the parties became somewhat reconciled. The dissolution action became inactive. Betty would go to Carl's home to see that he was cared for. She continued to act as his property manager and bookkeeper.
Carl died June 18, 1988. He died intestate. Under the statute of descent and distribution, § 474.010, Betty is his sole heir at law.
On October 16, 1979, Carl took Betty to the office of his lawyer. Carl had caused to be prepared an inter vivos revocable self-declaration of trust and warranty deeds conveying several tracts of real property to the trustee. Carl expressed to others that he had created the revocable trust for tax purposes, to avoid probate, to provide for the management of his estate, to care for Annette, and provide benefits for Betty for her lifetime. He told Betty the trust was for those purposes.
As recited in the judgment of the trial court, the trust provisions for Betty were:
Betty read the instrument. She declined to execute the warranty deeds. She said she did so because "I didn't thoroughly understand it and I thought it was kind of limited as to my benefit, and I felt I was entitled to more benefits than what was in there." The parties went home. Betty testified there was a heated discussion and that Carl said there would be a divorce if she didn't sign. The next day, she went to the lawyer's office and executed the deeds.
Carl executed four amendments to the trust indenture. The first was executed on May 15, 1980. The first amendment gave Betty some additional office furniture and equipment and allowed the Trustee to increase the monthly income to Betty ($1,000.00 per month) within his discretion to take into consideration the "present inflationary rate".
The second amendment was executed on November 26, 1983. The second amendment granted Betty a life estate in certain additional tracts of real estate. Betty was to receive the rents and profits from the additional tracts. Betty was made liable or responsible for all taxes, insurance and reasonable costs of maintenance on the additional tracts.
The third amendment was executed on December 23, 1983. The third amendment changed certain legal descriptions but did not otherwise modify or amend the trust indenture.
The fourth amendment was executed on February 12, 1987. The fourth amendment eliminated any interest or benefit that Betty had under the terms of the trust indenture.
Betty had knowledge of the first, second and third amendments at the time they were made. At some time after it was executed, Betty learned of the fourth amendment.
After the creation of the trust, Carl, from time to time, established various trust and individual bank accounts. He indiscriminately intermingled funds from those accounts. He used non-trust funds for the payment of trust indebtedness and purchase of trust property. He used trust funds for individual purposes.
In 1985, Carl transferred from the trust to Betty $80,000.00 in Certificates of Deposit. He later requested that she return the Certificates of Deposit to the trust, but she refused. The assets, and their value, received by Betty during the marriage and as a result of Carl's death, include the following:
"1. C.D.s ............................. $ 80,000.00
2. Tyson Stock ....................... 900.00
3. 2226 North St. Charles property ... 33,500.00
4. Martin note ....................... 20,000.00
5. 62 Cadillac ....................... 7,400.00
6. Steers note ....................... 7,100.00
7. Northwestern Life Insurance ..........To continue reading
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