Wilson v. Rhodes
| Decision Date | 03 June 2008 |
| Docket Number | No. 27904.,27904. |
| Citation | 258 S.W.3d 873 |
| Parties | Brenda WILSON, Personal Representative of the Estate of Amelia J. Winchester, Plaintiff-Respondent, v. Billy RHODES, Jr., Individually, and as Successor Trustee of the Bill Rhodes, Sr., Trust, Kathy Kinder, Individually, and as Successor Trustee of the Jean F. Rhodes Trust, Defendants-Appellants, and Abigail Winchester, Defendant. |
| Court | Missouri Court of Appeals |
The trial court granted a summary judgment requiring the successor trustees of two trusts to distribute certain assets to the personal representative of a decedent's estate. On appeal, the trustees contend that the court misapplied the law in so ruling. Finding no error, this Court affirms the judgment as modified.
Appellate review of a summary judgment is based upon the record submitted below. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993); Bumm v. Olde Ivy Development, LLC, 142 S.W.3d 895, 896-97 (Mo.App. 2004). Here, the undisputed material facts were presented via cross-motions for summary judgment filed by the trustees and the personal representative. The trial court granted the personal representative's motion. On appeal, we utilize a de novo standard of review and accord no deference to the decision below. Poage v. State Farm Fire & Cas. Co., 203 S.W.3d 781, 783 (Mo.App.2006); Bland v. IMCO Recycling, Inc., 122 S.W.3d 98, 102 (Mo. App.2003). Therefore, our task is to review the record and independently decide whether the personal representative has established an undisputed right to judgment as a matter of law. Rule 74.04(c)(6); ITT, 854 S.W.2d at 380.1
Bill Rhodes, Sr. (Husband), and Jean F. Rhodes (Wife) were married and had three children: Billy Rhodes, Jr. (Rhodes); Kathy Kinder (Kinder); and Amelia Winchester (Winchester). Winchester had a child named Abigail Winchester (Granddaughter).
In September 1992, Husband and Wife established individual trusts. Husband was the grantor and trustee of his trust. Wife was the grantor and trustee of her trust. Apart from those differences, each trust contained the same provisions. The distributive provisions in each trust were contained in Article VII. Using Husband's trust as an exemplar, the relevant portions of this article stated:
A. The Trust shall continue for the sole benefit of the Grantor until the death of the Grantor, at which time the Successor Trustee shall pay the expenses of the last illness, funeral, lawful debts and estate taxes, if any, of the Grantor. In the event [Wife] survives [Husband], the Trust shall continue for the benefit of [Wife], and the Successor Trustee shall pay all income earned by the Trust Estate to [Wife] for her lifetime. Said payments shall be made as said income is earned.
B. In the event [Wife] does not survive [Husband], or after her death, the Successor Trustee shall distribute the Trust Assets as follows: [certain stock, real estate and jewelry to Rhodes; certain real estate and jewelry to Kinder; certain real estate and jewelry to Winchester; and the residue of the estate divided equally among the couple's three children per stirpes].
C. ... All income earned by the Trust shall be paid to [Wife] during her lifetime. In the event [Wife] is not living and at such time [Successor Trustee] receives a clearance letter from the Internal Revenue Service and the Missouri Department of Revenue stating that all taxes are paid and satisfied in full, and at such time the business of the Trust is finally completed then [Successor Trustee] shall distribute the assets of the Trust as hereinabove set forth and provided, and the Trust shall terminate.
....
E. In the event either of [Husband's] children, [Kinder, Winchester or Rhodes] is not living at the time of [Husband's] and [Wife's] death, then such child/children's share of the Trust Estate shall be held in Trust for such deceased child's/children's lineal descendants (Grantor's grandchildren) until such grandchild/grandchildren, as the case may be, reaches the age of 25 years, at which time, such grandchild/grandchildren shall be given his/her share of the Trust Estate, free and clear of Trust, to be his/hers absolutely.
F. After the death of [Husband and Wife], the Successor Trustee is hereby authorized to execute whatever documents or instruments which are necessary to transfer ownership of the Trust Estate property and any undistributed income.
Article XI of Husband's trust also contained a spendthrift provision that stated:
Except as otherwise provided herein, all payments of the assets of the Trust Estate, accrued income, or all payments of principal and income payable, or to become payable, to the beneficiary of the Trust herein created shall not be subject to garnishment, levy, execution, anticipation, assignment, pledge, sell or transfer in any manner, nor shall any beneficiary, except Grantor [Husband], as hereinabove provided, have the power to sell, transfer, withdraw, anticipate or encumber such interests, nor shall such interest, while in the possession of the Trustee or the Successor Trustee, be liable for or subject to the debts, contracts, obligations, liabilities, or torts of any beneficiary of this Trust.
Husband died in July 1993. Rhodes was designated as successor trustee of Husband's trust. Wife died in November 2002.2 Kinder was designated as successor trustee of Wife's trust.
Winchester died in December 2002. A decedent's estate was opened, and Brenda Wilson was appointed personal representative. She made demand upon trustees Rhodes and Kinder (hereinafter collectively referred to as Trustees) to distribute trust assets that were due Winchester to her estate, but Trustees refused to do so.
Thereafter, Wilson (hereinafter referred to as Personal Representative) brought this lawsuit to compel distribution of the trust assets. Trustees filed a motion for summary judgment. The legal bases for their motion were: (1) Winchester died before her right to receive any distribution from the trusts vested; and (2) due to Winchester's death, her share of the trust proceeds should be held in trust for Granddaughter pursuant to the provisions of Article VII.E of the trusts. Personal Representative filed a cross-motion for summary judgment. The legal bases for her motion were: (1) Winchester's right to receive a distribution of her share of the trusts' assets vested upon Wife's death; and (2) by its own terms, Article VII.E was wholly inapplicable because Winchester outlived Husband and Wife. The trial court denied Trustees' motion and granted Personal Representative's motion. This appeal followed.
In Trustees' first point, they contend that the trial court erred in ordering trust assets to be distributed to Personal Representative because Husband and Wife specifically expressed their intent that their assets would pass to their grandchildren if Rhodes, Kinder or Winchester were deceased. This Court disagrees.
When determining the meaning of a trust provision, the paramount rule of construction is that the grantor's intent is controlling. First Nat. Bank of Kansas City v. Hyde, 363 S.W.2d 647, 652 (Mo. 1962); Ross v. Everhart, 185 S.W.3d 720, 724 (Mo.App.2006). When a trust instrument "contains plain and unambiguous language, courts give effect thereto." First Nat. Bank of Kansas City v. Waldron, 406 S.W.2d 56, 59 (Mo.1966). In our view, Trustees' argument is completely refuted by the plain language used in Article VII.E, which states:
E. In the event either of [Husband's] children, [Kinder, Winchester or Rhodes] is not living at the time of [Husband's] and [Wife's] death, then such child/children's share of the Trust Estate shall be held in Trust for such deceased child's/children's lineal descendants (Grantor's grandchildren) until such grandchild/grandchildren, as the case may be, reaches the age of 25 years, at which time, such grandchild/grandchildren shall be given his/her share of the Trust Estate, free and clear of Trust, to be his/hers absolutely.
(Italics added.) Because Winchester was alive when Wife died, Article VII.E has no application and created no beneficial interest in Granddaughter to any of the trusts' assets. Point I is denied.
In Trustees' second point, they contend that the trial court erred in ordering trust assets to be distributed to Personal Representative because: (1) the trusts contained spendthrift clauses; and (2) as Winchester died prior to distribution, these clauses precluded any trust assets from being paid to her estate. This Court disagrees.
A spendthrift provision prevents alienation of trust property that a beneficiary is entitled to receive "only until the beneficiary actually receives the property or the beneficiary's right to receive the property accrues." State ex rel. Nixon v. Turpin, 994 S.W.2d 53, 59 (Mo.App.1999). Here, the dispositive issue is when Winchester's right of distribution accrued.3 Neither trust explicitly required a beneficiary to survive until the date of distribution in order to receive trust assets. In the absence of language clearly expressing such an intent, the law favors the vesting of legal or equitable estates at the earliest possible time. Lehmann v. Janes, 409 S.W.2d 647, 656 (Mo.1966); Friedman v. Marshall, 876 S.W.2d 745, 748-49 (Mo. App.1994). Therefore, Winchester's right to receive a distribution of trust assets accrued on the date of...
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