Sheri Montgomery v. Estate of Donald M. Montgomery, Steve Shively, the and The Living Trust of Donald M. Montgomery and Betty M. Montgomery, Steve Shively, Trustee , 127 N.E.3d 1238 ( 2019 )


Menu:
  •                                                                                  FILED
    Jun 21 2019, 5:59 am
    CLERK
    Indiana Supreme Court
    Court of Appeals
    and Tax Court
    ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEES
    Jonathan E. Lamb                                           Jeffry G. Price
    John A. Cremer                                             Peru, Indiana
    Cremer & Cremer
    Fishers, Indiana
    IN THE
    COURT OF APPEALS OF INDIANA
    Sheri Montgomery,                                          June 21, 2019
    Appellant,                                                 Court of Appeals Case No.
    18A-ES-2191
    v.                                                 Appeal from the Miami Superior
    Court
    Estate of Donald M.                                        The Honorable Wayne E. Steele,
    Montgomery, Steve Shively, the                             Special Judge
    Executor, and                                              Trial Court Cause Nos.
    The Living Trust of Donald M.                              52D02-1611-TR-32
    52D02-1612-ES-35
    Montgomery and Betty M.
    25D01-5216-CB-35
    Montgomery, Steve Shively,
    Trustee,
    Appellees.
    Brown, Judge.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                    Page 1 of 15
    [1]   Sheri Montgomery appeals from the trial court’s approval of an accounting by
    Steve Shively as executor of the Estate of Donald M. Montgomery (the
    “Estate”) and trustee of The Living Trust of Donald M. Montgomery and Betty
    M. Montgomery (the “Trust,” and Steve, the Estate, and the Trust, collectively,
    “Appellees”). Sheri raises two issues which we consolidate and restate as
    whether the court erred in approving the accounting. We reverse and remand.
    Facts and Procedural History
    [2]   Sheri and Pamela Shively are the daughters of Donald Montgomery, and Steve
    is Pamela’s husband. In November 2016, Steve filed a Petition to Docket Trust
    under cause number 52D02-1611-TR-32 (the “Trust Cause”). On December
    10, 2016, Donald passed away. On December 12, 2016, Steve filed a petition
    for probate of Donald’s will under cause number 52D02-1612-ES-35 (the
    “Estate Cause”), and on December 19, 2016, the court appointed Steve as
    personal representative. Donald’s Last Will and Testament bequeathed his
    estate to Sheri and Pamela equally. On December 22, 2016, the court granted
    the petition to docket the Trust. A Settlement Agreement and Mutual Release
    of Claims dated August 2, 2017 (the “Settlement Agreement”) was signed by
    Sheri, Pamela, and Steve, filed in the Trust and Estate Causes, and provided:
    [A]t Don M. Montgomery’s date of death there existed certain
    property belonging to the [Trust] and/or [Estate], with approximate
    date of death values, to wit:
    1) 
    1091 W. 450
     N. Peru, Indiana, to be determined by appraisal
    2) 4569 S. Strawtown Pike, Peru, Indiana, to be determined by
    appraisal
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 2 of 15
    3) 1st Merchants Checking Account, approximate value of
    $1,917.00;
    4) 1st Merchants Money Market, approximate value of $4,902.00;
    5) Logansport Savings, approximate value of $84,930.00;
    6) 1st Merchants Bank account, approximate value of $207,000.00;
    7) American Funds account, approximate value of $288,000.00;
    8) Raymond James account. approximate value of $109,162.00;
    9) Vodaphone stock, approximate value of $9,995.00;
    10) Verizon stock, approximate value of $71,192.00;
    11) Comcast stock, approximate value of $39,346.00;
    12) AT&T stock, approximate value of $166,220.00;
    13) Frontier Communications stock, approximate value of
    $1,000.00;
    14) Fidelity Investments approximate value of $18,000.00;
    15) Raymond James Account, approximate value of $1,038.00;
    16) 2012 Chevy Colorado LT, approximate value of $20,000.00;
    17) 2013 Chevy Cruz, approximate value of $13,000.00;
    18) 2011 Trailer, approximate value of $2,500.00;
    19) Grasshopper Mower, approximate value of $3,250.00;
    20) Cub Cadet Mower, approximate value of $500.00;
    21) Other personal property.
    Appellant’s Appendix Volume II at 47-48. It provided, “with the exception of
    any of their respective rights and obligations created pursuant to this
    Agreement, upon execution of this agreement each party hereby mutually
    releases and discharges the other . . . from any and all known claims, demands,
    causes of action, obligations, and liabilities of every kind and nature whatsoever
    which each had, or claims to have had, or now has, against the other, which
    related to or arises out of the [Trust] or [Estate].” Id. at 48. It further provided,
    among other things, that: the Trust and Estate shall each be distributed equally
    to Sheri and Pamela; Pamela “shall receive the home located at 2569
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019           Page 3 of 15
    Strawtown Pike, attributed at appraised value toward her distributive share”
    and Sheri “shall receive the farm located at 10901 W 450 N, attributed at
    appraised value toward her distributive share” 1; Pamela and Sheri “will each
    receive one-half (1/2) of each of the investment accounts and/or stocks owned
    as part of this estate or by this trust, listed in numbers 7-15 above”; Sheri shall
    receive the 2012 Chevy Colorado LT, the Grasshopper mower, 2017 farm rent,
    and certain other property; and Pamela shall receive the 2013 Chevy Cruz and
    certain other property. Id. at 48. It provided that: Davis, MacDonald, & White
    Law Firm shall prepare all transfer forms for the transfer or liquidation of stocks
    and investment accounts; Jeffry G. Price, PC shall prepare deeds, affidavits for
    transfer of motor vehicles, gather bank accounts, pay bills, file tax returns, and
    execute any other documents necessary to carry out the terms of the agreement;
    and the Trust shall bear the expense of attorney fees incurred by the law firms
    for any and all matters related to the Trust and Estate.
    [3]   The Settlement Agreement also provided that Steve “shall prepare a Final
    Combined Personal Representative’s and Trustee’s Accounting and file any
    necessary closing documents with the court.” Id. at 49. It stated that “any
    adjustments necessary for equalization of trust distributions due to the
    difference in value of real estate distributed shall be made with cash, and, after
    equalizing distribution and after the payment of any and all final bills, the
    remaining cash shall be divided equally and distributed” to Sheri and Pamela.
    1
    These addresses differ from those listed earlier in the Settlement Agreement.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                   Page 4 of 15
    Id. The court issued an order approving the Settlement Agreement and stating
    that Steve was appointed as trustee of the Trust and personal representative of
    the Estate “to do all things and execute all documents necessary to carry out the
    terms and conditions of said Settlement Agreement.” Id. at 54.
    [4]   On December 13, 2017, Steve filed a “Personal Representative’s Final Account,
    Petition to Settle and Allow Account, and Petition for Authority to Distribute
    Assets Remaining and Close Estate and Petition for Fees of Attorney and
    Personal Representative” in the Estate Cause. Id. at 55. The filing stated that
    any income tax owed has been paid by the personal representative. The
    accounting includes three attached schedules, the first of which is labeled
    “Assets” and provides:
    
    1091 W. 450
     N., Logansport, IN (House & 2 acres)            $59,000.00
    49 +/- Acres with Logansport Proprty [sic]                  $183,634.00
    4569 S. Strawtown Pike, Peru, IN                            $130,000.00
    First Merchant’s Bank Checking (Estate)                     $121,853.00
    First Merchant's Bank Checking                              $152.00
    First Merchant‘s Bank Money Market                          $375.00
    2013 Chevy Cruz                                             $13,000.00
    2012 Chevy Colorado LT                                      $20,000.00
    2011 Trailer                                                $2,500.00
    Grasshopper Mower                                           $3,250.00
    Cub Cadet Mower                                             $500.00
    Land Rent (Hattery) 2016, 2017                              $12,000.00
    Household Misc.                                             $1,500.00
    Raymond James                                               $505,089.00
    Partial Distribution to Pam Shively                         $283,949.00
    Partial Distribution to Sheri Montgomery                    $146,065.00
    ASSETS/INCOME TO ESTATE:                                    $1,482,867.00
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019              Page 5 of 15
    Id. at 59. The next schedule is labeled “Expenses” and lists nineteen expenses
    that total $20,264.67. Id. at 60. The expenses include among other items
    attorney fees of Jeffry Price, utilities, automobile and homeowners insurance,
    lawn care, tax preparation and appraisal services, and property taxes. The third
    schedule provides:
    RECAPITULATION
    Total Assets                                         $1,482,867.00
    Total Disbursements                                  $20,264.67
    Net Available for Distribution                       $1,462,602.33
    DISTRIBUTION
    Pamela Shively                                       $731,301.16
    Sheri Montgomery                                     $731,301.17
    $1,462,602.33
    Id. at 61.
    [5]   In January 2018, Sheri filed an objection to the accounting in both causes
    claiming errors including that: Steve “failed to show beginning and ending
    dates and balances from date of death to present, how real property and
    personal property was valued”; the “number of shares of stock were not
    provided along with the date-of-death value of said shares with adjustments”;
    Sheri had been “deeded real property from the trust by a warranty trustee deed
    executed on December 7, 2017”; Steve “failed to explain how the partial
    distributions were allocated” to Pamela and Sheri and “how each shall receive
    the amounts they are to receive”; Sheri’s attorney fees were not included or paid
    as ordered; no records were presented to establish the numbers in the
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019            Page 6 of 15
    accounting; and no “reserve” account can be located on the accounting. Id. at
    66-67. Sheri requested that the court order Steve to comply with the Indiana
    Code and the Settlement Agreement or, in the alternative, consider the removal
    of Steve and the appointment of a neutral third party to fulfill the parties’
    agreement. In February 2018, Sheri filed a motion for removal of Steve as
    personal representative and trustee and the appointment of a neutral third party.
    [6]   On March 12, 2018, the court held a hearing. Steve indicated he believed the
    assets and expenses listed were accurate, he did not know of any monies that
    were not represented in the accounting, he never received a bill for Sheri’s
    attorney fees, and “the bottom line is everything was eventually liquidated” and
    all the funds were deposited in the estate account. Transcript Volume 2 at 67.
    When asked if the American Funds listed in the Settlement Agreement had
    been liquidated, he testified that the American Funds were part of the holdings
    at Raymond James and that “the entire Raymond James Account - because it
    was essentially in one large account, it made sense to say well just split it. Open
    a new account in Pam’s name. Open a new account in Sheri’s name. They
    each get 50 percent and we don’t have to go through all this,” and “that’s been
    accomplished.” Id. He indicated the Vodafone, Verizon, Comcast, AT&T, and
    Frontier Communications stock had been sold, and that Fidelity Investments
    “was basically down as life insurance” and it was split between Pamela and
    Sheri with each receiving a check for $9,000. Id. at 69. He stated that he had
    informed Sheri’s attorney in November 2017 that he was thinking he was going
    to need to hold money back in reserve to file taxes for 2017 and testified “I
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 7 of 15
    mean in part I’m holding up that because I had no idea what’s going to happen
    down the road, so I wanted to make sure that there was enough funds
    available” and “I did not want to have to, after everything settled, have to go to
    Sheri and try to get money to pay for something that I had no way of knowing.”
    Id. at 70. He indicated the Chevy Colorado and Grasshopper mower are in
    Sheri’s possession that he was prepared to liquidate the estate and trust
    accounts once the court approved the accounting.
    [7]   On March 14, 2018, the court issued an order denying Sheri’s motion for
    removal of Steve as trustee and personal representative and providing: “The
    parties are instructed to work through their respective counsel to set up dates
    and places for transfer of all personal property.” Appellant’s Appendix Volume
    II at 110. Sheri filed a Motion to Correct Error and/or Motion to Reconsider,
    which the court denied. On August 13, 2018, the court issued an “Order
    Closing Estate Proceeding and Closing Trust Docket” stating that Sheri’s
    objection “has now been overruled and the said accounting otherwise
    approved” and, “[i]n order to clarify the record, the Court now directs the Clerk
    to make an entry showing that the final accounting . . . has been approved” and
    the Estate is closed and to make a similar entry with regard to the Trust. Id. at
    122. Sheri appeals. 2
    2
    Appellees filed a motion to dismiss Sheri’s appeal as untimely. In response, Sheri argued the March 14,
    2018 order was not a final judgment and that the court ruled on her objections to the accounting for the first
    time in its August 13, 2018 order closing the Estate and Trust proceedings. This Court denied the motion to
    dismiss.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                 Page 8 of 15
    Discussion
    [8]    The issue is whether the trial court erred in approving Steve’s accounting. The
    court’s findings control as to the issues they cover and a general judgment will
    control as to the issues upon which there are no findings. Yanoff v. Muncy, 
    688 N.E.2d 1259
    , 1262 (Ind. 1997). Findings are clearly erroneous when the record
    contains no facts to support them. 
    Id.
     A judgment is clearly erroneous if it
    applies the wrong legal standard to properly found facts. 
    Id.
    [9]    Sheri maintains that Steve’s accounting is statutorily deficient. She argues the
    assets schedule does not contain a beginning balance identifying the assets Steve
    was initially charged with administering, the schedule is undated and does not
    even appear to be an inventory of all assets as of a single point in time, and she
    cannot tell what happened to the assets listed in the Settlement Agreement and
    why they are so different from his assets schedule. She further argues the
    expenses schedule does not list gains or income received during his
    administration, her attorney fees as required, expected future expenses despite
    his testimony, or the gains or losses incurred through the sale of the stocks
    identified in the Settlement Agreement. She states that the last schedule does
    not identify property held by Steve as of the filing of the accounting and the
    assets which have been distributed. She also asserts the accounting was not
    verified as statutorily required and that his testimony does not cure the
    accounting “because it is conclusion-based in nature.” Appellant’s Brief at 25.
    [10]   Appellees assert that Sheri received a partial distribution of $148,000 and title to
    a house and thus cannot bring this appeal and that she cannot complain about
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019           Page 9 of 15
    the accounting or any matters related to the Settlement Agreement in light of its
    release language. They claim the accounting “tracks rather well all of the assets
    listed in the [S]ettlement [A]greement,” there “was no need for a beginning
    balance because the beginning balance was shown in the [S]ettlement
    [A]greement,” “the short time lapse between the approval of the agreement and
    the submission of the final accounting . . . was a mere matter of months,” and
    “[l]ittle would have changed from the assets identified in the [S]ettlement
    [A]greement until the accounting itself.” Appellees’ Brief at 20. Appellees
    argue the real estate was divided pursuant to the Settlement Agreement, the
    Raymond James accounts were divided in-kind, and Sheri provides no details
    showing Steve abused his fiduciary responsibility. They argue “it would make
    sense for Steve to withhold the complete distribution of the assets since the
    objection was filed in January, and one would expect that either the estate or
    the trust (or both) would be required to file income tax returns with regard to
    any gains or income incurred in that calendar year.” Id. at 23. They argue that,
    to the extent there was a technical defect in that the accounting was not
    verified, the defect was corrected by Steve’s sworn testimony, and they assert
    “[i]t appears that the trial court concluded that Sheri’s objections were largely
    either procedural or so minimal in its [sic] impact on the overall accounting, as
    to warrant approval of Steve’s final accounting.” Id. at 26. In reply, Sheri
    argues that she did not release Steve from his obligations under the Settlement
    Agreement, including his obligation to file a final accounting. She also argues
    the partial distribution did not constitute a waiver of his fiduciary obligations.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 10 of 15
    [11]   
    Ind. Code § 29-1-16-3
     provides in part that “[e]very personal representative may
    file in the court a verified account of his administration at any time prior to final
    settlement and distribution but every personal representative must file in the
    court a verified account of his administration . . . (a) Upon filing a petition for
    final settlement . . . [and] [a]t any other time when directed by the court either
    of its own motion or on the application of any interested person.” 
    Ind. Code § 29-1-16-4
     provides:
    Accounts rendered to the court by a personal representative shall
    be for a period distinctly stated and shall consist of three (3)
    schedules, of which the first shall show the amount of the
    property chargeable to the personal representative; the second
    shall show payments, charges, losses and distributions; the third
    shall show the property on hand constituting the balance of such
    account, if any. When an account is filed, the personal
    representative shall also file receipts for disbursements of assets
    made during the period covered by the account. Whenever the
    personal representative is unable to file receipts for any
    disbursements, the court may permit him to substantiate them by
    other proof. The court may provide for an inspection of the
    balance of assets on hand. The court may, upon its own motion,
    or upon petition, provide that verification of accounts or credits
    thereon may be made by the unqualified certificate of a certified
    public accountant in lieu of receipts or other proof.
    
    Ind. Code § 29-1-16-5
     provides in part: “At the time of filing of an account the
    personal representative shall petition the court to settle and allow his account;
    and if the estate is in a proper condition to be closed, he shall also petition the
    court for an order authorizing him to distribute the estate, and shall specify in
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 11 of 15
    the petition the persons to whom distribution is to be made and the proportions
    or parts of the estate to which each is entitled.”
    [12]   Further, 
    Ind. Code § 29-1-17-2
     provides, “[i]n its decree of final distribution, the
    court shall designate the persons to whom distribution is to be made, and the
    proportions or parts of the estate, or the amounts, to which each is entitled
    under the will and the provisions of this probate code,” “the decree shall state
    that all claims except those therein specified are paid and shall describe the
    claims for the payment of which a special fund is set aside, and the amount of
    such fund,” and “[i]f any contingent claims which have been duly allowed are
    still unpaid and have not become absolute, such claims shall be described in the
    decree, which shall state whether the distributees take subject to them.” The
    statute further provides “[i]f a fund is set aside for the payment of contingent
    claims, the decree shall provide for the distribution of such fund in the event
    that all or a part of it is not needed to satisfy such contingent claims,” and “[i]f
    a decree of partial distribution has been previously made, the decree of final
    distribution shall expressly confirm it, or, for good cause, shall modify said
    decree and state specifically what modifications are made.” Also, 
    Ind. Code § 29-1-17-13
     provides that, “[u]pon the filing of a supplemental report of
    distribution together with receipts or other evidence satisfactory to the court
    that distribution has been made as ordered in the final decree, the court shall
    enter an order of discharge.”
    [13]   
    Ind. Code § 30-4-5-12
     governs accounting by trustees and provides in part that,
    unless the terms of the trust provide otherwise or waived, the trustee shall
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 12 of 15
    deliver a written statement of accounts to each income beneficiary or the
    income beneficiary’s personal representative annually and the statement shall
    contain at least all receipts and disbursements since the last statement and all
    items of trust property held by the trustee on the date of the statement at their
    inventory value. 
    Ind. Code § 30-4-5-13
     provides that a verified statement of
    accounts filed with the court shall show, among other requirements, the period
    covered by the account; the total principal with which the trustee is chargeable
    according to the last preceding written statement or the original inventory if
    there is no preceding statement; an itemized schedule of all principal cash and
    property received and disbursed, distributed, or otherwise disposed of during
    the period; an itemized schedule of income received and disbursed, distributed,
    or otherwise disposed of during the period; the balance of principal and income
    remaining at the close of the period, how invested, and both the inventory and
    current market values of all investments.
    [14]   We observe that the signatories to the Settlement Agreement expressly agreed
    that they did not release any claim related to their rights and obligations created
    pursuant to the agreement, and the agreement required Steve to file a combined
    final accounting. See Appellant’s Appendix Volume II at 48-49 (Settlement
    Agreement provides that, “with the exception of any of their respective rights
    and obligations created pursuant to this Agreement, . . . each party hereby
    mutually releases and discharges the other” and provides that Steve shall
    prepare a final combined accounting and file any necessary closing documents
    with the court). Sheri was entitled to the distribution set forth in the Settlement
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019        Page 13 of 15
    Agreement 3 and did not, by virtue of the partial distributions, forfeit her right to
    enforce the terms of the Settlement Agreement or to challenge the accounting.
    See 
    Ind. Code §§ 29-1-17-1
    , -2 (addressing partial distributions).
    [15]   We turn next to the accounting. While much of the property and many of the
    amounts listed in the Settlement Agreement may be included or reflected in
    Steve’s first schedule of “Assets,” the schedule does not provide an explanation
    or reference to documentation regarding any liquidation, transfer, or
    distribution which occurred following the execution of the Settlement
    Agreement. The partial distributions to Sheri and Pamela are listed as assets.
    The schedule does not indicate which assets may have been liquidated or
    transferred to Pamela or Sheri or indicate how the undisbursed assets would be
    distributed. The Settlement Agreement lists two tracts of real property, and the
    schedule of assets lists three tracts and does not indicate that they have been or
    will be transferred. The accounting in the record does not include appraisals or
    records showing the closure of accounts or transfers of funds. The schedule
    does not indicate whether the funds held at First Merchants Bank or Raymond
    James have been distributed. The second schedule related to expenses does not
    include attorney fees incurred by Sheri which may be required under the
    Settlement Agreement.
    3
    Steve’s assets schedule shows Sheri had received a partial distribution of $146,065, and the distributions
    schedule indicates that she is entitled to a distribution of $731,301.17.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                 Page 14 of 15
    [16]   In addition, while the third schedule indicates the net amount available for
    distribution and the amounts to which Sheri and Pamela are entitled based on
    the asset values used and identified expenses, the unverified schedules do not
    indicate which assets have been distributed and, to the extent property has not
    been disbursed, do not explain how the distribution will be made, which items
    have been or will be transferred directly to Sheri and Pamela, which items have
    been or will be liquidated, and how the distributions to Sheri and Pamela will
    be equalized. While Steve testified that the funds at Raymond James were
    divided into two accounts, one in Sheri’s name and one in Pamela’s name, the
    assets and distributions schedules do not reflect this division or transfer. While
    Appellees state that it would make no sense for Steve to complete the
    distribution of all assets, the distribution schedule does not reflect any amounts
    held in reserve, Steve did not file a supplemental report of distribution, and the
    court nevertheless closed the proceedings. A final distribution consistent with
    the Settlement Agreement should be verified and effected before the
    proceedings are closed.
    [17]   For the foregoing reasons, we reverse the trial court’s approval of the
    accounting and remand for further proceedings consistent with this opinion.
    [18]   Reversed and remanded.
    May, J., and Mathias, J., concur.
    Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 15 of 15
    

Document Info

Docket Number: 18A-ES-2191

Citation Numbers: 127 N.E.3d 1238

Filed Date: 6/21/2019

Precedential Status: Precedential

Modified Date: 1/12/2023